There’s a crisis in manufacturing and the National government seems not to have noticed. But doing an “ostrich” doesn’t alter what’s happening in the real world.
This year Labour’s economic team have met with exporters and manufacturers all around the country. We’ve heard over and over again how those sectors are in crisis because of the National government’s hands-off-and-hope policies.
Even if you’re not in exporting or manufacturing yourself, while you live in New Zealand you’re affected by those sectors’ decline. 40,000 manufacturing jobs have been lost since 2008, and because unemployed people have nothing to spend they’re not reinvesting in their local communities. The facts are that there was a 14% decline in simply transformed manufactured exports and a 10% decline in elaborately transformed manufactured exports from the 2008 to the 2012 financial years.
Things are getting worse too. Just yesterday we found out job ads fell 4.5% in September (with a 5.4% decline in skilled job ads), so yet another record might be set for Kiwis giving up and moving to Australia.
Exporters and manufacturers aren’t just talking to us about their problems – they’re pleading to anybody who will listen. Unfortunately the National government are so arrogant they won’t give fair hearing to people who don’t subscribe to their dated ideologies.
In the face of government inaction Labour, the Greens and New Zealand First have come together to hold a parliamentary inquiry into the manufacturing crisis. We’ll keep you updated via Red Alert as that progresses.
Exporters and manufacturers have repeatedly told us their #1 problem is the unsustainably high and over-speculated Kiwi dollar. New Zealand contributes about 0.23% to world GDP, but our dollar is among the most traded globally. It seems that New Zealand’s money has become a plaything for John Key’s New York currency trader mates.
The government’s monetary policies have a huge impact on the dollar. Labour supports an independent Reserve Bank Governor, but we completely reject National’s apparent dogma that an independent Governor means the government has no responsibility for the economy.
The government are responsible for the wording of the Reserve Bank Act, not the bank’s Governor. The current Act makes controlling inflation the primary responsibility of the Governor – to the deliberate exclusion of consideration of other important measures of economic wellbeing, such as the current account and value of the dollar. Exporters tell us that’s madness and we agree (and so do the Greens and New Zealand First).
The National government are responsible for agreeing the inflation policy target range. In recent years that policy agreement has targeted 1% to 3% inflation in any one year. That’s the agreement that finance minister Bill English has signed.
But now the IMF is forecasting for New Zealand’s current account deficit to be the worst in the developed world next year - and with inflation at 0.8% for the year below the target range. So the bank isn’t delivering the single target that the National government has given to it. And all the while New Zealand’s economy is collapsing around us and ordinary Kiwis are losing their livelihoods and leaving the country.
A thinking and responsible government would take from this that something must change.
But yesterday when David Parker and I questioned Bill English in Parliament, the minister barely even addressed how inflation is forecast to drop below his target range – let alone concede there is a problem (or announce any rethink of his obviously failed policies).
How much economic misery does New Zealand have to endure? Will there be any jobs left by the time Labour is elected at the next election? Will there be any young people left on this side of the ditch to fill them?