Open up on policy options - 29 October

Open up on policy options - 29 October

It is time for the Government and Reserve Bank to open up on monetary and fiscal policy options say the New Zealand Manufacturers and Exporters Association (NZMEA). The Government and its officials should be working harder to encourage a more balanced economy and should be opening up debate rather than shutting it down.

It is well recognised that our tax system skews investment towards assets rather than activity, and that interest rates control inflation via the negative impact on the tradeable sector rather than acting directly on the source of inflation in the non-traded sector. Our politicians and officials are well aware of these points and their consequences.

NZMEA Chief Executive John Walley says, “The trade offs in the economy need to be discussed. We need to open up about whether we want a high wage economy based on elaborately transformed exports, or low wage asset based economy exporting raw materials to the world.”

“Only one will deliver high living standards.”

“One of the competitive advantages a small country has is the capacity to change and adapt faster than larger economies, but we will only see this benefit if we open up to new initiatives. Even large institutions like the International Monetary Fund have begun to review their stance on economic best practice, it is time our political leaders and officials did the same.”

ENDS

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