Finance Minister Michael Cullen yesterday launched a scathing attack on his de facto National Party rival, Don Brash, accusing the former Reserve Bank Governor of "monetary policy incompetence".
Dr Cullen, who wants a more flexible monetary policy, went as far as to claim that Dr Brash's management of the policy duringthe 1990s caused "the crucifixion of the tradeable sector".
His outburst came as he issued Labour's economic policy, in which he gave a "cast-iron" guarantee that the party would not increase GST, income tax or company tax in the next three years. But he refused to provide the same pledge on petrol tax or to rule out a rise in the duty on alcohol or tobacco.
Dr Cullen said there was no reason to think they would rise beyond the normal inflation-linked adjustment.
His broadside at Dr Brash - who is expected to take over the finance spokesman's role for National after the July 27 election - followed a pointed attack late last month when Dr Brash likened Dr Cullen to Sir Robert Muldoon.
"We haven't had that kind of political interference for a number of years, since Rob Muldoon was Minister of Finance," Dr Brash said then.
"When the minister was telling the bank how to run monetary policy it was a disaster."
Yesterday, Dr Brash, who accepts that the bank was slow off the mark in the early 1990s, said Dr Cullen was trying to have his cake and eat it.
"He can't both accuse me of being too slow to tighten in 1993 - with the consequence that later policy had to be very tight to keep policy in target - and accuse the bank of tightening too quickly this time."
Dr Cullen said about 40 people had applied for the governor's job, expected to be filled next month.
He confirmed his intention to renegotiate the policy targets agreement with the new governor to ensure that monetary policy is flexible enough to maintain price stability while supporting growth.
But he said the 0-3 per cent inflation range target would not change.
Economists believe Labour wants a new governor to use the full width of the band, instead of aiming for the 1.5 per cent midpoint.
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