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Slash and burn not the answer to economic woes

For immediate release

Friday 27 June 2008

Slash and burn not the answer to current economic woes

The bank workers union Finsec is calling on big business to resist a traditional slash and burn response to the 0.3% decrease in GDP announced today and instead is calling for an increase in their expenditure and investment in New Zealand.

"Now is not the time to cut costs. That will add to the problem. We need to start seeing money flowing directly into the economy and workers' pockets," said Andrew Campbell, Finsec's Campaigns Director.

"The major banks produced combined net profits of over a billion dollars for the first six months of the financial year. Rather than sending that profit back to Australia they can be investing it in better wages and employing more staff locally. This is an easy contribution banks can make to helping turn around the decline in growth," said Campbell.

"It is not only the responsibility of Government to fix the problem. Profitable companies, like the banks, should contribute too. Some simple steps banks can take to provide an economic stimulus include providing employment in New Zealand, not sending jobs to Bangalore, getting money to workers via good wage rises, and reducing interest rates," said Campbell.

"History is clear; investment is needed to get out of tough times and companies that slash and burn often pay the price in the longer term. We call on businesses that can afford it to start spending and get the economic wheels turning - a strategy that has worked in the past," he said.

Campbell says that workers need help coping with significant price rises and that with the economy already slowing, reducing expenditure by big business would simply create a "double whammy" impact on the economy.

"We need good, well paid jobs that stay in New Zealand and for workers to get fair pay increases so that they can survive in the tough times and so that we can all do our bit to improve the economy," said Campbell


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