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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Welcome action on monetary policy

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The New Zealand Manufacturers and Exporters Association (NZMEA) is supporting calls from the Labour party for changes to monetary policy. Labour leader Phil Goff called for such a move in a speech to Federated Farmers this morning.

Goff declared that, “today I am announcing the end of the consensus around the policy targets and tools of the Reserve Bank.”

“Labour wants to see a step change in our export performance.”

“We want policy that will keep our exchange rate as stable and competitive as possible.”

NZMEA Chief Executive John Walley says, “We had a monetary policy review in 2007 where the whole issue was basically ignored; clearly the economic problems since then have brought this issue back into the spotlight. A properly run review is long overdue but very welcome for New Zealand’s exporters. As for changes we need look no further than Singapore; their monetary policy has delivered a stable exchange rate, lower inflation, lower interest rates and higher growth than New Zealand for decades.”

“As Phil Goff mentioned in his speech our current monetary policy settings mean that the tradeable sector is punished via a high exchange rate when non-tradeable inflation rises. This policy sends all the wrong signals to the economy and is largely responsible for our continual external deficits.”

“We need to find additional tools to fight inflation in the non-traded sector directly rather than transferring all costs to our exporters; that wealth transfer has to stop before the export sector collapses,” says Mr. Walley.

“The Reserve Bank has introduced a new bank funding policy and Treasury has suggested better fiscal management to assist monetary policy objectives. The Reserve Bank Act needs to be informed by the Singaporean experience and target exchange rate stability to complete this suite of measures.”

“The Government should support this initiative and do more than just bemoan the detrimental effects of an overvalued currency. It is time to stop talking and start changing fiscal and monetary policy to put an end to the wealth transfers from the tradeable to the non-tradeable sector.”

tags: monetary policy, inflation, exchange rate, reserve bank act


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