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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Productive Investment Incentives – no says Chamber of Commerce

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Below is a link to an article from The Press that highlights the difference between a business group that accepts any membership and one that represents a particular sector.

To quote a response to a call from Coca Cola for accelerated depreciation:

“an incentive like accelerated depreciation was something that could be looked at to encourage investment in manufacturing, but it was more important for there to be an environment that encouraged business in New Zealand generally, rather than artificial incentives." cola article 19 1 12.pdf

This is the key difference; broad membership organisations are held hostage by their diverse membership. They must try to keep everyone, or at least the majority, happy. So policy positions are represented in broad terms.

Here accelerated depreciation, available in most countries that compete with New Zealand, is subordinated to a general call for settings that help all businesses. Sadly there are no such settings; the traded (or real economy) competes with the world, but the domestic (or non-traded) economy only competes locally. So the New Zealand lawyer, for now, competes only with lawyers in New Zealand; but the manufacturing company competes with manufacturers, and their helpful policy frameworks, anywhere in the world.

One set of policies do not, will not and cannot suit all segments of the economy. This clearly manifests in the exchange rate - the domestic economy wants ever higher exchange rates that lower the cost of imports and offshore travel, whereas the real economy wants lower exchange rates that support international trading competitiveness. The former represent the majority in the economy, so naturally policy is biased to favour domestic activity, not real economy competitiveness. Unfortunately our national current account trade deficit has to be balanced by either selling local assets and / or borrowing from offshore. Unless the trade deficit is corrected this process of sell and borrow ends in a Grecian scenario, with not much left to sell and no one lending at any price.

The New Zealand Manufacturers and Exporters Association advocates policy settings and instruments that support the real economy: such as accelerated depreciation for productive plant as outlined in the Press article (here is an article from the NZMEA on tax - have a look at the 'References from Other Jurisdictions' section, and a submission from some years ago). We go further in other policy areas that deal with competitiveness issues related to lower and broader tax base and monetary policy that target our exchange rate’s value and volatility.

tags: depreciation, business associations


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