Finance Minister Robertson makes a false declaration about the Grocery Commissioner's Powers

In a debate with National Party Finance Spokeswoman Nic Willis, Finance Minister Grant Robertson tried explaining why previously he opposed cutting GST on fruit & veges but now has reversed himself & supports the policy. He stated that the difference is the introduction of a Grocery Commissioner who will "make sure the benefits are passed on".

However, the pass-through depends on the relative sizes of the elasticities of demand & supply for fruit & veges. If demand is highly elastic compared to supply, then even in a competitive market the GST cut will not be passed on & there's nothing the Commissioner can do about it, since it has nothing to do with monopoly powers & collusion.

We've made the point before on DownToEarth.Kiwi when the PM argued that the Commissioner will ensure the 15% cut in GST is passed on. Now the Finance Minister has made the same claim. The PM didn't tell the truth & now the Finance Minister isn't telling the truth .. which just goes to show one thing - this election campaign has been marked by grossly misleading assertions about the effects of all our parties policies on the economy.

Sources

https://www.newshub.co.nz/home/politics/2023/10/election-2023-debate-moments-nicola-willis-confronted-with-national-social-video-of-christopher-luxon-making-questionable-statement.html

A callous RBNZ Blames Migrants for Inflation & says only "some" are stressed by high interest rates

In the Minutes of the Reserve Bank's Monetary Policy Committee released today, members said this about immigrants:

"Upside surprises to, or greater than expected demand-side stimulus from, migration could sustain growth momentum for longer. More resilience in domestic demand could slow the pace of expected disinflation".

Do migrants "slow the pace of disinflation"? One of the UK's top economists, Prof Sir Steve Nickell, former Economics Head at Oxford & Bank of England Monetary Policy Committee Member, told a Parliamentary Select Committee:

"there is certainly a broad acceptance in the UK .. that immigration has had a tendency to reduce inflationary pressure"

Indeed the whole point of Chris Hipkins hiking immigration this past year was to relieve wage pressure due to huge skill shortages in NZ. Meanwhile in the US, Forbes reports "Economists say increasing immigration will reduce inflation".

However our Reserve Bank refuses to take responsibility for inflation by printing $50 billion & prefers to frame migrants. Yet immigrants expand the supply side of the economy, as well as increasing demand, and the evidence for nations like the UK & US is that the net of these two effects is disinflationary. The RBNZ should apologize for sticking the blame onto migrants & duping folks into believing they're a cause of high interest rates. It's one thing to blame the weather & Putin for our inflation, but throwing immigrants into the mix is out of order. Whipping up anger at migrants by falsely claiming they increase demand without making up for it by also being productive citizens is outrageous.

Second, the Reserve Bank's Monetary Policy Committee "noted that pockets of stress have emerged for some in the household, commercial property & agricultural sectors" from debt servicing costs. The RBNZ doesn't have a clue about stress levels in Kiwi households so why write such rubbish? Do its staff work in a gilded palace in Wellington, detached from life in the real world? "Pockets of stress for some", eh? The majority of NZ can't afford to pay its bills & mortgages yet the RBNZ thinks its just a problem for "some" - the odd "pocket"? What a callous institution. Did its out-of-touch Monetary Policy Committee saunter off & buy $8 flat-white coffees on Lambton Quay after their meeting?

Sources:

https://www.rbnz.govt.nz/hub/news/2023/10/official-cash-rate-remains

https://publications.parliament.uk/pa/ld200708/ldselect/ldeconaf/82/8206.htm

https://www.forbes.com/sites/stuartanderson/2023/05/04/economists-say-increasing-immigration-will-reduce-inflation/?sh=6886bc1b1a0f