$5 billion trade bungle

The Government's failed free trade agenda and its refusal to actively manage the New Zealand economy are the root causes of today's all-time record $5 billion trade deficit, says the Green Party.

Statistics NZ reported today a May year trade deficit of $5,005 million - an all-time record in dollar terms. This represents 16.3 percent of exports - the largest annual deficit in percentage terms since the mid-1970s.

"The more free trade agreements the Government signs up to, the faster our economy goes down the gurgler," says Green Co-Leader Rod Donald.

"What will it take for Labour and National to face up to the fact their trade liberalisation policies have led to a flood of cheap imports that have caused our trade deficit to career out of control?

"Sooner or later the Government must step in to avert the trade and current account crises. Historically, New Zealand used to run a positive goods balance, which offset negative dividend and interest flows. With the goods balance now running at a $5 billion deficit for the year to May, it is inevitable that the June year current account deficit will exceed the 7 percent GDP trigger-point."

The Green Party is proposing a number of measures to get the New Zealand economy out of the red and back into the black.

"The Government should immediately launch an extensive 'Buy NZ made' campaign, to reduce our demand for imports and boost our domestic manufacturing sector. "It should also look seriously at an across-the-board tariff on imports to dampen New Zealanders' seemingly insatiable appetite for imported goods.

"With petroleum and oil product imports increasing in the last year by a massive 39 percent, to $3,985 million, the Government must implement a comprehensive plan to reduce our dependence on imported fuel.

"And, last but not least, the Government needs to take steps to get the Kiwi dollar down to where it belongs. This would increase the cost of imports and improve our export receipts.

"For too long, the Government has acted like an irresponsible parent, allowing the kids to put whatever they like on the family's credit card. Before the banks cut up our cards and foreclose on the mortgage, the Government needs to rein in our out-of-control spending, " says Mr Donald.

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