Finance Minister Grant Robertson wants the Reserve Bank (RBNZ) to become more involved in checking the skyrocketing price of housing in New Zealand.
Robertson has written to RBNZ governor Adrian Orr suggesting a change to the rules under which it operates, to take heed of the impact of any monetary policy on house prices.
"One proposal I am seeking advice from the Reserve Bank is on whether to include stability in house prices as a factor for consideration in the remit when formulating monetary policy," he wrote.
The RBNZ is already required to look to avoid unnecessary instability in interest rates and the exchange. Robertson's suggestion would add the words "house prices".
However, he said he was not looking to direct or instruct the RBNZ, nor change its primary mandates of managing inflation and maximising employment.
Reserve Bank governor Adrian Orr Photo: RNZ / Dom Thomas
"I want to be clear I am not proposing any changes to the mandate or the independence of the Reserve Bank."
Robertson said the alternative monetary policies the RBNZ had implemented to counter the economic impact of Covid-19 such the bond buying programme, low interest rates and backing bank loans had affected the housing market.
"I believe it is right that we consider how these tools might be impacting the housing market, with particular regard to housing price inflation."
Meanwhile, the government's finances are in better shape than expected but remain deeply in the red.
Final audited accounts for the year ended June show a deficit of $23.1 billion, slightly less than figures given just before the election.
The strength of the rebound from the Covid-19 restrictions underpinned the tax take by nearly $3bn more than expected, while expenses were $5bn below the Budget forecast.
The net debt level was also lower than expected at 27 percent of the value of the economy.
Robertson said the quick response to the pandemic had prevented an economic collapse.