Steven Joyce’s stubborn refusal to acknowledge that the currency is overvalued is costing Kiwis jobs, says Labour’s Finance spokesperson David Parker.
“Steven Joyce is far too relaxed about the crippling effects of our overvalued dollar. Despite the hundreds of jobs being lost in exporting in recent weeks he flippantly says the dollar is ‘pretty toppy at this point in time’.
“He won’t acknowledge that the dollar is too high and doesn’t reflect the fundamentals of our economy. The facts are clear. Our dollar is overvalued. That hurts business and costs jobs.
“Let me point out the arguments.”
· The IMF says our currency is overvalued by around 15 per cent.
· Two US economists, Cline and Williamson have produced a league table of overvalued currencies since 2009 across thirty-four countries. Over the past three years, the Kiwi has consistently been overvalued, placing in the top three each year.
· Our Current Account Deficit is at $10 billion, so despite the best terms of trade in a generation we haven’t covered the costs of our imports and interest.
· The Reserve Bank says our 30-year Current Account Deficit will get worse.
· Our high international liabilities and Current Account Deficit caused New Zealand to be downgraded by ratings agencies last year.
· The Kiwi dollar is the tenth most traded currency in the world.
· Thousands of jobs are being lost in the export sector, in places like Invercargill, Kawerau and South Auckland. If the dollar reflected the fundamentals of the economy, those businesses would be performing better and hiring people, not firing them.
“Businesses are shutting, Kiwis are losing jobs and families are struggling because the dollar is overvalued. If the dollar reflected the fundamentals of our economy, our exporters would be performing better and could compete overseas.
“Labour has a plan to get the dollar down. We need to end National’s policy of primacy of inflation. The Bank needs to consider other critical aspects of the economy such as exchange rate and employment.
“Steven Joyce calls such ideas snake-oil and loony but he is refusing to face up to the problems of our overvalued currency.”