Today we have the extraordinary spectacle of the Reserve Bank of New Zealand blaming immigrants for this country's housing price bubble and calling on the government to review immigration policy. This comes after the Prime Minister criticised the Reserve Bank for not acting to restrict the access of property investors to bank loans.
I am not sure which of these two calls is the more ridiculous but both are equally dishonest. The inflation in the property market in is due in large part to the massive expansion in the money supply, which the Reserve Bank manages, fueling demand in the property market, but it is also due to supply-side restrictions driven by an onerous regulatory environment. The latter is mostly due to the byzantine Resource Management Act, which allows territorial authorities to tightly restrict the supply of new land and which imposes huge compliance costs on builders and developers, but also to the increasing burden of a myriad of other laws such as new Health and Safety at Work Act.
It seems that John Key and his officials will do anything but admit the true causes of the housing bubble. Whether you look at demand-side or supply-side issues they are all of the government's making and the fact that two arms of government are blaming each other for the problem makes it clear where the blame lies - and it isn't with immigrants. Instead of looking to scapegoats, the government should be looking at themselves and their policies.