Scoop has an Ethical Paywall
New ideas to manage the exchange rate welcomed
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
New Zealand Council of Trade Unions
Te Kauae Kaimahi
The New Zealand Council of Trade Unions Te Kauae Kaimahi brings together over 350,000 New Zealand union members in 40 affiliated unions. We are the united voice for working people and their families in New Zealand.
Gordon Campbell: On When Racism Comes Disguised As Anti-racism
Brendon McMahon - Local Democracy Reporter: West Coast Swim Spot Testing Clear Of E-coli
Green Party: Government Throws Coal On The Climate Crisis Fire
Labour Party: Public Transport Costs To Double As National Looks At Unaffordable Roading Project Instead
The Treasury: New Paper On A Framework For Assessing The Economic And Fiscal Impacts Of Climate Change
Government: Pet Bonds A Win/Win For Renters And Landlords
Government: New Zealand Condemns Iranian Strikes
