David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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Budget needs focus on generating revenue

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Budget initiatives announced so far have focused on cutting costs; cost cutting is important but to really fix things we simply have to earn more say the New Zealand Manufacturers and Exporters Association (NZMEA). This Government has been at pains to point out that the economy needs to shift its balance towards savings and investment to support the tradable sector. Now is the time to put some policy in behind the rhetoric.

NZMEA Chief Executive John Walley says, “Given that we are forecast to have a $17 billion dollar deficit this year a bit more than tinkering is needed. The way to turn this around is to earn more through exports.”

There are several factors holding back larger investment in the tradable sector:
• The high and volatile New Zealand dollar;
• A tax system that promotes speculative investment in land and buildings over investment in the tradable sector; and
• The lack of any productive investment incentives.

“A one percent annual rise in the exchange rate costs the export sector around $200 million net; a change of 5 percent is considerably larger than any likely savings from Kiwisaver or Working for Families schemes,” says Mr Walley. “We must better balance fiscal and monetary policy to enhance investment and export earnings. Inflation controls in the domestic economy should lean heavily on prudential controls such as loan to value ratios, and not interest rates, to keep the pressure off the exchange rate.”

“A capital gains and/or land tax is needed to level the tax rate across all forms of income. Tax harbours incentivise investment in land and buildings over investment in productive activity which generate jobs, wealth and tax revenue. This must change.”

“Exporters operate in a competitive market environment. Countries with a strong export focus offer many incentives including investment in research and development and early stage investment in the tradable economy. New Zealand must match these incentives and a Research and Development Tax Credit would be a start.”

tags: budget, exchange rate, land tax, capital gains tax, research and development, government deficit


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