Would you agree that a Government that encourages domestic savings, generating local pools of capital that may in part be used to provide venture capital, while discouraging spending, could be beneficial to the economy?

Would you also agree that changing the trust and marginal tax regime, which until now has seen most NZ investors put their money into residential property rather than the sharemarket and/or more productive investment vehicles (like the companies that you have successfully grown) would be beneficial to our economy?

Would you agree that opening up SOEs to domestic capital might encourage New Zealand investors to put their money into enterprises, rather than residential property?

I appreciate that these are all leading questions, but I would highlight that National has had the courage to deal with these core issues around making the economy more productive, and changing the incentives to invest. On all three counts, Labour has opposed these measures. Labour would prefer to protect wealthy landlords than see New Zealanders invest in growing businesses.

You say you don’t like using National/Labour labels, yet you prompted this discussion by applying a political analysis that clearly supports the Labour Party. Yet by every useful measure, Labour has failed to address the core drivers of investment and productivity while in Government, and continues to oppose any such measures while in opposition.

Tim I totally and utterly agree with what you have said and made that point in person to the Labour Party Conference where PEC and Fed Farmers where asked t o speak. Your summation of the economy under Labour as being Government spending, property bubble and high commodity process is all true as well but you have missed out expansion of debt through inflows of cheap foreign capital which was fueling the property boom. I have presented papers, been on television, attended the monetary select committee in 2007 and lobbied anyone who will listen arguing these issues.

The PEC is about a Productive Economy. It believes this productivity always starts from its ability to trade internationally. That ability to trade and retain the profits here in New Zealand has been undermined with a combination of the limited tools set available within the RBA, no restriction of capital flows, our unusually small economy (therefore easily manipulated exchange rate) and the tax bias to property.

If exporters are exposed to the risks identified above then why would anyone invest in exporting and that’s exactly what has happened and that’s where our lack of productivity starts. Get exporters firing and our productivity rises. Kill them and it dies. Yes many internal things can be and should be improved but nothing effects New Zealand as much as our weak monetary policy.

Let’s paint the picture for you. Some entrepreneur does everything right, invents a great product, gets the cost out of it and productizes it and gets ready for a huge export push. He goes to the bank and says “Mr Bank can I borrow 2 million for working capital. Here are all the advanced orders to show demand for my product. Here is my cost and look there is 40 margin left over after all expenses”

The bank says “NO the margin is not enough”

The entrepreneur says “are you crazy it’s at least an adequate and sustainable margin”.

Now the banks expertise shows when the manager says ….”it’s not enough to protect the potential variations in the exchange rate. If you take the volatility of the last two years as and example at some point in these contracts you will be shipping dollars to your customers and for an unknown period. As we can see an inflation bubble coming and the only tool to stop it is the RBA i.e. to increase interest rates, we can see both interest rates going above your budgeted figure and that will cause the exchange rate to go up as well so NO we won’t lend on this deal.

So Tim every banker, corner store operator, real-estate manager, property investor, importer, distributor and retailer says “so what that’s life”

None of these business people will change their views as they benefit from the effects above, at least in the short term. However if we all keep killing our exporters this way we have no ability to fund the imports and pay our foreign debt and then what? Think it through while you think of Spain Portugal Iceland and our very high national debt (around 100 % of GDP)
Yes I am speaking in advance of today’s facts but as the export sector which is roughly 30% of our GDP slowly wakes up to the implications I can absolutely see these policies splitting the business vote. Those in the export sector (that understand the issues) are very excited about Labours new position on monetary policy for all the reasons above. As a country our productivity is rubbish and if people like me wont reinvest in export businesses than we as a county are stuffed. Tim can I suggest you read the article by Bryan Gould http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10658094 which sums it all up very nicely. Stop worrying about labels like Labour, National or Greens and just pick out policies that we need and see what happens.

There is a disconnect between what Labour did in government, and what Labour are saying now. You think it’s because they’re paying attention to what you are saying. I think that position is just basically naive.

Labour did little to expand the productive economy over nine years. You know that better than anybody, as somebody who has actually created successful businesses in New Zealand over that time. What you managed to achieve was despite the Labour government, not because of it. Has it occurred to you that you might actually be a pawn of the Left by making such bold predictions as the business vote swinging in behind Labour, rather than a function of Labour listening to what you say?

My impression of the business view of Labour’s last nine years was that the government failed to capture any benefits from the longest period of economic activity since World War II. You know as well as anybody that the growth in the New Zealand economy was due to a mix of fast-spending on government services, a property bubble, and high export commodity prices. Instead of dealing with critical issues like savings and investment, and economic productivity (and here was me thinking that the Productive Economy Council was actually focussed on boosting economic productivity), Labour failed spectacularly. As you know, economic productivity flat-lined under Labour.

More important than Labour’s words now is their recent record in government.

I might offer you some constructive advice with regards to your commentary. You have very concrete and useful experience establishing export businesses in New Zealand. I think you undermine your credibility by straying into political analysis such as suggesting that the business vote will swing in behind Labour. There has been absolutely no sign of this happening. It is wishful thinking on your part, which in my mind does betray a political bias at worst, and downright naivety at best.

The recent Morgan poll shows Labour’s support dropping again to below 30%. Granted, this is a poll of general voters rather than the business community, but on the other hand it is inconceivable to me that the business community would suddenly sweep in behind a major political party that has has such a poor record in government and is failing in the polls. It is also absurd, as far as I am concerned, that you would make such a prediction without any evidence.

• The PEC is certainly not politically aligned, it is aligned to policy outcomes.
• My own politics changes year on year with the issues of the day / year / decade.
• The PEC believes in Economic Sovereignty and the policies that will deliver that.
• It does not agree that we have best practice in Monetary policy and has advocated that since day one and long before it was Labour Party Policy
• If you read the blogs and the time commitments you will also see us attacking the banks excessive behavior before Labour was involved in an enquiry

So perhaps it’s happening the other way around in that Labour are understanding our message.

With all that said it’s true that I have actively attended every opportunity to speak on these subjects and they have all come from the LEFT. All the policies that we agree with seem to also be coming from the left. What can we say to that?

I’ve just come across this blog. Reading through your posts there is a consistent theme coming through them: John Key is wrong, Phil Goff is right.

It’s hard reading through your blog to conclude otherwise than you are a Labour Party hack, and the Productive Economy Council is just a front for the Labour Party.