Monetary policy distorts economy
November 7, 2007
Monetary policy distorts economy, sabotages manufacturing - EPMU
The Engineering, Printing and Manufacturing Union has told the Select Committee inquiry into monetary policy that relying purely on the OCR to manage inflation is distorting the economy and sabotaging our manufacturing base.
The inquiry follows a series of manufacturing closures earlier this year in which the high dollar was a major factor, including Fisher and Paykel’s August announcement that it was shifting its Auckland appliance manufacturing offshore.
EPMU national secretary Andrew Little says Parliament needs to consider using a wider range of tools to combat inflation.
“We’ve said time and again that relying purely on interest rates to control inflation is a blunt and dangerous way to run the economy and we’ve seen the damage it’s done this year as continual rate hikes designed to control the housing boom have pushed our dollar higher and higher and eventually priced many our exporting manufacturers out of the country.
“There are a quarter of a million manufacturing jobs in New Zealand but the livelihoods of so many working New Zealanders and their families are being put at risk by a narrow focus on inflation and a total reliance on the official cash rate to control it.
“We believe that ensuring a sustainable manufacturing sector is critical to New Zealand’s economic future and that to put that at risk to address short term inflationary issues is highly irresponsible. Hopefully we’ll see some smarter and more targeted economic management coming off the back of this inquiry.”
The EPMU is New Zealand’s largest private sector union and represents thousands of manufacturing workers including those at Fisher and Paykel.