New Zealand could benefit from Currency Union
8 December 2006
New Zealand could benefit from Currency Union - Copeland
United Future MP Gordon Copeland, the party's Finance spokesperson, today characterised the government's dismissal of the Australian Parliament's openness to a currency union as somewhat superficial.
"There is a serious issue here and it deserves proper analysis," said Mr Copeland.
"I am, of course, particularly focussed on the benefits that such a union could yield to New Zealand. I believe there are several."
"Being part of an Australasian block would, in my view, be positive for monetary policy on this side of the Tasman. Presently the official interest rate in Australia is 6.25% and in New Zealand it is 7.25%; a margin of 1%."
"Under the common currency proposal, monetary policy would be established for Australasia as a whole and the current "risk premium" detaching to the Kiwi dollar would disappear."
"In addition, the disappearance of the Kiwi dollar as a separately traded international currency would immediately bring to an end speculative activity and the other profit taking opportunities which are presently attracted to our very small nation's currency and our very high interest rate. Our head is always above the parapet and that is not a good place to be!"
"Of equal importance is the reality that a currency union would effectively expand the domestic customer base for New Zealand businesses from 4 million to more than 24 million people. This would enable New Zealand businesses to have an enlarged, stable and less fragile domestic market and provide a better springboard from which to tackle exporting to the rest of the world."
"I find it interesting that Australian business leaders understand that 4 million additional domestic customers could boost growth and productivity whilst, on this side of the Tasman, the government tends to be dismissive of the great benefits that would flow from a five-fold increase in such customers for New Zealand businesses."
"We need to have a debate about this issue and not dismiss it."
Mr Copeland made it clear that United Future continues to support a two separate currency model within one single currency union. This would mean the retention of distinctive Australian and New Zealand bank notes; a model which is followed elsewhere in the world.