This press release from the Greens pretty well sums up the situation that National have left the economy in. Once you remove the rebuild effects from the Christchurch earthquakes, our increasingly undiversified economy is looking in pretty poor shape for the decade ahead.
Falling dairy prices are highlighting the danger of National’s economic strategy that focuses on the export of a few, simple commodities, the Green Party said today.
Dairy prices are down 8.4 percent this week – a 41 percent fall from their highs in February. Whole milk prices are down 11.5 percent largely due to weaker demand from China.
“National’s economic strategy has simplified our economy and concentrated our exports on a few, low-value-added commodities,” said Green Party Co-leader Dr Russel Norman.
“National has bet the farm on the farm and it isn’t working. A growing reliance on one or two commodity exports has made our economy more vulnerable to commodity price swings.
“Producing increasing amounts of milk powder also has huge, downstream environmental impacts. We need to build a smart green economy with much lower carbon emissions and water pollution.
“A smarter way forward is to invest in innovation and policies that support our manufacturing and ICT export sectors.
“National is not building a strong, resilient export sector.”
Last month the Green Party launched their economic plan to build a smarter, more innovative economy which has, as its centrepiece, an additional $1 billion of government investment in research and development (R&D), including tax breaks for business.
“Innovation lies at the heart of a smart, green economy. Economies that innovate do better over the long term, creating good jobs that pay well while protecting the environment,” said Dr Norman.
“Our economy is on the wrong track. We invest half what most other developed countries do on research and development.
“Innovation is a key driver of prosperity in advanced economies, yet this current Government has relied on an economic strategy of simply doing more: producing more milk solids, mining more minerals, securing more free trade deals, and working longer hours.
“We want businesses to get on with innovating and exporting high value products that command high prices and support high wages. Our R&D tax credit is the simplest and quickest way to spur innovation activity.
“Voters have a choice this election: National’s simplified economy that creates few jobs and remains vulnerable to commodity price cycles; or a smarter, greener economy where innovation flourishes and manufacturers develop high value exports,” said Dr Norman.
See a previous post on this site about this index “Dairy drops further”This chart shows the volatility of the price index for globally traded dairy products over the last 10 years. In particular the current high stockpiles of whole milk powder in China and NZ are driving the price down at present. Basing a export economy on such volatile commodity
Top-ranked exports, as share of total exports
These figures show New Zealand’s export base narrowing during National’s time in office, not widening. We much are even more dependent now on dairy than we were, which mean our economy is ever more at the mercy of the global dairy auction.