English and Key divided again over economic policy

Despite the weight of evidence Bill English continues to deny there is a problem in the housing market.

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National's leaders remain as divided as ever over economic policy with Mr Key and Mr English unable to agree on the best approach to resolving inflation problems in the housing market, Finance Minister Michael Cullen said today.

"Despite the weight of evidence Bill English continues to deny there is a problem in the housing market," said Dr Cullen.

"However, I have had two conversations with John Key in the last seven months where he supports efforts to explore how ring fencing of investment housing losses could help take the heat out of the market.

"Inflation in the housing market remains the number one concern of the Reserve Bank. Monetary policy needs to be more effective if we are to take the pressure off the export sector.

"That's why we need to look at alternative measures. That's why there is a select committee process under way - the very inquiry that Bill English wants no part of.

"According to Mr English we should have had higher interest rates sooner. This is not a solution New Zealanders would agree with.

"It is useful to remember that the preliminary work on ring fencing carried out by Treasury flowed from last year's Supplementary Stabilisation Instruments report. No decisions have been made and I await the outcome of the select committee inquiry.

"As it is most unlikely that Mr Key and Mr English will resolve their differences over economic policy, I look forward to working with other parties to forge a cross-party consensus on how best to tackle this economic challenge."