National leader Christopher Luxon is pushing for inflation-adjusted tax thresholds following the Reserve Bank's latest update and newly released unemployment figures.
Luxon spoke to journalists during a visit to a computer recycling business in the Auckland suburb of Penrose on Wednesday afternoon in response to a warning from the Reserve Bank today that a significant jump in unemployment would present the biggest risk to the country's financial stability.
In its half-yearly financial stability report, the central bank said while the financial system as a whole remained sound, some households and businesses would come under pressure from rising interest rates.
"It's a mixed story," Luxon said of the economic data today.
"Having said that, what we're seeing is clearly wages are not keeping pace with the price of inflation. What that means is real wages are negative, your money is going backward.
"We're seeing an economy now that is causing huge amount of pain.
"This government doesn't have an economic plan to manage and control inflation," he said, adding that rising rates would cause huge pain going forward.
"We need to control costs that get passed on to businesses that lead to higher prices."
The government was spending too much and hiring too many bureaucrats, Luxon said.
Inflation-adjusted tax thresholds were not ideological and happened in every other developed country in the world, and would ease a lot of pain, rather than what he calls "rinky-dink cost of living payments", he said.
Luxon said National's plan would take the current progressive tax system and just adjust the thresholds for inflation.
"It's an idea that we have been proposing to the government saying let's do this.
Give people some relief by just adjusting the tax threshold, rather than keeping it, let New Zealanders keep it in their own pockets."
Christopher Luxon Photo: RNZ / Nick Monro
It was "starting to talk about the pressure that's going to come," he said of today's economic data.
"It's worrying, really worrying."
Regarding the rises in interest rates, Luxon said he worried about the impact it may have, including mortgagee sales when people could no afford to refix their mortgages.
"There are some tough conversations happening around dinner tables around New Zealand tonight."
"The government likes to blame overseas factors for this, but half of it is domestic, and it can control it."
Meanwhile, unemployment is holding close to record lows as slack in the market reduces, while wages have risen strongly.
Stats NZ said unemployment for the three months ended September was unchanged at 3.3 percent, slightly above expectations.
Luxon said he did not want to see a rising unemployment rate, as the Reserve Bank feared today would hurt the country's financial stability.