New ideas to manage the exchange rate welcomed
 
The CTU strongly supports taking initiatives to bring down the exchange rate, says CTU economist Bill Rosenberg reacting to the proposal from the Green Party this morning.  
 
“Alongside broadening Reserve Bank objectives to include the level of the exchange rate, we need to have a range of tools available to suit the circumstances, combined with policies aimed at the underlying trends that lead to overvaluation of the New Zealand dollar. We have seen too many exporters and firms competing with imports laying off staff and moving production elsewhere in recent weeks. Another – up to 40 jobs at risk in the Christchurch Engine Centre – was announced just on Friday citing the high dollar as a cause,” he says.
 
These tools could include macro-prudential policies that more actively control bank short term funding from overseas, or a financial transactions tax on incoming funds. Underlying policies that would support a lower dollar by discouraging property speculation include a capital gains tax or other assets tax excluding the primary home, and limits on loan to value ratios for mortgages. However loan limits need to be accompanied by much stronger housing policies to ensure first home seekers are able to find affordable good quality homes.
 
“The government should also be actively working internationally to build support for such policies, which would strengthen their effectiveness. Unfortunately US proposals in the Trans Pacific Partnership Agreement negotiations on financial rules could make exchange rate management much more difficult.”
 
“The Greens proposal for using ‘Quantitative Easing’ to fund the Christchurch rebuild, refinance EQC and help take pressure off the exchange rate is a very interesting one and deserves serious analysis and consideration. Clearly there are risks and benefits in all such policies, but the downside of current policies are all too apparent and Quantitative Easing should be among the options considered. At a time of low inflationary pressures because of stagnating household incomes and higher debt repayment, the risks are much less,” Rosenberg concluded.
 
ENDS

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Gordon Campbell: On Failures Of Care For Those With Mental Disabilities

Hard to imagine a more disturbing insight into the treatment of the vulnerable than the Health Ministry report on Te Roopu Taurima o Manukau. The Ministry has found that the country’s only kaupapa Maori intellectual disability residential care provider has been “seriously dysfunctional.”

The ministry says the business has failed to recruit and retain quality staff – and says the kaimahi (caregivers) that have been employed are seriously unsuitable for the job, lacking basic knowledge. But Te Roopu Taurima o Manukau doesn’t get all the blame. The report says there’s a significant gap under disability laws to ensure there’s oversight by qualified clinical professionals. More>>