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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Capital Gains Tax + Strategy = Jobs - Productive Economy Council

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Selwyn Pellett of the Productive Economy Council details the advantages a Capital Gains tax would bring in a press release today:

There are three fundamentally important reasons the country needs a Capital Gain Tax:

  1.  The government’s high borrowing, on top of an already high net foreign debt is causing our country to be uncompetitive in exports outside of the primary sector. While diary and other primary exports are a critical part of our future, they do not create many new jobs. As such they are capable of neither sustaining an increasing population base nor providing the high standard of living those leaving New Zealand clearly desire.
  2. A broader lower tax base is desirable for both compliance and efficiency. Much of what was said in the Tax Working Group’s paper was about the unfairness of the current tax system and its effects on compliance. A Capital Gains Tax alongside other tax changes already implemented largely addresses those concerns.
  3. A Capital Gains Tax sends the right signals for investors and means those choosing to take the path of unproductive property investment will have to pay their fair share of tax. While fairness in tax is good the real long term benefit is the chance to get more of our limited capital invested in making New Zealand more, not less, competitive.

Many will not understand how these points affect their lives but they all effect our ability to compete with the world and the strong evidence is we are failing in that regard. Exports have been declining since 2004 which correlates with the rapid asset inflation of property and the emergence of sustained, high interest rates and a high dollar. Today our exchange rate swings around the fortunes of our diary industry and while that to some extent buffers our economy, it simultaneously kills our differentiated manufacturers and exporters - preventing the very thing we need most, an expansion of our export base.

Many things have to happen to address this downward spiral but getting investment into the productive side of the economy is first and foremost, followed by the need to stop borrowing as a Nation and to cease funding asset inflation. Capital Gains Tax combined with investment in Research and Development, and an expansion of the Reserve Bank Act’s objectives to include not just inflation targeting but also jobs and exports are the beginnings of a productive economy strategy we will fully endorse.

tags: selwyn pellett, productive economy council, capital gains tax, tax working group


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