Policy changes are needed to cure a declining foreign debt position say the New Zealand Manufacturers and Exporters Association (NZMEA).
Standard and Poor’s has put New Zealand’s credit rating on negative outlook. Treasury Secretary John Whitehead has already commented that the Government needs to move into surplus faster than is currently forecast and this advice needs to be heeded.
NZMEA Chief Executive John Walley says, “John Key’s statement that “nothing has changed” is precisely the problem. Although import consumption has dropped through the recession, the same old policy settings that encourage consumption rather than production are still there; we are not giving our exporters the motivation to earn our way out of trouble.”
“We have a policy framework that has caused New Zealand to have some of the highest interest rates in the world, attracting foreign capital, and tax distortions that encourage consumption fuelled by asset backed borrowing.”
“While these conditions remain we cannot expect a different result than the one we have seen for the past decades of ever increasing foreign debt.”