Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


High exchange rate stopping economic rebalancing

23 April 2012

High exchange rate stopping economic rebalancing

The high kiwi dollar is preventing the long overdue rebalancing of our economy onto a more productive and less debt-ridden footing, the Green Party said today.

Reserve Bank Board Minutes obtained under the Official Information Act show that as far back as June 2009, Reserve Bank Governor, Dr Alan Bollard was uncomfortable with the stronger currency telling the Board that “it would not deliver rebalancing”. On that day, the kiwi dollar was worth US$0.63 while the Trade Weighted Index (TWI) was at 60. Since then, the kiwi dollar has appreciated 28 percent against the US dollar to US$0.81 while the TWI is up 21 percent to 72.6.

“These previously unseen Board Minutes show that the Reserve Bank Governor told the Board that his number one message way back in 2009 was the damage the high kiwi dollar was inflicting on the economy,” Green Party Co-leader Dr Norman said.

“Three years later, and the kiwi dollar has risen even further and still no action has been taken.

“The New Zealand economy has been unbalanced for years. It has had large current account deficits and, in order to pay for those deficits, it has built up high levels of external debt and overseas ownership of the economy.

“The only way out of this downward spiral is to rebalance the economy towards the tradeable sector so that it can perform much better, but that needs a lower exchange rate.

“If we want our export and import-competing sectors to thrive and pay our way in the world, we are going to need to address our high and highly volatile exchange rate.”

As the Green Party revealed last week, the Business Operations Survey provided strong evidence that the high and volatile exchange rate is hurting our export industry with close to half of all New Zealand export companies saying it is the most important factor constraining their exports.

“The National Government has been asleep at the wheel ignoring the key structural vulnerabilities our economy is facing,” said Dr Norman.

“We need to have a national discussion on measures that can stabilise our exchange rate at levels our export industry can thrive in. Overseas Governments have been taking this issue very seriously.

“There are small practical steps we can take immediately that will help.

“We can reduce the pressure on the exchange rate and the tradeable sector by empowering the Reserve Bank with a mandate beyond inflation control to include managing exchange rate levels and volatility.

“Instituting a tax on capital gains (excluding the family home) would also ease upward pressure on the exchange rate.

“The Government can set in place the drivers and incentives for our companies to export, innovate, and thrive.”

The Green Party's alternative plan for our economy:

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Virtues (and Fluffed Opportunities) Of The Operation Burnham Report

One unspoken rule of thumb in any official public inquiry is : whatever you do, don’t conclude you were made to listen to “a litany of lies” even if the evidence of a deliberate cover-up is right there under your nose. In that respect, the report into the 2010 Operation Burnham military raid in Afghanistan has been a model of decorum. Bad stuff did happen and has been duly noted and lamented - but only as a lapse and departure from usual professional standards. Normal service can be trusted to resume shortly... More>>


Office Of The Speaker: Parliament Is Revamping Its Rules

Today, the Standing Orders Committee’s report on the review of Standing Orders was presented to the House. The Speaker of the House, the Rt Hon Trevor Mallard, chairs the committee. He said today that the 2020 review will make our rules more ... More>>

Environment: Govt Progress On Climate Change Essential, Risk Assessment Shows

The release of the National Climate Change Risk Assessment shows that the progress this Government has made to solve the climate crisis is essential to creating cleaner and safer communities across New Zealand. “Because of this report, we can see clearer ... More>>

Economy: Investing In The Tourism Sector’s Recovery

More than $300 million in funding has been approved to protect strategic tourism businesses, drive domestic tourism through regional events and lift digital capability in the tourism industry, Tourism Minister Kelvin Davis announced today. A $400 million ... More>>


National On MP Bill: Waka-Jumping Repeal Bill Passes First Reading

The Electoral (Integrity Repeal) Amendment Bill has passed its first reading, marking one step closer to Parliament getting rid of NZ First’s ‘waka-jumping’ legislation, National List MP David Carter says. “I’d like to thank the Greens for voting ... More>>


Covid-19:Legislation For Managed Isolation Payments Introduced

Hon Dr Megan Woods Minister of Housing Legislation to allow the Government to recover some of the costs for managed isolation and quarantine will be introduced to Parliament today, said Minister of Housing Megan Woods. “The Bill will allow the government ... More>>


Your Vote 2020: Bringing Election Coverage To Viewers Across TVNZ Channels And Platforms

As New Zealand gets ready to head to the ballot box this September, 1 NEWS is bringing voters comprehensive coverage and analysis of this year’s General Election. TVNZ’s coverage will draw on the depth of experience held across the 1 NEWS team, says Graeme ... More>>

Economy: 30% Believe Households Worse Off, 298,000 Expect To Lose Jobs

64% of New Zealanders feel the economic position of their households is the same or better than a year ago – and 30% think it is worse or much worse, while 298,000 think they will lose their jobs in the next 12 months. Households’ perceptions ... More>>

State Services Commission: Findings Of Investigation Into COVID-19 Active Cases Privacy Breach

Deputy State Services Commissioner Helene Quilter has today announced the findings of an investigation into a breach of privacy regarding sensitive personal information. The investigation looked into who or what caused the disclosure of the information, ... More>>

International Security: New Zealand Suspends Extradition Treaty With Hong Kong

The New Zealand Government has suspended its extradition treaty with Hong Kong and made a number of other changes in light of China’s decision to pass a national security law for Hong Kong, Foreign Affairs Minister Winston Peters says. More>>


Energy: 100% Renewable Electricity Grid Explored With Pumped Storage ‘battery’

The Government is taking a significant step toward its goal for 100% renewable electricity generation in a move that could be a game changer for consumers and the creation of a low-emissions economy, Energy & Resources Minister Megan Woods said. ... More>>






InfoPages News Channels