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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Business as usual not good for everyone

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As long signalled, Bill English presented a business as usual budget with no real surprises. There are a few positive notes, but it does not tackle the major issues facing the tradable sector in New Zealand, say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive John Walley says, “This year’s budget comes with much of the sentiment we want to hear: rebalancing the economy, export growth, getting back to a structural trade surplus, boosting housing supply, but it contains no real follow through, no plan of action to tackle those elements of our economy where business as usual is a problem. Business as usual has growth forecasts falling below our trading partners, and a growing current account deficit. All the talk of rebalancing does not run through to the numbers.”

“The key absence from the Budget is a way to directly tackle our overvalued currency, which continues to be the major obstacle to exporter growth.”

“The Government has forecast that both goods and services export volumes will grow more strongly, largely driven by assumed depreciation in the NZ$ in the later part of the forecast period. However no policy has been set out to address this issue. “

“The positives we take from the budget were the reduction of ACC levies, some increases in R&D grants, the ability to claw back R&D funding if a firm moves its R&D offshore, some tax breaks for high R&D start up firms and the Reserve Bank of New Zealand (RBNZ) explicitly given the power to expand the use macro-prudential tools.”

“Although we are happy to see more focus on R&D in New Zealand, we believe R&D tax credits are a broader, more effective tool for incentivising R&D, which will lead to improved productivity and innovation. We have been promoting the ability to claw back R&D grants for some time so we are happy to see this, it provides an incentive for successful business to stay in New Zealand – we look forward to seeing the specific details on this.”

“The introduction of explicit and agreed macro-prudential tools is a step forward – but to be effective these need to be actively used by the RBNZ to push back hard on asset bubbles and take the pressure off the exchange rate.”

“The all-consuming focus on the Government surplus misses a much more important issue; our national debt. As a result our current account deficit is forecast to increase; already our net external position is one of the worst in the developed world (Net International Investment Position: 71.7% of GDP in 2012 forecast to reach 80.9% of GDP in 2017)."

“We have policies that encourage households to take on more debt and investment incentives remain biased towards asset speculation on land and buildings rather than productive investment. These imbalances need a policy solution.”

“We see the current account deficit continue to rise; forecast to reach 6.5% in 2017. The Treasury outlined the three main reasons for the worsening current account deficit in their economic outlook report: imports of activities such as banking and insurance increasing, exports being weak and imports rising, and private sector continues to borrow heavily overseas. All up not a great picture.”

“An increase in the current account speaks to a decline in our national economic performance. We are an export dependent nation and our future depends on export success; our policy choices need to start to reflect this.”

“We have to earn more. We need to focus more on the real and concrete, as opposed to rhetorical. We need ways to encourage export growth, much more than business as usual.”

tags: exports, budget, manufacturing, r&d


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