Next Wellington Seminar
Next Wellington Seminar
Topic: Housing Affordability and the Reserve Bank
Speaker: Michael Reddell
Date: Thursday 25 June 2015
Venue: Buddle Findlay, State Insurance Building, 1 Willis St
Time: 5.30pm for LEANZ AGM, 6pm seminar start
About the seminar:
House prices, especially in Auckland, have become increasingly unaffordable. This is largely the outcome of the collision between two sets of public policies: restrictions on land use which impede new housing supply, and high target levels of inward migration of non-citizens. One or other policy might make sense, but the combination has very adverse effects on the younger and poorer elements of the population of our largest city. It is a real phenomenon rather than a financial one, and the pressures can only be sustainably alleviated by government action in these policy areas. The Reserve Bank appears to have taken on itself some responsibility for trying to manage house price fluctuations. However, the Bank's involvement appears to be based on a misconception of what is going on, and a misapplication of insights from financial crises abroad, notably that in the United States last decade. There is little or no evidence that financial stability in New Zealand is in any way threatened. The LVR restrictions - and others the Bank appears to be contemplating - undermine the efficiency of the financial system. They may also be slightly impairing its soundness. Parliament should be asking harder questions about whether such uses of regulatory powers, especially by a single unelected official, are appropriate.
About the speaker:
Michael Reddell spent 30+ years on the staff of the Reserve Bank of New Zealand. In that time he worked in a wide range of the Bank's areas of responsibility, including as manager responsible for economic forecasting and as Head of Financial Markets. He was a long-term member of key internal committees responsible for advising the Governor on monetary policy, and on financial regulatory matters.
In the course of his career, Michael spent two years each as resident economic adviser to the central banks of Papua New Guinea and Zambia, and from 2003 to 2005 he was Alternate Executive Director on the Board of the International Monetary Fund. He also spent two years from 2008 to 2010 on secondment to the Treasury involved in issues from the design of the guarantee schemes during the crisis to assisting the 2025 Taskforce on identifying possible policy options to close the income gap with Australia.
Michael now blogs on economics and policy issues at www.croakingcassandra.com