Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

OCR cut action called for

Now that the shock horror merchants and doom and gloom predictors have had their say on the Reserve Bank's cut in the OCR to 1%, it's time for action.

The Bank itself could start the process by offering to fund government infrastructure projects and investments that would boost the productivity of New Zealand businesses.

After all, if it was good enough for it to provide money to the country's overseas owned private banks during the global financial crisis to ensure they could continue to deliver massive profits to their shareholders, then surely it's good enough for it to generate funding for the government to invest in the productive base of our economy.

The government signalled an $8 billion dollar increase in borrowing in the 2019 budget update, so the Reserve Bank could fund that for a start.

Why borrow that $8 billion from overseas lenders, with the added interest burden on taxpayers, when your own bank could provide the funds?

The Bank could also replace the government’s current private sector borrowing with Reserve Bank funding, and save taxpayers $6 billion each year in wasted interest payments. That $6 billion could be left in the hands of taxpayers through a tax cut, particularly for those on the lowest incomes.

But more is needed to get our economy rolling. Quantitative easing – lending money to the banks – is not one of them.

There are three direct investment options the government could pursue, and the Bank could fund.

Investment in productivity-generating infrastructure such as roads and rail.
Investment in companies needing capital to introduce new technology or develop and market new innovations.
A direct payment to New Zealand citizens as a dividend from New Zealand Inc, based on the value of the economy and the country's publicly owned assets.
Infrastructure investment takes significant time to roll out. Planning, consents, letting of contracts, etc all extend the time frame before real spending takes place, although there are some projects well down that track that simply require a sensible and immediate funding capability. The Reserve Bank could provide that rather than the taxpayer-expensive options the government is currently exploring.

The Provincial Growth Fund has made a start in investment directly into the productive economy but it's only tinkering around the edges. Its offer of $10 million for Westland Milk to develop new processing capacity (since withdrawn) was an indicator of what could be done. But it's nowhere near enough.

The government should set up a Development Bank, perhaps as an arm of the Reserve Bank, so that businesses needing additional capital for innovation and new technology could source it from within New Zealand instead of looking to overseas investors. That capital could be provided at 0% interest so that those new projects did not have a front-end additional cost on their development.

This would retain our most productive businesses in New Zealand ownership instead of them falling into overseas hands, as has been the case with so many of New Zealand's best businesses.

But this approach also has a significant lead in time.

The third option could be implemented within a few short months. A dividend paid to New Zealand citizens would not be a handout. It would be their return on the investment in time, innovation, and hard work that they, their parents, grandparents, and great grandparents have made in creating the assets and economic base the country now enjoys.

It could be paid in 3 monthly instalments, initially to those on the lowest incomes, and progressively to all New Zealand citizens.

The consumer spending that would result would go a long way to providing the boost to the economy that the Reserve Bank itself is now calling for.

It would result in more business for retailers and manufacturers, as well as significant additional tax income, repaying some of the distributed dividend.

The irony is that the Bank itself has in its hands the power to solve the problem.

Ends

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Democracy 2.0: NextElection Partners With Scoop For Exciting Democracy Tech

NextElection, a technology platform empowering democracy and Government accountability, and Scoop Independent News have partnered to strengthen citizen participation in the 2020 New Zealand General Election, set for September 19th.

Scoop’s ambition for bringing NextElection to NZ is to use it to strengthen and expand Scoop Citizen activities under the auspices of the Scoop Foundation for Public Interest Journalism.

The nextelection.nz platform has been populated by the project team with channels for all the 2020 General Election candidates and political parties. It also features up to date geolocation data based on the latest electoral boundaries. More>> Joint Press Release: NextElection, Scoop.co.nz, ScoopCitizen





       
       

      National: Emma Mellow As Auckland Central Candidate

      Tonight the National Party has selected Emma Mellow to stand in the Auckland Central electorate for the 2020 General Election. Emma Mellow replaces retiring MP Nikki Kaye who first won the seat from Labour in 2008. Emma leads a team of communications ... More>>

      ALSO:

      Travel: Update On New Zealand And The Cook Islands Bubble

      The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Henry Puna have welcomed the completion of phase one in the establishment of a travel bubble between New Zealand and the Cook Island. More>>

      Election 2020: Labour Launch

      E ngā mana e ngā reo Ngāti whātua ngā mana whenua o Tāmaki Makaurau, e tika te kōrero Ehara taku toa he toa (taki tahi) he toa (taki tini) No rēira tātou e huihui mai nei, ka ‘Hoake tonu tātou’ Thank you for that welcome. And thank ... More>>

      Gordon Campbell: On Political Twins, And On Labour Extending Its Wage Subsidy Scheme

      A quick quiz for the weekend. Which political party currently represented in Parliament issued a press release yesterday that contained these stirring passages: “[We have] long supported a free trade and free movement area between Canada, Australia, New ... More>>

      ALSO:

      Parliament Adjourns: Adjournment Debate: Speaker Trevor Mallard

      The 52 Parliament has sat for the last time before the September Election. It sat for 245 days... More>>

      ALSO:

      E-Cigarettes: Vaping Legislation Passes

      Landmark legislation passed today puts New Zealand on track to saving thousands of lives and having a smokefree generation sooner rather than later, Associate Health Minister, Jenny Salesa says. The Smokefree Environments and Regulated Products (Vaping) ... More>>

      ALSO:


      Covid-19: Poll On Management Approval

      New Zealanders’ overall trust in the Ministry of Health and Government to manage the COVID-19 pandemic is at 82%, down from 91% during April. Overall distrust that the Ministry and Government will manage it in ways which best protect themselves More>>

      Election 2020: National Releases 2020 Party List

      National’s 2020 Party List is a strong mix of experience coming up through our Caucus, and new and exciting talent joining our team from communities across New Zealand, Party President Peter Goodfellow says. “The National Party is incredibly ... More>>

      Horizon Research Limited: How Judith Collins Stopped The Bleeding

      Horizon Research includes questions on voting from time to time in its surveys – for both forthcoming referenda and general elections. 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>>

      ALSO:


       
       
       
       
       
       

      LATEST HEADLINES

      • PARLIAMENT
      • POLITICS
      • REGIONAL
       


       

      InfoPages News Channels