NZ dollar blamed for 'manufacturing crisis'
The New Zealand dollar is once again being blamed for large scale job losses in the manufacturing sector.
Labour and the Greens say the Government has its head in the sand but one economist says the exchange rate isn't responsible.
Workers were back on site at Summit Wool spinners today, but not for long. More than 150 of its 200 staff are about to lose their jobs.
This just four days after the opposition MPs started their own inquiry into what they call a "manufacturing crisis". The Government dismissed the inquiry as "scaremongering."
“It shows the Government is completely out of touch with the real economy,” Green Party co-leader Russel Norman says.
“We believe the NZ dollar is over inflated and our manufacturers aren't able to compete against other countries,” Labour leader David Shearer says.
David Bennett sees that first hand, his company Pacific Helmets makes the biggest selection of helmets in Australasia. He's watched the climb 25 percent against the greenback since he started up.
“If the exchange rate gets worse, as it's projected to be, the crisis is going to get extremely serious.”
But Kirdan Lee from the New Zealand Institute of Economic Research says it's not the dollar, rather Asian economies, which are to blame.
In the past 20 years, he says Asia's taken over as a much cheaper manufacturing base.
“Can you blame the dollar? No, the declines you see in manufacturing [are] actually a continuation of a 20 year story. So it's not about the dollar.”
Mr Shearer says that's rubbish - and the dollar is overvalued.
“The Reserve Bank says that, Treasury says that, manufacturers say that - what do you have to do for the Government to be hands-on?”
Our biggest trading partner is actually Australia, and the exchange rate is currently good for business there.
“That's saving the bacon for a lot of us at the present time,” Mr Bennett from Pacific Helmets says.
But Mr Shearer points out that New Zealand exports to many other countries.
“It's good if you export just to Australia, but of course we export way beyond that.”
So the debate around the dollar continues to heat-up. Labour wants to give the Reserve Bank more power, the Greens want to print money.
And the Government thinks that's all crazy.