The Reserve Bank Governor has all but said there is zero reason to raise the OCR right now, but has gone and done it anyway. Perhaps in hindsight he believes that during the last inflation spiral we should have used the OCR lift earlier and gone hard. That soft approach inevitably killed our exports and now while many exporters are hanging on by their fingernails we start the process all over again. read more »

Finally the mainstream media is waking up to the fact that you have to own your wealth generation to actually create wealth for New Zealand. It’s a simple concept but it’s amazing how long it has taken to get it into the public debate. Fran O’Sullivan correctly identifies the issues. For more on this subject watch the Beatson interview.

It seems Bryan Gould has found the missing link in productivity that Labour, and now National struggled to find.

The Productive Economy council welcomes Labour’s announced intention to create a monetary policy environment that better supports exporters.

With every political party angling for the populist vote, it’s highly encouraging to see Phil Goff today staking out a position that will provoke serious debate on how we grow the economy. Those businesses that design, make, employ and export real things will love this announcement, says Pellett, the spokesperson for the Productive Economy Council. read more »

Dr Bollard’s increase of the Official Cash Rate to 2.75 per cent is a blow to hard working New Zealanders - both home owners and exporters - who thought the worst was over. This latest move will put more money into the hands of foreign-owned banks and at this point in the economic recovery cycle is plain stupid, says Productive Economy Council spokesman Selwyn Pellett.

“New Zealanders need to demand a fairer system for controlling inflation than the OCR. The Chief Economist of the BNZ said today that all the interest payments received were passed on to savers. This is a misrepresentation of the facts, as the banks’ future profits will demonstrate. The banks lift prices (fees and interest rates) quickly, bring them down slowly and pocket the difference as incremental profit. We’re expected to shrug our shoulders accept it as if there is no alternative,” says Pellett. read more »

Gareth Morgan takes a look at how the Budget will effect the investment landscape and concludes that if the government was serious about ending our reliance on property investment then it must be given a fail mark on that score:

“And we are left more than ever with the tax regime and its application to investment, giving investors little choice but to either surrender sovereignty over their savings to some faceless institution, or to opt out of the wider investment market and just buy property.”

Read Gareth’s piece over at the NZ Herald

Today we have for the first time seen the sort of Policy leadership that might actually deliver the economic turnaround that could see us catch up with Australia, says the Productive Economy Council.

The policies announced today by Labour could see a New Zealand that generates its own savings pool to invest in its own companies, to create superior profits from the innovation in science and technology, and to earn superior margins for our exports and pay our employees superior salaries, says PEC spokesman Selwyn Pellett. read more »

Stephen Joyce needs to take a “whole of the economy view” of KiwiRail’s intended purchase of locomotives and rolling stock, says Selwyn Pellett the spokesperson for the Productive Economy Council.
“We are an ambitious nation and it would be nice if our political and economic decision making could catch up with that ambition. New Zealanders want to see our Kiwi SOE dollars spent here, building our own rail locomotives and rolling stock, creating jobs, new skills, tax revenue and export opportunities. Not protected industries but invested industries. This type of economic investment is very sticky and that is its appeal, says Pellett.

read more »

Gareth Morgan outlines just why residential property investment is costing us dollars in terms of tax and missed opportunities:

“So why, if residential property investment is taxed the same as shares or any other business, is it a tax rort? If you were to include capital gains in the profit measure you would instantly see that residential landlords aren’t running at a loss at all - their core business is capital growth.

And that of course isn’t taxed. So the root of the problem is that capital growth in property is by far the main component of the “profit” line of this business and it’s not taxed.”

Read the full article over at The NZ Herald

“If nothing changed, New Zealand would eventually be selling all its assets to service debt, leaving the country as nothing more than a cash cow for foreign interests,”

Selwyn Pellett, along with Ganesh Nana, John Walley and Rod Oram get stuck into economic orthodoxy at the Fabian’s Christchurch ‘Bold Choices‘ seminar, as reported by the Timaru Herald.