Media release April 27th, 2000

Government reaction to monetary study a slap in the face for business

Government's rejection of the Institute of Policy Studies report on forging stronger links to the Australian currency is a slap in the face for business who gave it their overwhelming support, says the Employers and Manufacturers Association (northern).

"All business wants from Government on the development of our monetary system at this point is for it to keep an open mind on the subject," said the EMA's chief executive, Alasdair Thompson.

"The Government does not seem prepared to do this. Dr Cullen rejected the general idea out of hand this morning.

"He seems to have already made up his mind our monetary system is as good as it can get.

"The Government seems to think it knows what is best for New Zealand business on this and other critical issues affecting our economic and trading future.

"Australia is our largest market by far ($5173 million in exports for year ended January 2000), and more of our manufactured exports (over $3500 million a year, about 40 per cent of all manufactured exports) go there than anywhere else.

"In other words the Australian market supports the employment of far more New Zealanders than any other export destination.

Furthermore, Dr Cullen knows our future cannot be supported by the export of undifferentiated commodity products to Europe and elsewhere. But that is what Government's closed mind on exploring monetary options points to.

"Talk about New Zealand's sovereignty in this context is a red herring and so is Australia's lack of interest at this stage. Besides, in any practical sense Governments have long since given up their sovereignty over monetary policy.

"What is at issue is economic growth, and Government's actions so far have shown no sign it knows how to get that underway."

Further comment: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme) 025 982 024 (mob)

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