The Productive Economy Council and the New Zealand Manufacturers and Exporters Association are pleased to help stimulate new thinking by sponsoring the inaugural Alternative Budget Competition which is open to all currently enrolled university students.

“Generations X and Y have a huge stake in the future of our country since it is on them that the tax burden of supporting any future benefits – which they may or may not receive – will fall. And yet these generations are poorly represented among those who form our economic policies,” says Selwyn Pellett, spokesman for the Productive read more »

The proposed buyout of the Crafar dairy empire by Natural Dairy (NZ) Holdings, a Cayman Islands registered, Hong-Kong based company – previously known by the more illuminating name of the China Jin Hui Mining Corporation – should start alarm bells ringing with the New Zealand public, says the Productive Economy Council.

The public has a historical resistance to asset sales, but many might not understand that our agricultural sector is just such an asset, of such importance to the economy that selling large parts of it off to foreign interests is not in the national interest.

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“There is a general consensus across all political parties and government bodies that New Zealand’s economic future is precarious – our exports are low, our debt is high, our relative standard of living continues to decline. As a small, open trading economy with a heavily reliance on commodity exports, coupled with a volatile exchange rate, we are prone to “boom and bust” cycles.

But the public discourse for many years has been limited to the solutions of the neo-liberal right. They haven’t worked. New Zealand Fabians believe that we need a wider debate, and a wider range of progressive options and solutions to consider and discuss.”

Mike Smith, Chair of the New Zealand Fabian Society announces its seminar and lecture series kicking off next month in Auckland, Wellington and Christchurch, over at Publicaddress.net

“He is saying, I don’t like the activity of investing in property to avoid paying taxes, but I’m not brave enough to challenge them or convince them what is in their best long term interests.

He has finally shown his colours. He is a mediocre leader without the vision or the ability to change New Zealand. He is a seat-warmer who is too scared to scare the masses.”

Bernard Hickey reacts to Prime Minister John Key’s outlining of his economic plans today – NZ Herald

The Productive Economy Councils welcomes Labour’s stance on tax and monetary policy reform

The Productive Economy Council welcomes comments in a speech from Labour leader Phil Goff today in which he outlined Labour’s economic priorities in 2010.

PEC spokesman Selwyn Pellett says Phil Goff is spot on in highlighting the need to up skill our population to create more productive and wealthier society.

“Phil Goff obviously understands the danger we face. Namely, that as New Zealand comes out of the recession it is not enough to simply rely on a default recovery back to the status quo. It will be all too easy to mistake a general improvement in the economic outlook for a positive long-term prognosis for our economy’s health. In reality our economy is in no better position to guarantee a prosperous future than it was before the recession,” says Pellett. read more »

The Tax Working Group is the latest initiative from the government that is setting out to find answers to questions we haven’t yet asked, says the Productive Economy Council.

“Like Don Brash’s productivity taskforce, the Tax Working Group will inevitably make recommendations to “fix” a broken system. Which is fine, as far as it goes. The problem is that that if New Zealand is viewed as a train, with the economy as the engine, and our society as the carriages being pulled behind, these fixes might help keep the whole train moving, but they do nothing to define its destination.”

“In short, what’s lacking in all of this is any articulation of a vision for our economy, our society and our country,” says PEC spokesman Selwyn Pellett.

“The applicability of any of the policies from the Tax Working Group can only be measured against such a vision,” he says.

“Without an articulated vision, how do we as a country decide which is better; a lift in GST (Goods and Services Tax), to tax income derived from capital appreciation (Capital Gains Tax) , or a land user tax? All have very different outcomes and biases and considered in isolation they all have merits.”
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“Labour has also to rethink tax, productivity growth and innovation. Like Mr English, it worries about the serious imbalance between exports and the domestic economy, low savings and seriously high foreign debt. Unlike Mr English, Labour is much concerned with “economic sovereignty”.”

Colin James analyses Labour’s shift in thinking on inflation targetting in The Dominion Post

Phil Goff’s decision to seek a more equitable monetary policy is welcomed by the Productive Economy Council.

It’s good to finally see a politician stand up and say we have got it wrong with our monetary policy and it’s time to fix it.

But Labour’s shift in position is only the first step in what promises to be a bitter fight about the future of our economy. The business community is clearly divided into two camps; those that make their money from exports, creating jobs and earning the country’s foreign exchange and who are thus heavily penalized by our volatile dollar and tax regime, and those who profit from the current system, exploiting the tax system and shifting exchange rate to their advantage and the county’s detriment.

While exporters and farmers will welcome Labour’s new focus on getting the fundamentals of our economy right, those in favour of the status quo represent a powerful lobby group both numerically and in terms of funding ability.

They have benefited from our dysfunctional economy for so long, that they appear to have mistaken what is good for them as being what is good for the country as a whole, even when there is a mountain of solid evidence to the contrary. read more »

John Key’s comments this morning about New Zealand having best practice in monetary policy is clearly untrue. The facts don’t support John Key and as an ex-Foreign Currency trader himself he must surely know that. Singapore is currently No 9 in GDP per capita in the world and we are no 46. Mr Key needs to explain if we do have best practice why so many countries that don’t have our monetary policy rank at the top twenty in Global GDP per capita rankings. In 1965 Singapore was No 42 in GDP/Capita and New Zealand was No 11. If we have best practice where are the results Mr Key exactly where are the results?

Mr Key looks and sounds nervous on this issue and throw away lines like “If Labour want to increase petrol prices etc we won’t have anything to do with it” are designed to scare the public and derail the debate. As people have said, if politicians where paid in US dollars this problem would have been solved 20 years ago.

In a speech to Federated Farmers today Labour leader Phil Goff  has indicated that at least one of the major political parties appears to be getting the message, saying:

“… our Reserve Bank policy targets are not well designed to produce a stable and competitive exchange rate, nor to keep interest rates as low as possible. In fact, it often operates the other way round. When there is a surge in domestic demand, the policy response is to increase interest rates. Ironically, higher interest rates attract even more inflows of foreign capital, which then gets lent out and sometimes causes even stronger domestic demand. So New Zealand’s overseas debt increases inexorably, while monetary policy punishes our most productive businesses and first home-buyers – just about the two sectors that we least want to affect.”

The full text of his speech is available here.