In practice, we found it increasingly difficult to determine which items to include or exclude, and were exposed to (although never received much) criticism that we could manipulate the calculation in order to meet our objective. In 1996, the target was widened to 0-3 percent, reflecting the new National/New Zealand First Coalition Government’s preferences (RBNZ, 2000b).
In such circumstances people typically worry about two consequences. The first is a long period of very weak construction activity, usually because an excess of stock resulting from previous over-construction needs to be worked off. But we have already had a fairly protracted period of weak residential construction; it’s hard to believe it will get much weaker, actually, at a national level.