Manufacturing: Govt has 'head in the sand'
Tue, 29 Jan 2013 8:19a.m.
By Dan Satherley
The Government has been accused of having its "head in the sand" when it comes to problems faced by New Zealand's manufacturing sector.
John Walley, chief executive of the Manufacturers and Exporters Association says "there is no doubt there is a crisis", and it's all the fault of the high New Zealand dollar.
"Two things will happen, absolutely, if the currency continues to increase," he told Firstline this morning.
"For the people whose balance sheets are now so thin they can no longer survive, they will close. For the people with resources remaining on their balance sheets, they will change their business models and move offshore. Both of those stories are bad for New Zealand employment."
Opposition parties yesterday began hearings in an inquiry into the manufacturing sector, which they say has shed 40,000 jobs since National came to power in 2008. The Government has declined to take part, with Prime Minister John Key denying there is a crisis.
Unions and company executives told the inquiry yesterday the high dollar was forcing businesses to close or go offshore, with one even saying it would probably take "a change of government" to solve the problem.
Mr Walley says the Reserve Bank needs to widen its scope, instead of just focusing on keeping inflation down.
"I think what we've seen is the overvalued New Zealand currency now for two or three years, that's attacking exporters' balance sheets, and frankly very few, if any, jurisdictions on the planet are purely inflation-targeted anymore."
But ASB economist Nick Tuffley says changing the Reserve Bank's focus won't make much difference.
"I think the Reserve Bank does have quite a flexible target with what it's doing, and tweaking the target's not going to make the difference between an 80c exchange rate and a 50c exchange rate in this sort of global environment," he told Firstline this morning.
"We need to fix the UK, fix Europe, fix the US, then we might have a lower currency."
Mr Tuffley says past attempts to control the exchange rate failed.
"The best things that it can really do is keep inflation relatively low and stable, and we've gone through past periods – the '70s and '80s – where we tried to do things with monetary policy – let's have a little bit more inflation, let's boost the money supply and get faster growth – and it didn't work. All it did was mean that we have high inflation, which doesn't really help anybody, and in fact it tends to hurt the poor and the elderly, the most vulnerable, more than anybody else."
Mr Walley says if nothing is done, New Zealand's economy will suffer.
"It's absolutely true that on the one hand, imports and consumption is favoured by a high currency, but equally we have to pay for the goods we import, so if the part of the economy that actually earns our way in the world fails, then the cheap flat screen TV may be attractive, but if you don't have a job, maybe you don't even consider it."
He says labour costs are "almost insignificant" to manufacturers.
"The reality is it's the currency."
Not only has the Government denied there is a crisis, it claims the number of manufacturing jobs has increased in the last four years.
Mr Walley disagrees, and is urging the Government to get involved in the inquiry.
"I understand that the Government has been invited all along this process, and is simply taking the 'head in the sand' approach. 'What crisis? There is no crisis.' Well, if they get out and talk to the people I talk to every day, there is no doubt there is a crisis."
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5/04/2013 5:57:15 a.m.
Yeah its their usual tactic using the attack pack trying to bring down the messenger CMG.No worries, its kind of pathetic that they have to try and minimise National's complete control of the negotiations for 4 years.It's a sign of how strong denial dominates their political posturing when they can't deal with the information in documents released by their own Mr Fix It? National had their hands firmly on the reigns from 08 onwards and brushed past the warning signs even after their own 'unsatisfactory performance' letter was met with threats of litigation from Talentless2 and Leslie Longstone had put in writing her serious misgivings about the Aussie conmen and their low levels of competence and professionalism.Just saying "No they didn't" is a bit like an old Monty Python skit? When things went to crap and they got exposed they immediately went for the underling scapegoat option. Let me get this straight,you're saying the advisors should shoulder the responsibility for the Novopay Board's decision? Give me a break.Its pretty pathetic that Denise and Paora are still throwing the 'blame Labour' grenades but par for the course they pursue whenever they're faced with the truth.National screwed the pooch on this one,big time and the rest is history.Bill English gave the go ahead for the system to go online in Aug 2012 after test results came back which were poor,the system was riddled with bugs and they'd complained about Novopay themselves?These guys continue to struggle with the obvious while the rest of the country associate one party with the Novopain fiasco.This witless two faced National govt.Denise quoting poll results unrelated to Novopay is just another example of the desperate clutching at straws that pervades your weak political argument.If you have a problem with the data,take it up with Mr Fix It,in the meantime,talk about the Longstone letter,the board's own 'not satisfied' letter and the Talentless2 legal threats instead of talking about my opinion huh? Wow.
24/03/2013 3:15:24 p.m.
Easy for you all to pick on one commenter, eh? Novopay aside, I don't like what this government is doing to new zealand. Hope they are out next election. Good people of New Zealand, vote the nats out next election!! They are selling us down the road so we will end up with all the worst problems of overseas.
25/02/2013 11:56:22 a.m.
Katubaldy. The blame for having Novopay is equally split between Labour who chose Novopay and the so called expert advice people who were relied on to advise accordingly and then recommended the transition to happen. National is merely caught in the middle of poor judgment by Labour and bad recommendations by the experts, which is how 51.6% of the people obviously see it, as evidenced by this last weeks party opinion polls.
23/02/2013 11:38:59 p.m.
KATUBALDY. The forest is still blocking the opinion of the wood and as has been said, personal bias is over-riding more honest comment. Put simply, the ministers didn't make any judgment call. They simply followed the 'expert' advice because they were not sufficiently expert enough themselves to make the decision to go ahead with Novopay.
18/02/2013 9:03:15 p.m.
The only difficulty I've had is getting a response posted for the last two weeks..? There's no bias involved when you're laying down the facts. It's common knowledge that the Novopay board had the hindsight of failed test results, the knowledge of an infected system and the retraction of a 'Not satisfied with services' styled statement when threatened with litigation, before making the wrong decision. You guys seriously trying to cling to the idea that the three ministers were completely mistake free in their judgements will go down as the only bias shown on this issue. When you're team screws up, you just have to accept it like anyone else...that clear enough for you to see the forest now Denise?
6/02/2013 6:46:13 p.m.
Katubaldy. It seems you have difficulty in seeing the wood for the trees or maybe you are simply blinded by your own somewhat uninformed but biased understanding of the situation? As I see it, Paora is only saying National called on experts to guide them to do what they needed to do because they did not have the expertise to do so, which is their right and having listened to the that advice, they acted accordingly. As a result, no blame can possibly be laid against the National approach.
6/02/2013 7:43:24 a.m.
Wow you're making this one easy bro.If you've been following the threads of the different Novopay articles,you'd have seen that the one National MP I did give cudos to, was Steven Joyce when he released the documents and fronted up on Campbell Live. I still think it was the one right thing National have done on Novopay and that it reflects badly on Joe Key's leadership. You just can't accept that National blew it and are insisting the blame lays at Labour's feet. Ministers are regularly dependent on their advisers in these situations and you've reinterpreted the advice they got as an endorsement of the system..? Really? The testing and the expert advice showed that the system was riddled with bugs and a delay to the Aug 2012 going live was the best action to take. Longstone released a statement absolutely shredding the Talentless2 guys as amateur and out of their depth..? When the Aussies realised that they might be pushed back again they threatened litigation as a negotiating tactic. Now here is where the Novopay board made their worst blunder. They blinked, stuttered and crumbled under the pressure and went live with it anyway. That is about as gutless as it gets in commercial negotiations,to give in at the first proposal and the country paid for it. Cha-ching, 100 million dollars down the drain, and the interminal stress caused to the education staff. The long bow drawn is the one you've got your hands on man. You started out by saying National should get credit for their patience and the public should be grateful. Now its they didn't know the technical stuff and have a heart. This whole drawn out fiasco plainly shows this govt are stuck on the stupid train and their supporters will say anything,rather than face the truth. National screwed the pooch on this one and they've even given up on the Labour scapegoating....talk about you can't acknowledge a problem guy? But hey if it comforts you to attack me and blame Labour, feel free its your opinion man. The future is about getting it fixed for the teachers,tax payers,parents and pupils. If you're stuck in the blame game it shows where your priorities are and a pretty sad indictment about the level of denial your cool with.
5/02/2013 9:29:07 p.m.
Katubaldy. The trouble with your argument is you don't acknowledge the honesty of Joyce's statement that English, Parata and Foss not being specialists themselves, rightfully accepted the specialists recommendation the system was ready to go. It's a very long bow to draw to claim they were to blame when the stupidity of Labour arranging the Novopay contract in the first place, is where the blame belongs.
5/02/2013 2:27:06 p.m.
Try and let the 'Labour scapegoat' thing go Paora, especially in this case. Joyce had the nads to release the Novopay documents for the public. The least you could do is have enough courage and sense to accept the evidence put in front of you. Team Novopay, namely English,Parata and Foss went to bat for the govt. They negotiated the implementation of the payroll system for more than four years and when it came to the crunch they blew it. Not a single Labour MP in the room on any of those meetings. Talentless2 themselves delayed the green light from the original 2010 deadline to 2011. Then came another delay to 2012. The whole time the Aussies were asking for more money which in itself should have thrown up some warning signals. The advice given and the testing showed that the system was not ready to go online.When Talentless2 saw the writing on the wall,they threatened and bullied the Novopay board into backing down on the delay, giving them the green light when they clearly weren't ready. Lesley Longstone, who had an inside view of the situation, stated in writing that the Aussies were basically amateurs who were out of their depth and they asked her to tender her resignation...? Knowing that the system was flawed and plagued with bugs they gutlessly gave the project the go ahead and the rest is recent history...Where is the missing 12 million in wages? Why wasn't Parata thrown out with the bathwater? Finally how the heck do you interpret all these facts as a heroic stand by National, (the supposed business savvy party???) to try and fix Labour's initial error and deserving of cudos in some way...The problem never got fixed, hence introduce Mr Fixit and the release of the documents. What the emerging picture does reveal is a govt who got backed up by the contractors and didn't have the expertise, wherewithal or guts to put the thing right. You guys are desperately trying to lay the blame elsewhere,as usual and this time it's even more pathetic than ever.
4/02/2013 9:57:49 p.m.
Katubaldy. I'm not sure why you keep harping back to the Labour initiated Novopay? The fact National are trying to make it work because of the millions of tax-paid dollars it has cost to date rather than break the Labour contracted agreement, is a credit to Nationals patience in not throwing the baby out with the bathwater.
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