Half of all New Zealand companies involved in exporting are being hurt by the high and volatile New Zealand exchange rate, said Green Party Co-leader Dr Russel Norman today.
Data obtained by the Green Party from Statistics New Zealand show that 46 percent of businesses surveyed saw the high exchange rate and/or high exchange rate volatility as a major barrier to growth. This same study showed that only 13% of businesses surveyed saw overseas government regulations or tariffs as a barrier to growth.
"Our high and volatile exchange rate is hurting our export industry with close to half of all New Zealand export companies saying it is constraining their exports," said Green Party Co-leader Dr Russel Norman.
"John Key's Government has spent too much time pursuing free trade agreements when it's the high and volatile kiwi dollar that is affecting export businesses the most.
"The National Government's lack of leadership in this area leaves our economy structurally vulnerable and has kept wages low.
"We need to have a national discussion on measures that can stabilise our exchange rate at levels our export industry can thrive in.
"The Government's short-term interests favour a higher exchange rate - one that keeps imports cheap while ignoring the longer-term structural damage high exchange rates have on our economy."
Dr Norman proposed a number of possible measures for addressing the high exchange rate but warned that there was no quick fix, hence the need for a wide public policy debate on the issue.
"If we want a smart economy that can pay its way in the world, we are going to need to address our high and highly volatile exchange rate," Dr Norman said.
"We can reduce the pressure on the exchange rate and the export sector by empowering the Reserve Bank with a mandate beyond inflation to include exchange rate levels and volatility.
"This can include macro-prudential measures like requiring banks to raise more capital onshore.
"Instituting a tax on capital gains (excluding the family home) would also ease upward pressure on the exchange rate.
"There are smarter ways to manage our economy than the National Government's current focus on selling our most productive state-owned assets.
"The Government can set in place the drivers and incentives for our companies to export, innovate, and thrive."
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