A really interesting three-quarter page article by Ben Heather in today’s DomPost is titled “Looking for new tools to help exporters.” Lord knows we need them.
But Stuff.co doesn’t seem to think so – you can’t find the article on-line, and when I enquired about why the answer was “We don’t put everything up.” No place for new or alternative ideas on their website it seems.
A couple of quotes from the article:
Manufacturers’ and Exporters’ Association Chief Executive John Walley claims the Reserve Bank’s focus on the Official Cash Rate as the only tool in the regulatory box has left exporters battered by a volatile and over-valued exchange rate at the mercy of speculators. Compounding this the tax regime favours a property investment merry-go-round at the expense of an economy based on value-added growth…
The solution, at least according to Mr Walley, is tightening controls on the volume of money, printing money (quantitative easing) to control the exchange rate, introducing a capital gains tax, and giving tax breaks for research and development. . Kiwibank should be used more aggressively as a foil against anti-competitive behaviour among the bigger banks..
Many of the MEA’s ideas are supported by BERL’s chief economist, Ganesh Nana, who agrees reliance on the OCR has been bad for New Zealand and harmed one of our biggest tickets to prosperity: exporting.
Dr Nana says there is much frustration among exporters who are slowly being ground down by policies tipped against them. “I think we’ve embedded in this country the process and policies that create a low-wage economy. We’ve taken up this wonderful policy that we thought was so great bu it hasn’t worked.”
John Walley’s ideas were “rubbished” by Roger Kerr who described the ideas as “maverick”. The article goes on to say:
Mr Kerr points to stable inflation as evidence that the status quo in New Zealand is right and says the debate has been raging for more than 20 years.
But while the argument is the same, the global financial crisis may have shifted the goalposts.
An IMF report, Rethinking Macroeconomic Policy, says small countries that abandoned controlling inflation as their one guiding light and fiddled with the exchange rate during the eonomic crisis acted sensibly.
“Central banks in small open economies should openly recognise that exchange rate stability is part of their objective function,” the report said.
This runs contrary to a whole generation of economic wisdom in New Zealand, championed by Sir Roger Douglas and Ruth Richardson and never seriously questioned by any government since.
But all is not lost – you can come along to the Fabian Society seminar, Bold Ideas for a Better Future, in Wellington next Sunday 28th March, 12:30 to 4:30 at the Spectrum Theatre, cnr Johnston St and Customhouse Quay; and in Christchurch on Sunday 18 April at Mancan House, 253 Cambridge Street at 1pm to hear about these ideas for yourself from John Walley and Ganesh Nana, as well as Selwyn Pellett and Rod Oram. There will be plenty of scope for debate.
Oh and by the way, you can get Roger Kerr’s regular offerings on Stuff.co. Even though they haven’t changed in 20 years.