So the recession is over. At least Bill English is happy to say so and will spend the next month telling us we are out of recession and it’s business as usual. That’s fantastic news, or at least it would be if he was right.

But, says Selwyn Pellett of the Productive Economy Council, unfortunately he’s wrong.

“Prior to the recession 30 percent of our GDP was from the export sector and that 30 percent is still very much in recession,” says Pellett. read more »

As the dollar hits 76.4 cents to the US dollar, we are told there is nothing we can do to protect our own currency and that’s just not true. “Why are New Zealanders not being told the truth”, says Selwyn Pellett spokesperson for the Productive Economy Council. 
 
“The public are tired of hearing “Oh it’s the US Dollar or the Pound” and “We are in the same position as everyone else”.  Well this may serve the needs of banks and the politicians but it’s just not true.  In the 22 day period from the 1st of August the NZ Dollar has appreciated 5.1% against the US Dollar with a 0.1% improvement in GDP, while Singapore achieved a 15% improvement in GDP with just a 1.61% increase in its dollar against the US Dollar, and Taiwan’s currency decreased 0.6% in the same period. So let’s stop telling the New Zealand public we are helpless and can’t do anything.  The lack of leadership on this issue puts us in danger of becoming another Iceland.” says Pellett.
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Singapore has it right. We have it wrong. Here’s why.

Let’s look again at Monetary Policy (pptx)

Let’s look again at Monetary Policy (pdf)

Bill English, Dr Bollard and Treasury are doing their best to paint an accurate picture of where we are as a country. Unfortunately the Prime Minister seems to be presenting a very different landscape to the public. If borrowing an extra $250 million a week doesn’t make the Prime Minister and the average New Zealander think we have a problem with the way our economy is operating, what will asks Selwyn Pellett, the spokesperson for the Productive Economy Council.

“The fact is that we are living beyond our means and we need to restructure our economy. If we were talking about a business, the need for a restructure would be taken for granted. The shareholders would be demanding it and the CEO would see the need to make hard decisions or know they will be replaced by the board. Well, our economy is a business, and we are all shareholders. It’s time we made that demand, and it’s time the Prime Minister realised that hard decisions must be made,” says Pellett.
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This Powerpoint presentation outlines the PEC’s vision of where we’ve gone wrong economically as a country and what the PEC thinks we should do to get it right.

Download Growing up to business (1875KB)

The Prime Minister’s comments on Capital Gains Tax has brought into sharp focus his leadership style says Selwyn Pellett, spokesman for the Productive Economy Council.

“It is totally inappropriate to make these comments before the tax advisory group has officially released its findings,” says Pellett. “The Prime Minister has essentially said that the tax advisory group is wasting its time, because he is highly unlikely to listen to their findings if it involves a recommendation for any type of Capital Gains Tax. It looks like John Key is telling the advisory group and the rest of New Zealand that he doesn’t need to listen to advice from either experts or those economically affected by property speculation. That’s an enormously arrogant position for any Prime Minister to adopt so early in his term as Prime Minister.” read more »

“Dr Bollard’s comments about the need for a speculation tax are underwhelming in light of the rise of the NZD to 70 cents against the US dollar and the damage another bank fuelled property bubble will do to our economy. It’s time farmers and exporters joined together to tell the Prime Minister that Dr Bollard needs more sophisticated tools as the OCR is a very blunt instrument,” says Selwyn Pellett, spokesman for the Productive Economy Council.

It is the PEC’s position that property speculators are doing serious damage to the economy, aided by the banks and our outdated monetary policy. The PEC calls on Dr Bollard to be more candid with the country about just what the relationship between property speculation, monetary policy and the bank’s behaviour is and the effect it is having on the economic outlook for the country. read more »

The OCR has become a rod with which Dr Bollard can beat exporters while he remains powerless to punish speculators and banks, says the Productive Economy Council (PEC) in reference to the pending RBNZ statement out this week.

“The reports today suggest the recession is over for the average New Zealander and that may well be true. The housing market has again started to take off and bank lending follows. Yet the green shoots of economic recovery are still so fragile that any decent frost will wipe them out. The tradable economy (Exporters) is hurting more now than at the beginning of the recession and Dr Bollard must surely know that. As a result his options are actually very limited”, says Selwyn Pellett, spokesman for the Productive Economy Council. read more »

PEC’s submission to the Parliamentary Banking Inquiry can be viewed here (PDF).

The presentation by the New Zealand Manufacturers and Exporters Association to the Banking Inquiry can be viewed here and its full submission here.

In commenting today that “there is some evidence at the moment that the recovery could consist of a pickup in housing,” Finance Minister Bill English went on to tell reporters that “now that’s more of the problem than we had before and it would be a concern particularly if it goes with a high exchange rate that punishes our exporters.”

Productive Economy Council spokesman Selwyn Pellett says that while the government is 100% on target in identifying the problem that real wealth creation for the country can only come from exports, the PEC remains unconvinced about its commitment to solving it. read more »