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Labour Party: Macroeconomic Environment Policy

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A sustainable economy requires a supportive macroeconomic environment.

Labour will work in conjunction with the Treasury and the Reserve Bank to promote best international practice coordination between fiscal and monetary policy implementation in order to best protect the tradeable sector from undue volatility in interest and exchange rates.

Labour recognises that in the current circumstances the government will be running a significant deficit in the short term, but is committed, over the longer term, to a level of Crown debt that will allow us to manage known future fiscal demands (such as those arising out of population ageing).

New initiatives which Labour will announce prior to the election will be funded within currently projected fiscal allowances. New departmental initiatives will, in the first instance, be paid for out of baselines.

Labour will not respond to a more difficult fiscal environment by cutting back on public services to New Zealanders, as our opponents would do.

We remain committed to strong, properly resourced and effective public services.

We will, however, strictly prioritise spending over the next three-tear term, and will ensure that, spending which contributes most to economic and social development is given the highest priority.

Improving the investment environment is a key part of Labour's economic transformation strategy. To deliver wealth and jobs, New Zealand firms need ready access to affordable capital.

New Zealand's capital markets have improved over recent years, boosted by the over 800,000 people who have joined KiwiSaver, the business tax package and the changes to the Portfolio Investment Entity regime. But to strengthen this position we must continue to develop the breadth and depth of our capital markets.
Labour will further develop financial markets to address issues of small capital markets and other problems.

We have already established an industry-led taskforce to producing a blueprint and action plan to develop New Zealand's capital markets. The Capital Market Development Taskforce is looking at the current state of our capital markets, the international context, future risks and opportunities and key changes necessary to deliver the best possible financial system for New Zealand. It will report in mid-2009.

Labour will deepen venture capital and equity markets through a “fund of funds” in venture capital a joint public/private sector foundation for independent research on equities.

Labour will maintain the effectiveness of recent changes to the tax system in improving New Zealand’s savings and investment levels and is committed to progressing its international tax reform agenda to strength the competitiveness of New Zealand-based firms.

Labour will consult with the Guardians of New Zealand Superannuation and KiwiSaver Providers on what changes to current settings would most facilitate increased investment in New Zealand by their funds.

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