Change nothing --- and nothing changes
new-zealand-labour-party
Sun Oct 02 2011 13:00:00 GMT+1300 (New Zealand Daylight Time)
Change nothing --- and nothing changes
Sunday, 2 October 2011, 2:28 pm
Press Release: New Zealand Labour Party
David
PARKER
Economic Development Spokesperson
Change nothing --- and nothing changes
Bill English continues to bury his head in the sand despite last Friday’s twin credit rating downgrades announced by Fitch and Standard and Poor’s, says Labour’s Economic Development and Associate Finance spokesperson David Parker.
“It’s almost unbelievable that Bill English denies the downgrades are a blow, when National has said repeatedly that avoiding downgrades was a key priority for the Government,” David Parker said. “He is even trying to downplay the potential impact of the downgrades on interest rates.
“The lack of a credible plan from National to cure our economic woes is starting to bite –-- not just affecting those suffering unemployment. Everyone will be affected by the drop in our credit rating and the higher interest rates it causes.
“Under current government settings it gets worse from here,” David Parker said. “Using the government’s own predictions, then, if National is re-elected, after six years of their management New Zealand gets poorer, then poorer, then poorer still.
“This is why New Zealand has suffered the credit downgrades. Yet John Key says we will muddle through, and Bill English says it is all in hand and no changes are needed.
“We have heard a great deal about how our poor economic performance has been made more difficult by the global financial crisis and the Canterbury earthquakes, but our structural economic problems plainly need a long-term plan to fix them. The current trend is clear,” David Parker said.
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“For decades we have spent more than we have earned as a country. We need to address this. Our country needs to save more, invest in the export sector and export more. A structural fix is required if we want to develop a robust economy and own our own country.
“The current system cannot deliver this change. The projections in the present government’s budget show what is already bad, gets worse. The current account deficit is projected to increase to 6.9 per cent of GDP. This flows through to ever more debt and more of our assets being owned overseas.
“New Zealand’s net investment position measure shows what we own of the rest of the world less what they own of us. As the ratings agencies say, it is not good news. The latest budget shows this total’s negative 78 per cent of GDP by the end of this financial year (after receiving the reinsurance proceeds from Christchurch).
“This gets worse every year hereafter, rising to minus 85 per cent by 2015,” David Parker said. “What this shows, is that substantial structural change is needed to improve our fortunes.
“There are three levers that only a government can pull to help our export economy grow stronger:
• changes to the tax system (a capital gains tax will direct more of our precious investment capital to the productive export sector, and a research and development tax credit will help our businesses to build new opportunities);
• changes to monetary policy to help our exporters;
• improved savings to increase the capital available to grow our businesses and own our own assets.
“National has failed on each of these important fronts,” David Parker said. “Labour has a plan for each.”
ends
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