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The Crisis Facing NZ

The Crisis Facing NZ

By Dr Michael Kidd - Nimbin NSW Australia

The standoff between Cullen and Key disguises the sad loss of productive capacity in NZ over the last decade, which has seen an emphasis on consumption and the loss of jobs in production industries in the city and country. Because of the high direct and indirect taxes, and interest rates many firms have decided to outsource or move overseas. Although we have the lowest official unemployment rate, the real numbers of people who have left the work force is over 50% higher than in 1985. There is certain blindness about globalisation, for example the Agreement on Trade-Related Investment Measures (TRIMs) restricts our ability to increase the local content of goods manufactured here, or to make an overseas investor export rather than import. Central planning is not the answer but the lowering of costs within NZ.

A good example is that there are only two main companies (Goodman Fielder and Weston, both overseas owned) in the market for milling and biscuit wheat. They can & do close mills at their whim and source flour from Australia.

The enormous foreign debt - compared to $16 billion in 1984 - is more than our GDP, so we should be thanking the mom and dad Japanese investors for keeping our country afloat as we have lost the ability to live within our means.

Unearned consumption and wealth is the root cause of NZ structural problem - just as there is no such thing as a free lunch - eventually people who invest in NZ will want to see a return for their investments; or will reach a point where they will not continue to artificially underwrite NZ’s so called growth - even at the cost of selling short.

Several areas of reform arise out of this discussion: looking at the adherence to the principles of free trade with out asking the same of our trading partners; reviewing the obstacles on profit driven industries - of these the small employment pool created by welfare, and the high cost of compliance and indirect taxes are the most insidious.

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