Judging by Prime Minister John Keyss opening address to Parliament we are to anticipate more of the same in 2011; that means a continuation the economic funk seen over the past two years, and the resulting build up of debt.
The New Zealand Manufacturers and Exporters Association (NZMEA) is calling for significant policy changes so that the tradeable sector can reverse this slide.
NZMEA Chief Executive John Walley says, “There seems to be an assumption that with high commodity prices the economy will just look after itself. We need to spark more investment and capacity expansion across our entire export sector; that is manufacturing, agriculture, services and tourism.
“It is worth noting that manufacturing contributes about the same to GDP as agriculture and tourism combined. We will not get rich exporting raw materials.”
John Key commented during his address to Parliament that, “The Government will continue to support stable and predictable monetary policy, focused on maintaining a low level of inflation and thereby minimising price increases across the economy. We note that this is not the position of some other parties in this Parliament.”Mr Walley says,
“Over the past ten years inflation in the tradeable sector has averaged 1.5% and inflation in the non-tradeable sector has averaged 3.7%. Price based inflation targeting has addressed inflation by killing off the tradeable economy via an overvalued exchange rate.
“A vote for a different approach to monetary policy is not a vote for higher inflation but it is a vote for supporting investment and expansion in our export sector.
“Continuing with a monetary policy framework that overvalues the exchange rate is a recipe for a low export, low wage and high unemployment economy. Until this policy nettle is grasped, talk of rebalancing and recovery will be just that, talk.”