A year has now passed since the 2008 General Election. It’s a good time to reflect on the track record to date of the new National government. Have they helped or hindered economic recovery?
On the jobs front, the new National government has been conspicuous in their absence. 150,000 Kiwis are now unemployed, that’s 41,000 more than when John Key came into power. There is no doubt in my mind that National could have done much more to keep many of those hardworking Kiwis in their jobs.
All we’ve had from John Key is window dressing. His jobs summit in February is now widely considered a waste of time and recently his big idea from the summit, his cycleway, was launched without any reference to jobs.
Kiwis will be looking across the Tasman and wondering why unemployment there has now started to fall, while ours continues to rise. The answer is Australia’s government had a plan to get through the recession while National did not. The Australian Government acted early, it was decisive and it gave help to those who needed it.
By contrast John Key held a summit for the photo op and then sat on his hands and did nothing while more and more Kiwis were laid off. They could have focused their first Budget on jobs, but they didn’t. They could have targeted their tax cuts to lower income earners, but they did the opposite.
It’s not just the increasing number of those finding themselves out of a job that have struggled in the past year either. Hard working Kiwi families are increasingly struggling with the rising cost of living. While the power and gas companies continue to rake up huge profits, ordinary Kiwis face ever rising power and fuel bills. The weekly trip to the supermarket continues to be a financial battle of wits for many working New Zealanders as food prices continue to rise.
Instead of focusing on easing the burden on Kiwi families, National is doing the opposite. Their changes to the Emissions Trading Scheme will place an even bigger burden on the taxpayer, who will now end up subsidizing some of our biggest polluters by billions of dollars. It just doesn’t make sense.
There is a better way. If National is really committed to easing the burden on hard working Kiwi families and closing the wage gap between New Zealand and Australia they could start by picking up Phil Goff’s suggestion that we consider a new approach to monetary policy.
At the moment our exporters are struggling with the wildly fluctuating currency, a problem that will only be compounded if interest rates start to rise again. That’s costing us jobs and preventing our exporters from growing their businesses.
Phil Goff has had enormous experience in trade policy and international economics. He shepherded forward a host of historic trade pacts and is acutely aware of how onerous our volatile currency is for exporters. Mistakenly, we may think in the Hutt Valley that monetary policy is an arid, distant field of endeavour, unrelated to our wellbeing. Wrong conclusion!
If we are to develop our economy and achieve a position comparable with Australia it must come from export growth. International markets are keen on our goods and services. But an exporter has to convert overseas earnings into Kiwi dollars, and therein lies the rub. Irrespective of a firm’s efficiency, innovation or size, the currency conversion rate dictates the value of their overseas efforts.
Our currency is one of the most actively traded in the world. These trades have more to do with interest rate margins than our actual exports. This is debilitating for many exporters, it reduces jobs and stunts our economic development. If we’re going to get the Kiwi economy back on track, addressing the flaws in our monetary policy would be a good place to start.
I know that 2009 has been a challenging year for many of our local families. I hope that you will enjoy a relaxing summer break and a much more prosperous New Year.
