The latest interest rate rise will hit the fragile regional economies of New Zealand and hurt exporters by putting more upward pressure on the exchange rate, says Labour’s Finance spokesperson David Parker.
“The regions are already hit by dropping export prices for dairy products and timber prices plus they have flat housing markets from LVRs . Now they have to endure another interest rate rise which is a direct result of the Auckland housing price bubble.
““The Reserve Bank Governor has already said mortgage interest rates will get close to 7% by the end of the year, adding $233 to monthly costs on a $300,000 mortgage.
Labour will ensure no regions in New Zealand are ‘red-zoned’ by tailoring Regional Growth Plans for each province as part of our Economic Upgrade, Labour’s Finance spokesperson and Deputy Leader David Parker says.
“The Royal Society of New Zealand’s Our Future report highlights the hollowing out of our regions under National, a trend that Labour has long warned of.
“That trend has become reality. A number of experts such as the NZIER, the Royal Society and Infometrics have warned that things have become so bad some communities may be abandoned.
New Zealanders have tremendous pride in their towns and regions. It is insulting to them and their forbears that they have been abandoned over the past 6 years by National’s management of the economy.
“Labour won’t abandon the regions – we will help them to succeed. Labour’s policies will support industry and boost growth to create jobs and opportunities in the provinces.
“We will work alongside businesses, communities and local government to tailor Regional Growth Plans to each province, as called for by experts such as Shamubeel Eaqub. Labour will announce further regional development plans next week.
The drop in the Fonterra payout shows New Zealand needs to diversify its economy and provide the settings to allow other industries and sectors to grow, Labour’s Finance spokesperson David Parker says.
“Fonterra’s 2.9 per cent cut in the forecast milk payout highlights the concerns Labour has repeatedly expressed over our economy being too reliant on the price of one commodity.
“Yesterday’s NZIER forecasts confirm growth in this country is driven by two areas – dairy and the Christchurch rebuild. A significant drop in milk prices could have serious flow-on effects for the economy.
“Labour’s Economic Upgrade will diversify our export economy and support other sectors through policies to support investment, innovation and industry.
“We will encourage investment through universal KiwiSaver that will boost our investment pool. Our capital gains tax will get that money away from property speculation and into productive businesses. This will lift wages and take pressure of house prices.
“We will support innovation through our research and development tax credits and tax incentives to encourage investment in new technology which will encourage businesses to expand.
“Our industry support policies for manufacturing and forestry have been well received by business and more will be released in the coming months.
“Our Reserve Bank Upgrade will lower the dollar and keep interest rates and the cost of capital lower for business.
What really matters to New Zealanders is a strong economy that provides secure work and good wages, says Labour’s Finance spokesperson David Parker.
“On Tuesday Labour will detail its changes to the Reserve Bank Act. These changes will help create jobs and take pressure off interest rates.
“For forty years New Zealand has not exported enough to cover the costs of our imports and interest.
“Our Reserve Bank changes, combined with our wider Economic Upgrade, will help New Zealanders by creating better jobs that pay higher wages for Kiwis by helping our exporters compete overseas.
“Labour’s changes will work with our Economic Upgrade focussing on investment, innovation and industry policies.
The loss of 70 jobs at Alloy Yachts shows the pain being inflicted on exporters by the high New Zealand dollar and the need for an upgrade of our out-of-date Reserve Bank Act, says Labour’s Finance spokesperson David Parker.
“Our overvalued New Zealand dollar is having a huge impact on manufacturers, especially those like yacht-building that rely almost wholly on exporting. In January Fitzroy Yachts in New Plymouth said it would have to close down. Now Alloy Yachts is slashing its workforce.
“It is a heartbreaking time for the families of those workers who often have to leave the region or go overseas to find jobs; all because our dollar is overvalued, by up to 15 per cent, according to the IMF.