Greens urge Dr Cullen to act on dollar

Green Party Co-leader Rod Donald is urging Finance Minister Michael Cullen to reveal the options he says he has to reduce the high value of the New Zealand dollar.

Mr Donald made the call after the announcement of the worst October trade figures on record. The deficit for the month was $701 million and the annual deficit was $3.2 billion, with exports down 15.5 per cent on the previous year.

"Clearly the high value of the New Zealand dollar is decimating our export returns," said Mr Donald. "The rural sector is already feeling the pinch and the consequences will soon start to bite in the cities, as farmers and other exporters cut their spending.

"If the markets were working properly, the dollar should have corrected by now but Dr Cullen's attempts to highlight New Zealand's unsustainable current account deficit have obviously failed to move them.

"It's time for Dr Cullen to tackle the underlying causes of the high dollar.

"He could start by taking a serious look at a capital gains tax. This would help stop the housing market from blowing out further if the Reserve Bank cut interest rates in order to reduce the value of the dollar. And it might make housing a bit more affordable in the long-run.

"Secondly, Dr Cullen should re-orient the economy towards greater self-reliance. The Government's export-led growth strategy needs to be matched by steps to reduce imports in favour of New Zealand-made goods - otherwise we will end up mortgaging our whole country to pay for imports."

Mr Donald warned that it would be a further nail in the export sector's coffin if the Reserve Bank was to increase interest rates next week.

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