Press Release – ACT New Zealand
Excessive government spending – and the borrowing to fund it – is partially to blame for the high New Zealand dollar that is hurting our exporters, ACT Leader Don Brash said today.Reducing Govt Spending Crucial For Exporters
Press Release by ACT Leader Don Brash
November 16 2011
Excessive government spending – and the borrowing to fund it – is partially to blame for the high New Zealand dollar that is hurting our exporters, ACT Leader Don Brash said today.
“Today, the Official Cash Rate (OCR) in New Zealand is higher than in any other developed country in the world except Australia,” Dr Brash said.
“The relatively high OCR affects our domestic interest rates, driving them up, resulting in more overseas investors buying up New Zealand dollars to invest in New Zealand. It’s this demand for our dollar that’s keeping it so high.
“The New Zealand Manufacturers and Exporters Association estimate that each one per cent rise in the New Zealand dollar costs exporters $200 million per annum. Over the past two and a half years the dollar has skyrocketed 38 per cent, costing exporters approximately $6.6 billion. This is a massive and unfair burden to bear, and is hugely damaging to the overall economy.
“Right now, we need to be assisting our exporters, not penalising them. If National showed greater fiscal restraint and reduced government spending, it would inevitably prompt the Reserve Bank to reduce the OCR, which would boost export growth.
“That’s why it’s so important for National to agree to pass ACT’s Spending Cap Bill immediately after the election. This would cap government spending, limiting any increases to inflation and population growth. It would inhibit future Governments from irresponsible ‘Labour-like’ spending binges.
“Getting government spending under control is crucial and ACT is the only Party in Parliament with a serious policy to do that,” Dr Brash said.