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‘Rock star’ economy hitting the rocks

26 August 2014

‘Rock star’ economy hitting the rocks

National’s so-called ‘rock star’ economy is unravelling and today’s trade figures for July showing a 7.5 percent fall in exports from June is a sign of the trouble ahead, the Green Party said today.

“The 5 percent fall in dairy exports, is indicative of the problems ahead and demonstrates the folly of National’s polluting economy relying so heavily on commodities,” Green Party Co-leader Dr Russel Norman said today.

“Dairy comprised nearly 42 percent of all exports in the year to July while manufactured exports have dropped to 21.6 percent of total exports from 28.9 percent when National tool office.

“It shows how the manufacturing sector, where so many jobs come from, has been hollowed out under National.

“Bank economists are now saying that New Zealand’s so called ‘rock star’ economy could soon hit the rocks and the lack of any coherent strategy by the Government risks a ‘hard landing’ once temporary factors such as the Christchurch rebuild and high dairy prices wear off and New Zealand families will feel the hangover.

“Treasury in its Pre-election Economic and Fiscal Update last week stated the main two factors of economic growth were residential house building in Christchurch and Auckland together with high immigration fuelling consumption – hardly a solid basis for sustainable prosperity.

“According to Westpac chief economist Dominick Stephens, New Zealand's recent growth has been fuelled by the Canterbury earthquake rebuild, low interest rates and a surge in net migration.

“He warns high immigration could abruptly end and when the Canterbury rebuild is complete, people will be surprised by the size of the economic downturn.

“There has been a blind faith in National’s economic management and the reality proves that’s misguided.

“National’s plan is based on increasing the volume of dairy production. Not only will this further pressure an already highly stressed environment, but its plain bad economics.

“Dairy prices have plunged over 40 percent since February due to increased supply – adding more volume will only reduce prices more.

“National is offering nothing to mitigate the dangers the bank economists warn of. National’s solution is commoditisation and more volume, which means more pollution, not diversifying and not adding value.

“Even in Christchurch National has no plan for the future. Their focus is one-off projects like the stadium and the convention centre, rather than building a comprehensive, integrated public transport network that has benefits for all that lasts for generations.

“The Green Party has a clear plan and policies to implement it. We need to build an economy based on innovation and adding value to products made here together with reducing reliance of fossil fuels – a greener, smarter economy that benefits all.

“We will invest an extra $1 billion in Research and Development in the next term, doubling the Government R&D contribution,” Dr Norman said.


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