Dr Cullen urged to take Green medicine for dollar
Green Party Co-leader Rod Donald is urging Finance Minister Michael Cullen to consider Green proposals for getting the
dollar down to a realistic level, given his failure to reveal the options he promised were available to him two months
ago.
The New Zealand dollar is heading relentlessly upwards, and is widely tipped to top the 70 cents US mark in the near
future. On a trade-weighted basis, the dollar has appreciated over 30 per cent in the last two years.
"Dr Cullen's failure to arrest the rise of the New Zealand dollar is causing extensive pain for exporters, tourism
operators and domestic manufacturers," said Mr Donald. "The rural sector is already feeling the pinch and as hedging
contracts run out, the consequences will start biting in the cities, as farmers and other businesses cut their spending.
"It's time for Dr Cullen to tackle the underlying causes of the high dollar. New Zealand is too dependent on foreign
capital and trade and lack of govt controls have turned us into a paradise for speculators.
"Dr Cullen's first step should be to look at introducing a capital gains tax on properties other than the family home.
This would help to deflate the property boom but more importantly would give the Reserve Bank the flexibility to drop
the Official Cash Rate. The dollar would immediately drop as speculative capital went elsewhere.
"These steps might also make housing a bit more affordable in the long-run.
"Secondly, Dr Cullen needs to bring in tighter controls on foreign investment, both to limit speculation on property and
to focus the inflow of foreign capital on new, productive investment. Coupled with a capital gains tax this would steer
foreign and domestic capital towards productive activity.
"Third, Dr Cullen should re-orient the economy towards greater self-reliance. The Government's export-led growth
strategy needs to be matched by a determined 'buy New Zealand made' campaign, led by the government through its own
purchasing policies. This would make our economy less vulnerable to the over-valued dollar.
"Our fourth recommendation is for Dr Cullen to introduce across-the-board tariffs on imports to reduce the current
account deficit and to provide some relief from the high dollar for domestic manufacturers." Rod Donald pointed out that
across-the-board tariffs are permitted under WTO rules.
"Dr Cullen may not find any of these Green Party proposals palatable but I challenge him to come up with better ideas
for reducing the pain being caused by the overvalued dollar."