Time to come clean, Dr Cullen

Another surge in the value of the dollar makes it imperative that Finance Minister Michael Cullen comes clean on his secret methods for controlling the damaging rise, says National Party leader Don Brash.

The dollar is today through the US68c barrier, and market commentators now believe an increase above 70 cents is entirely possible, putting further pressure on exporters.

“On 5 November, Dr Cullen told the Finance and Expenditure Select Committee that the Government was “not without options” to address the rise, but he has since gone to ground on the issue,” Dr Brash says. “This is not good enough. Dr Cullen teases exporters with promises of relief but then does nothing while the economy continues to be damaged.

“It's high time he revealed these so-called "options", or does he now concede that there are "quite big problems" in intervening in the currency, as stated by Reserve Bank Governor Alan Bollard?

“How can Dr Cullen claim success for his changes to the Reserve Bank's Policy Targets Agreement -- given that one of his key goals when amending the agreement was to "minimise adverse impacts on the real economy, including excessive appreciation of the New Zealand dollar” -- when the dollar has risen by nearly 75% since late 2000?”

Dr Brash says direct intervention as a way of controlling exchange rates does not work. Other policy options, such as changes to the Resource Management Act and reeling in union-friendly changes to employment law should be considered to ease cost pressures on exporters.

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