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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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12/11/09

Policy framework needs attention


Print-friendly 0 comment(s) Posted in: In the media

The New Zealand Manufacturers and Exporters Association (NZMEA) is backing calls from the Parliamentary Banking Inquiry for a Monetary Policy inquiry. Their report released today recognised that the Official Cash Rate (OCR) is ineffective at managing interest rates, ineffective at controlling credit expansion and causes an overly volatile exchange rate.

The report recommended that “further work be undertaken to explore an enhanced monetary policy framework which considers ways of achieving effective control of credit expansion and explores options for achieving a more stable and competitive exchange rate.”

NZMEA Chief Executive John Walley says, “A broad policy review with a focus on how the external stability problem facing New Zealand can be dealt with is long overdue. New Zealand must increase its trade with the world, so exports must grow more quickly and more must be invested in our export capability. The current policy framework simply has not delivered on this agenda.”

“We need a policy framework that underpins and supports export growth. The system we have fails to manage domestic inflation and causes widespread damage to the tradeable sector. A review needs to encompass ways of managing credit volume (as Alan Bollard noted today, “the rise in the New Zealand dollar over recent months could hinder continued improvement in the external balance”), countercyclical lending measures and the influence of fiscal policy (particularly the tax balance).”

“The last Monetary Policy review conducted in 2007 failed to give any useful analysis of the alternative options. Now that the economic crisis has made the imbalances in our economy painfully clear a more serious attempt at addressing these issues is warranted,” says Mr. Walley.

“The Parliamentary Banking Inquiry has accurately identified the issues. These are the OCR’s lack of effect on non-tradeable inflation, its perverse effect on the exchange rate and the tax imbalance that skews investment away from the productive areas of the economy.”

“These structural issues with the economy must be dealt with. Tinkering around the edges will not work.”



tags: banking inquiry, monetary policy, credit expansion, exchange rate

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