Greens dump money-printing plan

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Last updated 05:00 19/06/2013

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The Greens have dumped their call for quantitative easing - or printing money - after it became an electoral liability for the party and a future Labour-led government.

Green co-leader Russel Norman yesterday confirmed the u-turn after Monday’s release of the joint Labour-Green-NZ First-Mana report into manufacturing left the policy out of the mix.

Prime Minister John Key and other Government ministers have latched on to the plan to ‘‘print money’’ to paint the Opposition as economically radical.

Norman said it was never Green policy but was included in a discussion paper, issued last October.

‘‘Obviously it wasn’t as big a deal for us as it was John Key.’’

Other elements of the paper had been implemented by the Reserve Bank, such as using macro-prudential tools to control inflation in the housing market and intervening to lower the currency.

But on quantitative easing or QE ‘‘it’s pretty clear that there’s not a consensus’’ among the parties that would make up an alternative government.

Asked if it had caused political damage to the Opposition, he said it had been used extensively by National.

‘‘We pushed out the boat on QE ... and had advocated hard for,’’ he said.

He thought QE would be a sensible thing to do, ‘‘but the reality is the reality’’.

It was clear it would not be put in place given the views of the other opposition parties.

Labour finance spokesman David Parker welcomed the Green move.

‘‘It had become a lightning rod that let the Government avoid questions about policy that needed addressing,’’ he said.

They included changes to monetary policy to bring down the rising current account deficit. Printing money had never been Labour policy.

The Greens discussion document was aimed at driving down the value of the New Zealand dollar by requiring the Reserve Bank to essentially "print money" to invest in earthquake bonds and to buy overseas assets to rebuild EQC funds.

Norman said at the time that the measure would improve New Zealand's competitiveness, boost jobs and send a message to speculators that the Kiwi currency, underpinned by higher interest rates than in most economies, was no longer a one-way bet.

It suggested QE should be implemented in stages of $1 billion at a time but grow to as much as $7b to refinance EQC, which is in deficit after paying for damage from the Christchurch earthquakes.

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- © Fairfax NZ News

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