Fisher and Paykel - The outcome of ‘two-economies’

Media Release 16 August 2007.

Fisher and Paykel - The outcome of policy that creates ‘two-economies’

The New Zealand Manufacturers and Exporters Association, (MEA), says that Fisher and Paykel’s decision to move offshore is a consequence of policy that creates a New Zealand of ‘two-economies’ with massive differences between the external and domestic sectors.

The MEA says that in the decade between June 1997 and June 2007, the tradable inflation index increased by 11.9%, while the non-tradable inflation index rose by 38.4%, and yet monetary policy punishes the tradeable sector while leaving the rest relatively unscathed.

“There are company leaders telling me that for a generation they have either never seen business conditions so good, or so bad, depending on their relationship to the domestic or external economy”, says Chief Executive John Walley. “As long as New Zealand relies solely on the OCR as the tool to control domestic inflation and discards all other possible measures, then policy will continue to drive a wedge and exacerbate the gap between the ‘two-economies’ - between tradeables and the remainder of the economy – comments in this regard from Fisher and Paykel are the tip of the iceberg”.

“The strength of New Zealand’s overall employment market should not be used as the carpet under which we brush the loss of high grade jobs in the tradable sector”, says Mr. Walley.

“Those who stand to lose their jobs at Fisher and Paykel may well find work elsewhere, but there is a strong possibility that nearly all will not stay in the manufacturing sector, and New Zealand’s ability to sustain a complex supply chain gets yet another nail in its coffin”.

“Why is it OK to tell people with highly specialised skills not to worry as they will be able find work in some entry level activity?”

“The MEA welcomed the Reserve Bank’s submission to the Monetary Policy Inquiry that supplementary measures to the OCR, such as a floating GST are worthy of more than academic thought and more than supplementary application. As long as New Zealand persists with the existing rules, we will continue to witness the punishment for the sins of one part of the economy visited on the other, and ultimately on everyone, as our living standards continue to fall”.

ENDS

© Scoop Media