Total debt, not government debt, is the major issue for New Zealand say the New Zealand Manufacturers and Exporters Association (NZMEA).
The Budget released yesterday detailed how the Government hope to move out of deficit by 2014/15 but it is the current account deficit that is forecast to expand and that has the potential to cause a debt crisis here.
NZMEA Chief Executive John Walley says, “The current account balance demonstrates that NZ Inc has been in deficit for a long time. This essentially means that New Zealand as a whole has been either taking on more debt or banking a lower return as assets are sold offshore for the past couple of decades.”
“The distinction between Crown and private debt is essentially academic with governments around the world bailing out lending institutions, so the management of our current account must be the focus.”
“The 2012 Budget projected the current account to get significantly worse out to end of the forecast period.”
“On the revenue line a broader tax base including capital gains and active exchange rate management are the keys to promoting productive investment over asset speculation thereby improving export growth.”
“On the spending lines the entirely predictable burgeoning superannuation costs have to be addressed, it is a pity that Government don’t listen to Peter Dunne on this issue.”
“On the savings side the sooner Kiwisaver becomes compulsory the sooner we will no longer bemoan the absence of savings in New Zealand.”
“Until we develop the mettle to deal with the big issues our economy will continue to falter as we mess around the edges. Private debt, not Crown debt, is the issue facing New Zealand.”