28 January 2000

Trade deficit blowout a ticking bomb

The Green Party has described today's $3.6B trade deficit as a ticking bomb and is calling on the Government to take urgent action to address the crisis.

Overseas Merchandise Trade figures released today by Statistics New Zealand show imports climbing steeply and the gap with exports growing to an annual deficit of $3.621B for the year to December 1999. This value includes $631M for the frigate Te Mana.

"The December year deficit is more than double New Zealand's previous worst deficit in 1984, even after you deduct the cost of the frigate," said Green Party Co-Leader Rod Donald.

"We are no longer an export-led economy and we are unlikely to become one until the Government faces up to the reality that so-called free trade has caused the trade deficit blowout.

"Just today Trade Negotiations Minister Jim Sutton accused opponents of trade liberalisation as having 'rocks in their heads' (National Business Review p14). I would like to ask Mr Sutton what's in his head if he thinks it's OK for New Zealand to continue on the disastrous course set by the previous National government," said Mr Donald.

"In the same way that the Labour Alliance government is rejecting new-right ideologies in health and education, we urge them to adopt a rational common-sense approach to trade.

"There is certainly potential for New Zealand to increase exports, especially if we capitalise on our clean green image by shifting primary production to organics, but we must also take action on the rampant growth in consumer good imports," he said.

"Essentially this means promoting import substitution, both to get the trade deficit from the red into the black and also to create new jobs.

"There are a range of mechanisms available to achieve this, including tariffs, import controls and lowering the exchange rate, but first the government must acknowledge New Zealand's trade crisis and face up to it," he said.

Contact Rod Donald on 04 470 6660 or 025 507 183

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