Comments

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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24/6/10

Monetary Policy reform needed to rebalance our economy


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It is good to see Phil Goff and David Parker start to flesh out the intent to reform monetary policy signalled late last year, says the New Zealand Manufacturers and Exporters Association (NZMEA).  Early this year we saw the International Monetary Fund conclude that small open economies; big on the rhetoric of single lever (interest rates) single target (near term inflation), had done far better than those that implemented such single minded policy for real.

The one lever/one target approach has exacerbated distortions in the New Zealand economy. Investment has flowed to inflate one of the biggest asset bubbles on the planet, and production and productive efforts have been disregarded as we celebrated the fast buck economy with a consumption party.

Labour has picked up on the fact that other export exposed countries, which placed exchange rate stability as the central focus of their monetary policy, have achieved significantly higher long run economic growth.  It is well past time New Zealand followed their lead.

NZMEA Chief Executive John Walley says, “David Parker’s speech has shown that things can change, and that on reflection the policy settings we are clinging on to are not world’s best practice after all.  We saw from Bill English in the 2010 Budget lots of rhetoric around economic rebalancing but little else.  Labour stating at this point what they will do, what they will not do and that they have not decided is a real step forward.”

“Too many elections in New Zealand have been characterised by the major parties seeking to stand on the same spot. Monetary policy might not be as sexy as headline tax cuts but is fundamental to any real economic rebalancing.  Wealth transfers from the trade exposed sector have to stop before it is too late, many farmers and manufacturers are close to the end of the road.”

“If the cycle of falling investment leading to a loss of productivity continues expect fewer jobs and falling comparative living standards. For New Zealand to do better in the medium term the trade exposed sector must get a better deal – the key part of that deal is a trade biased exchange rate we have earned, not an exchange rate floating on the froth of speculation.”
 



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