Key defends high NZ dollar
Tue, 26 Feb 2013 9:05a.m.
By Dan Satherley
Prime Minister John Key says there are advantages to keeping the New Zealand dollar high – such as keeping petrol "cheap" – as debate continues to rage over the kiwi's strength.
Unions and the manufacturing industry have blamed the dollar for a string of job losses – potential and realised – at companies such as Contact Energy, Mainzeal, Telecom, Summit Wool Spinners, New Zealand Post and Solid Energy.
But Mr Key told Firstline this morning the overall numbers are "very small" in relation to the entire workforce.
"If you think that there's over 2 million people in the workforce in New Zealand… and then you think about the individual losses that we might look at, say 90 people involved overall with say, New Zealand Post. That is very small in relation to the overall number.
"I'm not saying it's not tough, and I'm not saying we don't have enormous sympathy for those that lose their jobs… I'm simply saying if you look at the overall data of what's happening at a macro level in the economy, business confidence is up, consumer confidence is up, the Quarterly Employment Survey, which is the indication of whether employers think they are going to take on people, is up, and manufacturing data… is up."
But Helen Kelly, president of the Council of Trade Unions, says the Government has "little plan or hope" for stemming what it calls a crisis.
"You've got the manufacturing sector in crisis because of the dollar, which is affecting Summit and all of the other manufacturing jobs we've seen," Ms Kelly told Firstline. "As those jobs go, retail starts to decline – people aren't spending money, and that's what will be happening in these retail chains… Telecom and Contact, in my view, are just being greedy, and are laying off staff when they're making record profits."
She says the kiwi is being kept high by currency speculators, investing in what some are now calling the "new gold".
"They're not making anything else, they're not the productive sector – and at the same time we're seeing the manufacturing economy collapsing and we're hearing from manufacturing businesses that the Government should step in and make more effort to find a middle ground around our currency… Even the IMF is now saying that countries should step in to do more to control their dollar."
But Mr Key doesn't see any need to step in, even suggesting that having a strong currency is in the best interests of not only consumers and importers, but manufacturers.
"For a very long period of time the United States had a policy of wanting what was known as the 'strong dollar policy' – they had it for decades – and it's because they knew that when they had a strong dollar, their consumers had huge purchasing power," says Mr Key.
"It effectively internationally made them wealthier. So for a lot of New Zealand consumers… their life is actually much better because of the strong dollar. They can either buy things or import it, inflation or petrol's cheaper, it's not a one-way street.
"Even for a lot of manufacturers, it's a big help to them. There are obviously some it affects, I understand that completely, but we were no terribly wealthy country when the exchange rate was down at sort of 35 or 40 cents, so I'm not sure we entirely want to have that either."
Ms Kelly has called on the Government to stop giving major contracts to foreign companies and invest more in infrastructure.
"The Government could stop the austerity measures and start driving the economy through infrastructure development, investment in things that need to get done, things like rail, roads, schools, health – all of those things would create jobs. They've got money, they should be doing it. They gave massive tax cuts, they should be getting some of that money back and investing in the New Zealand economy.
"The Government's not buying New Zealand goods, we saw that with the rail carriages where they favoured Chinese manufacturing over our own manufacturing… They should be ensuring that when they're buying things that they're favouring New Zealand products when they're doing that and investing in jobs."
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31/03/2013 4:25:34 p.m.
MIKE, Why don't the top brass take a paycut then? Wouldn't that reduce costs significantly?
7/03/2013 9:20:11 a.m.
Keith you need to look beyond Labours PR machine and the total govt debt including SOE's.If look at the total picture, which your not, then you will see Labour didn't run surpluses 1999-2008, they increased government borrowing in those boom years, but with creative accounting, hid it in SOE's.Take moving debt from govt debt to SOE debt. This moves the debt off the govt books and Labour claimed repayment, ie surplus, without a cent being repaid. The debt still existed, the govt was liable to pay the debt, just it was under the SOE so hidden by the Labour PR machine.Labour also practised asset revaluation, so with the inflation in assets values, claimed debt repaid, when again no debt was repaid.Companies that did similar before the 1987 sharmarket crash faced court action and fraud charges and quite a number served jail time for doing the same but on a smaller scale. It was not good practice.What is this Torries? So like Russel Norman, that Aussie foreigner, are you saying some Brits came over here and squashed the National Super, when NZ still has a National super scheme? Calling National Torries is like calling Labour Bolsheviks or Stalinists!Labour has talked publicly about lowering our dollar, ie devaluation to help out exporters by lowering real wages to reduce costs to exporters. How did you miss that as they have made the same party line for over 3 years now. Labour has also publicly said they want to change the Reserve Bank inflation target so they can run higher inflation, and given just the inflation of devaluation Labour is indicating, thats double digit inflation. Labour wont come clean and tell the public how the devaluation will give everyone inflation, and as history of devalutation everywhere, it leads to inlation and rising wages to try to hold the standard of living, which wipes any benefit of a lower dollar.
6/03/2013 11:21:51 p.m.
Mike you are wrong to say ACC lost money. Funny how they suddenly turned out to be over 2 billion in the black at the time you refer to.To say they lost money was a rumour started by national. You are also wrong to say kiwisaver lost money in fact it was lost from the National Super Fund. The money lost was in 2008. this lost is typical of investing in the share market some years are great and others are not so good. In 2006 the return on the investment reaped 19%. In 2007 the fund gained a 15% return. In 2008 when the world ecconomy crashed the return was minus 5%. Overall even you would have to agree thats not over a three year term.
6/03/2013 1:36:44 p.m.
Mike your history is full of holes . Labour came to power in 1972-1975. during this time we had the oil shocks which sent nearly every oil dependant country into difficult times. Labour were stupid in hind sight to invest with the right wing con man madoff. I doubt you will see a labour party pass legislation to stop this as they are not in government to do this and these right wing clowns lead by the junk bond trader wont do it because they are in bed with these money men. You are obviously not aware or your blinkers wont allow you to see that when labour left office in 2008 there had been no deficit. Mike weather you like it or not the governmernt borrows 2 billion a year to pay for its idiotic tax cuts. Its a fact. Mike you have not addressed any of the points i have mentioned such as the torries squashing the National super scheme set up by labour in 1974 or the money lost to investment niether have you mentioned the superann scheme set up by labour again or the benefits of the kiwisaver scheme to creating a fund to use for investment. I have no idea what you are talking about with labours devaluation and double digit inflation policy and i doubt you do to
6/03/2013 8:43:31 a.m.
Actually NZ not living within its means as a country since 1973 - started with that spend/spend Labour govt of 1974! And every govt we have since hasn't got NZ to live within its means since, including this one!You mention Kiwisaver, but you dont mention that the govt part of Kiwsaver is another SOE where Labour hid NZ losses and borrowing. Before the 2008 election ACC/Kiwisaver lost around $28 billion dolalr of hard earned NZ money due to Labour direction to invest in crooks like Madoff. We should see some policy from Labour to stop a repeat, but we haven't as they saw soeone like Maddoff as ticking all Cullens boxes, not investing in NZ, promising high returns, higher risk, and it lost NZ billions. Till we have some Labour policy to address the issue, they are likely to repeat such poor investment direction.In the Labour years 1999-2008 Govt spending in NZ grew more than ever before in the biggest govt spendup NZ has ever seen and NZ is still paying for that today. Why are the govt deficits so large now? Its not because of the socalled tax cuts, nor National cuts in govt spending, just National hasn't increased govt spending like Labour was, nor hiding govt borrowing and losses under SOEs.We do have a recession, and with the recession NZ real wages have risen to close the gap with other in the world. Take the min wage which for all Labours raising it, sat 35th-39th in the world, while under National even the $13.50 has risen to be the 4th highest min wage in the world!You still wont address Labours devaluation and double digit infaltion poicy to make it easier for our exporters, by lowering real wages. That policy is all about lowering real wages to lower wage costs, yet we have the blind faithful ignore what Labour intends through a lower dollar and high inflation.
5/03/2013 3:40:47 p.m.
Mike if you increase production you increase your sales hence wages increase. The more money in peoples pockets you generate more spending power. I stated this this in my previous correspondence. Iam well aware that new zealand hasnt lived within its means but that can be partly attributed to this government for there stupid tax cuts to the wealthy and them having to borrow of shore to pay for them. hardly a sensible policy or a fiscally resposible one. Mike if these stupid torries had of left the National super fund alone that was introduced by labour in 1974 there would be plenty of money in the consolidated fund and we wouldnt be borrowing as much ofshore. I see you conveniently over look the fact i mentioned kiwi saver and the national super fund i mentioned earlier. This also generates a substantial amount the government of the day has access to. Higher wages dont cause job losses if productivity increases. wages are only one of numerous reasons why coal is expensive to extract. If wages are low then more money has to be paid via benefits to help support the less well off. Unless you want the attitude of stuff then jack i am alright.
4/03/2013 5:09:50 p.m.
Keith I do understand economics which you dont seam to understand.If you have say a bucket and it costs $1, and you give people more money and the price of the bucket rises to $2, you haven't had growth, only inflation.This is where the opposition inflation plans is not growth. Neither is handing out higher welfare as at the end of the day, that money has to come from somewhere, so it causes inflation. As does raising min wages as those costs are passed on.The only way to get real growth is not by devaluation and inflation, but increases in real productivity.NZ hasn't lived within its means for 40 years, and where has it got us? We borrow more and more, and those screaming the loudest racism against foreigners, are on the other side intending to borrow even more from those same foreigners and sell out NZ for future generations to have to pay.NZ wages are too high. Take our min wage, 4th highest in the world, and this height of wages is costing jobs, hence the opposition plans to reduce real wages through devaluation and inflation, even though that has NEVER worked in the past. The closest to working was Muldoon who devalued and had a price/wage freeze, and even that failed.Can say all one likes that more wages is good, but when it costs jobs, and raises the costs of living, the inflation of high wages is not good. What we have is trickle down low productivity of high wages which gives high living costs and higher unemployment. If we reduced the wages without inflation, we would get lowered costs including living, increased employment. But that is unpopular, hence the intended sleight of hand/magic trick to devalue/give inflation to reduce real wages by the opposition, even though it wont work.Where NZ doing well, we have some of the highest productivity in the world. where NZ doing poorly, we some of the worst productivity in the world. Why is coal so expensive to get out of the ground here when overseas is much cheaper? #1 wages.
1/03/2013 1:32:20 p.m.
Nigel petrol is now the second highest its ever been so if that means to you and john key that its cheap you are both in the same ignorant space. Mike you obviously dont understand ecconomics. What is needed is stuff to be manufactured infrastructure to be built and an increase in goods and services. If you put more money in workers pockets they spend more causing supply to rise. They save more
giving access to capital. You cant have capitalism without capital. Unfortunately most of our manufactureing has gone off shore which has turned us into a society of consumers of overseas manufactured goods. These stupid torries rubbished national superannuation initially they also tried to rubbish kiwisaver. These two initatives have allowed access to savings to support the ecconomy. But key and his connies havent liked these ideas from a fiscally responsible labour party. They demonstrated this by attacking kiwisaver by reducing the companies contribution and also by cutting the governments contribution by half. Productivity may be high mike but none or at least not much of the wealth created by this high productivity has trickled down to the producers of this wealth. As i have already pointed out put more money in workers pockets you generate more spending and more savings you cant have capitalism without capital
27/02/2013 5:24:09 p.m.
Misinformation Mike at it again...talking about the fictional worst possible scenario of getting the NZD back to its real value. Runaway rampant inflation flaying all over the road causing economic accidents in the months that follow...What you're talking about Mike is a runaway delusion that claws at your grip on reality and precludes you from having a real debate. You come off as someone who is benefiting from the overvaluation of our currency along with the other speculators. Philip is talking about the downturn in manufacturing and exports cos of the high price of our dollar. A crisis that you think is fixed with a couple of your snarky insults. Then you move onto your fabricated stats like 36%, just make it 46%. 2% wage increases do not necessarily have a causation effect on the price of potatoes or staple goods. We don't need the services of your fairy godmother and your sugardaddy bro cos you just made up the disaster scenario...wow. Try to stop fabricating stats to scare yourself and others with Mike and then you might get to have a real debate...the same ol crap regurgitated over and over...time to get back on your meds man and leave the scare mongering out of your argument, its kind of comical but after a while it gets boring.
27/02/2013 9:02:13 a.m.
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