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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A bit more pessimism would be good for us - Brian Gaynor

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Brian Gaynor details New Zealand's growing debt problem in an article for the Herald.   He argues that overly optimistic forecasts from the Treasury are contributing to the debt blowout:

"The latest $18.4 billion deficit represents 9.2 per cent of gross national product - one of the worst amongst the 30 OECD member countries.

Only Greece, Ireland, United Kingdom and United States have Budget deficit/ GDP ratios in excess of 9.2 per cent last year or this year.

Deficits have to be financed through additional borrowing, and the Crown's gross debt went from $53.6 billion to $72.4 billion in the year to June.

This equals additional Government borrowing of $362 million a week for the year.

The escalating deficit is caused by several factors, including static tax revenue, continued increases in Government spending and the Christchurch earthquakes.

The individual tax take has declined from $27.5 billion in the June 2008 year to $23.1 billion in the latest year.

This is mainly because of the Government's tax cuts last year.

Corporate tax is down from $10.1 billion to $7.3 billion, but GST revenue has risen from $11.1 billion to $13 billion over the same period.

This is where the Treasury and its forecasts come in.

When the Treasury first started looking at the June 2011 year - in December 2006 - it forecast total tax revenue for the period of $67.6 billion, compared with the actual outcome of $51.6 billion, and an overall Budget surplus of $6 billion.

It is difficult to forecast five years forward, particularly when there is a global financial crisis in between, but the problem with the Treasury is that its forecasts are usually far too optimistic.

Soon after the Key Government came to power in November 2008, the Treasury was still forecasting a deficit of only $3.1 million for 2011.

This deficit forecast was raised to $8.6 billion in the 2010 Budget, when income and corporate tax cuts - and an increase in GST from 12.5 per cent to 15 per cent - were introduced."

tags: treasury forecasts, budget deficit


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