John Armstrong: About turn shows new pragmatism

As an attempted facesaver for yesterday's volte-face, the Greens are now promoting a private member's bill which would make the board of the Reserve Bank responsible for setting the official cash rate. Photo / Dean Purcell

The Greens' sudden about-turn on printing money is one of the strongest indicators yet of their determination to be exercising power as a party in Government after next year's election.

Russel Norman's retreat on his previous advocacy of so-called "quantitative easing" as a means of reducing pressure on the New Zealand dollar is evidence aplenty of a new pragmatism whereby the party is now willing to drop a policy if that policy is less than essential and risks handicapping centre-left efforts to defeat National.

However, the backdown may also be a sign that the Greens are getting nervous about Labour and whether that party now has a preference for a coalition deal with Winston Peters and NZ First - thereby leaving the Greens out in the cold once again. Labour has described the Greens' stance on quantitative easing as "unhelpful". The last thing the Greens want to do is give Labour excuses for striking a deal with Peters and not them.

National has relentlessly exploited voters' fears of the potential inflationary impact of quantitative easing with Finance Minister Bill English constantly cracking jokes at the Greens' expense by claiming they would fill the Beehive with colour photocopiers if they won power.

The policy is a good deal more complex than that and has been widely adopted overseas as a tool to stimulate activity in recession-hit economies such as the United States, Japan and Britain.

However, the Greens have made little discernible effort to counter National's portrayal of quantitative easing as replicating the hyper-inflation of 1920s Germany and modern-day Zimbabwe - and thus another example of Green Party "wackiness".

As an attempted facesaver for yesterday's volte-face, the Greens are now promoting a private member's bill which would make the board of the Reserve Bank responsible for setting the official cash rate - rather than the governor alone as now.

This further attempt to include the value of the dollar as a factor in setting monetary policy would see the bank's board include representatives from the export and manufacturing sectors.

This sounds dangerously like decision (or rather indecision) by committee.

Should the bill succeed in the ballot of private member's bills and win a slot on Parliament's order paper, it will be castigated by National as further proof the centre-left is soft on inflation and not concerned about people's savings losing value.

One avenue of attack may be closing for National. Another may yet open.