Trust & confidence needed for investment

28/06/2018

Who’s surprised?

New Zealand business confidence plunged to a seven-month low in June with retail most gloomy as costs, credit and capacity weigh on firms.

A net 39 per cent of 341 firms surveyed in the ANZ business outlook survey expect general business conditions to deteriorate in the coming 12 months, 12 points lower than May’s result and the lowest that measure has been since November 2017.

The survey has become a political football since the election as headline confidence has continued to weaken, with Finance Minister Grant Robertson saying he thinks it’s an issue around perception and the survey is not historically correlated with GDP growth.

Companies are also typically more downbeat about the broader economy under a Labour administration, and ANZ stressed today that business sentiment “is only one input into the decision-making that drives the economy” and “firms’ expectations of their own activity are a better gauge of future GDP growth.”

That measure was today down but remained positive, with a net 9 per cent of firms predicting increased activity in their own business, from net 14 per cent last month. . .

Businesses need trust and confidence to invest and grow, this government has shown little to foster either.

The captains’ call to halt future oil and gas exploration without consultation or warning; the fuel tax;  the prospect of employment legislation which will strengthen unions at the expense of employers and employees; an increase in strikes; the prospect of higher inflation and interest rates . . .

All this and more are disincentives to the investment which is needed for the business growth which secures and increases employment and economic prosperity.

 


NZ 3rd for growth but . . .

16/09/2016

Good news on the economic front:

The third highest growth rate in the OECD shows the Government’s management of the economy is delivering more jobs and opportunities for New Zealanders, Finance Minister Bill English says.

Statistics New Zealand reported Gross Domestic Product grew by 0.9 per cent in the three months to 30 June 2016. This took annual growth to 3.6 per cent – putting New Zealand’s growth rate in the top three among developed economies.

“Despite the tough period the dairy industry has been through, we are in the unusual position of enjoying solid growth, rising employment and real wages at the same time as very low inflation.

New Zealand’s annual growth rate of 3.6 per cent is more than double the OECD rate of 1.6 per cent and compares with 3.3 per cent in Australia, 2.2 per cent in the United Kingdom, 1.2 per cent in the United States and 0.8 per cent in Japan.

The result means the New Zealand economy is now worth more than $250 billion for the first time.

Growth in the June quarter was led by construction which grew by 5.1 per cent over the quarter. Residential construction was up 10 per cent over the last year – reinforcing the fact that New Zealand is in the middle of a significant building boom.

Exports of goods increased 7.6 per cent for the quarter, the highest increase in 18 years. 

But there is a but:

“While this result is solid and the outlook is relatively positive, there are many risks around and we cannot afford to take our current economic performance for granted. That is why the Government is continuing to focus on building a stronger, more resilient economy.

The Opposition and the other wailers have plenty of other buts including too many people not benefitting from the growth.

You could look at it that way but a growing economy is not a magic bullet.

New Zealand has entrenched problems of dependency which leads to and/or exacerbates poverty with all its attendant problems.

There are myriad causes for that none of which have easy or fast solutions.

But the opportunities to address not just the problems but the root causes of them are greater with a growing economy.

That New Zealand not only has one but has the third fastest in the OECD in spite of the dairy prices in the doldrums, is very good news.

 

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Really working for NZ

22/06/2015

National’s campaign slogan was working for New Zealand and its policies really are:

New Zealand recorded another quarter of continued economic growth, confirming that the Government’s sensible economic programme is taking New Zealand in the right direction, Finance Minister Bill English says.

“A reduction in dairy production contributed to quarterly growth of 0.2 per cent coming in at the lower end of market expectations, but still resulted in annual growth of 2.6 per cent,” he said. “A strong economy provides Kiwi families with new jobs, higher incomes and opportunities to get ahead.

“We are seeing solid, sustainable economic growth that is giving businesses around the country the confidence to invest another dollar and hire another person.”

74,000 jobs have been created in the past year, and average annual wages have increased by $5,700 in the last four years. Treasury forecasts they will rise by a further $7,000 to around $63,000 by mid-2019, considerably faster than inflation.

“Sustained economic growth is translating into real benefits for New Zealand households. But we need to stay on course to really lift our long-term economic performance.”

The latest quarter was driven in part by the expected reduction in dairy production as a result of drought conditions, with agriculture down 2.3 per cent. Mining activity was down 7.8 per cent, whereas retail trade and accommodation increased 2.4 per cent and construction was up 2.5 per cent.

Average annual economic growth was 3.2 per cent.

“The lower dairy output was in line with Treasury’s forecasts, which see the economy continuing to grow at around 2.8 per cent on average over the next four years.

“This results highlights that New Zealand is closely tied to international markets, and risks are ever-present.”

New Zealand’s 2.6 per cent GDP growth in the year to March compares with 2.3 per cent in Australia, 2.4 per cent in the United Kingdom, 2.7 per cent in the United States, 2.1 per cent in Canada, negative 1 per cent in Japan and 1 per cent in Germany. Average growth across the OECD was 1.9 per cent.

Whether you’re an individual, family, business, other organisation or government, careful management of your finances matter not as an end in itself but as the means for doing what you need and want to do.
New Zealand National Party's photo.


Quote of the day

29/04/2015

 . . . Had New Zealand’s economic growth rate been only a percentage point higher since 1970, the country would today have higher per-capita GDP than Australia and be fourth in the OECD instead of languishing below the median.

Further, economic growth is the single best way we can prepare against the range of natural calamities to which New Zealand can be subject. In our report on the merits of economic growth, we found that wealthier countries are better protected against even earthquakes.

Richer places can afford safer buildings. Over the next twenty years, a 1% growth rate would reduce the number of deaths in a substantial Wellington earthquake by about twelve percent. But at a 4% growth rate, the number of fatalities could be cut by over 60%.

As Wellington and Christchurch continue their unwelcome wobbles, let’s not forget the role growth can play in making us all a little safer. Eric Crampton


Highest annual GDP growth for 10 years

19/09/2014

Another reason to vote National for strong, stable government and a growing economy:

New Zealand continues to enjoy one of the fastest-growing economies in the developed world, confirming that the Government’s sensible economic programme is taking New Zealand in the right direction, Finance Minister Bill English says.

“It’s only through a strong economy that we can provide New Zealanders with new jobs, higher incomes and opportunities to get ahead,” he says. “The Government’s economic programme is successfully delivering those things and families can now look forward to the future with some confidence if we stick with that programme.”

Statistics New Zealand today reported gross domestic product expanded by 0.7 per cent in the June quarter. This took annual growth – from the June quarter 2013 to the June quarter 2014 – to 3.9 per cent – the highest growth rate for 10 years and the highest so far reported by OECD countries. Average annual growth was 3.5 per cent.

Mr English says New Zealand’s challenge is to build on the solid foundations provided by the growing economy.

“It’s pleasing to see the good progress we have made as a country over the past few years. The economy is growing, the Government’s books are on track to surplus and another 83,000 jobs have been created in the past year. But one or two years of growth will not change New Zealand’s economic prosperity. We need to stay on course to really lift our long-term economic performance.”

Growth in the latest quarter was driven by construction activity, up 2.2 per cent, business services, up 4.2 per cent, and retail trade and accommodation, up 1.4 per cent.

New Zealand’s 3.9 per cent GDP growth in the year to June compares with 3.1 per cent in Australia, 3.2 per cent in the United Kingdom, 2.5 per cent in the United States, 2.5 per cent in Canada, no growth in Japan and 1.3 per cent in Germany. Average growth across the OECD was 1.9 per cent.

National is delivering one of the strongest growth rates in the developed world. Party Vote National to keep the economy strong. #Working4NZ ntnl.org.nz/1wtJgA2


Meanwhile what matters more

19/06/2014

Political sideshows might excite political tragics.

But what matters far more are what affects people directly.

One of the biggest of those is the economy and there’s good news on that front today:

Strong growth in construction led to a 1.0 percent rise in gross domestic product (GDP) in the March 2014 quarter, Statistics New Zealand said today.

Construction activity grew 12.5 percent, due to large rises in residential and non-residential building. Growth in construction activity was strong in Canterbury and in the rest of the country.

“Construction was responsible for two-thirds of GDP growth this quarter,” national accounts manager Gary Dunnet said. “This is the largest increase in construction in 14 years.”

This is the third consecutive quarter in which GDP has grown by 1.0 percent or more. GDP growth for the year ended March 2014 was 3.3 percent.

The expenditure measure of GDP rose 1.3 percent in the March 2014 quarter. Growth in construction activity was reflected in a 2.1 percent rise in investment. Rises in residential and non-residential building were partly offset by falls in plant, machinery, and equipment and intangible assets.

Spending by New Zealand households was flat, while spending by tourists increased 7.7 percent. Higher tourist spending also drove an increase in exports of travel services, which contributed to a 3.1 percent rise in exports.

The size of the economy (in current prices) was $227 billion for the year ended March 2014.

The third consecutive quarter in which GDP has grown by at least 1% and annual growth of 3.3% – that is a remarkable turnaround in the wake of the GFC.

While earthquake recovery work is helping, growth in construction is not confined to Canterbury.

This reflects the good work led by the government, but Finance Minister Bill English says there is still a big challenge:

. . . “This is the latest in a run of encouraging economic indicators,” Mr English says. “Our challenge is to ensure this growth continues over the long term, because that’s the best way to deliver more jobs and higher incomes for New Zealanders.”

“Business and consumer confidence remains high, manufacturing activity has been expanding for almost a year and a half and the current account deficit is less than half of what it was five or six years ago.

“However, we still have plenty of work ahead of us to ensure these positive indicators continue to translate into real opportunities and progress for New Zealanders and their families.”

The solid growth was widespread across the economy in the March quarter. Construction made the largest contribution, with mining, agriculture, retail trade and accommodation also making positive contributions.

“This confirms businesses are investing for the long-term to support productivity and higher wages,” Mr English says. . .

“We are making good progress but our long-term challenge is to make the enduring structural changes needed for New Zealand to reach its economic potential,” Mr English says.

That will require more of the policies that are working now and none of the anti-growth, higher-tax, higher spending policies the left want to inflict on us.


Manufacturing at highest level since 2006

20/03/2014

Remember all the time and money the Opposition wasted on manufacturing a manufacturing crisis?

They’ll be hoping we don’t as the good news continues:

Strong growth in manufacturing saw gross domestic product (GDP) rise 0.9 percent in the December 2013 quarter, Statistics New Zealand said today.

Manufacturing activity grew 2.1 percent, driven by increases in food, beverage, and tobacco, and machinery and equipment manufacturing. Manufacturing activity is now at its highest level since March 2006.

Dairy farming and dairy product manufacturing both fell this quarter, after strong increases last quarter, when production rebounded from the drought earlier in 2013.

“While dairy activity fell this quarter, exports were up strongly, as production from last quarter was sold overseas,” national accounts manager Michele Lloyd said.

Wholesale trade, including machinery and equipment wholesaling, increased 3.2 percent this quarter. Strong machinery and equipment sales also led to a 7.5 percent increase in investment in these goods. Investment in plant, machinery, and equipment is now at its highest level since the series began.

The expenditure measure of GDP was up 0.6 percent in the December 2013 quarter, driven by exports (up 3.1 percent) and household spending on goods and services (up 1.3 percent).

The volume of spending by New Zealand households in the December 2013 year grew 3.4 percent, driven by a 7.4 percent increase in spending on durable goods. This is the largest annual increase in spending on durable goods since June 2005.

Businesses would not be making the highest investment in plant, machinery and equipment since the series began if they didn’t have a lot more confidence in manufacturing than the opposition.

It contributed to economic growth of 3.1% in 2013 and that figure is more good news.
Photo: Just announced: 3.1% economic growth in 2013 - National is building a stronger economy.


Growing, growing . . .

20/09/2012

It couldn’t be called a boom but annual growth of 2.6%, the highest since 2007, is encouraging.

Finance Minister Bill English says:

“New Zealand’s economy continues to perform better than those of most other developed countries, despite uncertainties in Europe, the United States and suggestions that growth in China may come off its recent highs,” Mr English says.

“From the Government’s perspective, we cannot influence these external events, which are having an impact on New Zealand.

“In the current environment, it’s important that we continue with our wide-ranging economic programme to increase New Zealand’s long-term competitiveness and give our businesses the best chance of succeeding.

“We are focused on growth that is sustainable and built on higher savings and earnings, rather than consumption and debt. Households and businesses are recognising this need for change and are changing their behaviour.” . . .

“We are making good progress and the outlook is for further moderate growth over the next three or four years,” Mr English says.

GDP growth for the June quarter was .6%.

The main contributors to the increase in economic growth this quarter were, by industry:

  • agriculture (up 4.7 percent), with continued good growing conditions resulting in increased milk production
  • construction (up 3.3 percent), due to increases in heavy and civil (infrastructure) and residential building construction
  • transport, postal, and warehousing (up 2.7 percent), as air transport bounced back from disruptions due to the Chilean volcanic ash cloud in the same quarter last year
  • manufacturing (up 0.8 percent), due mainly to an increase in transport equipment manufacturing.

“The good pasture conditions in the first half of the year continued to contribute to economic growth this quarter,” national accounts manager Rachael Milicich said.

“We are also now seeing evidence of a rebuild in Canterbury following the earthquakes.”

Given how small our economy is and how dependent we are on the rest of the world, so much of which is struggling financially, a 2.6% growth in GDP is an achievement.

The government has been quite clear its aim is sustainable growth based on savings and earnings rather than debt.

Households and businesses have got that message. Opposition parties’ behaviour – fighting against spending cuts and calling for the government to spend here and subsidise there – show they haven’t.


Living standard about more than money but not high without money

27/05/2011

Treasury has decided there’s more to higher standards of living than material wealth:

Treasury’s understanding of the term living standards goes beyond the narrow material definition – often proxied by GDP – to incorporate a broad range of material and non-material factors such as trust, education, health and environmental quality. In taking a broad approach to understanding living standards, Treasury is in line with other economic institutions internationally. For example, the Australian Treasury acknowledges that “analyses of economic development or progress that only take income into account neglect other important determinants of wellbeing”  . . .

I can’t argue with that. Anyone who thinks the standard of living is all about material wealth knows more about price than value.

The OECD certainly thinks so in its better life initiative:

The Index allows citizens to compare well-being across 34 countries, based on 11 dimensions the OECD has identified as essential, in the areas of material living conditions and quality of life: housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety, work-life balance..

New Zealand performs well on the index which rated factors including  income, employment, education, health, civic participation and satisfaction.

New Zealand performs exceptionally well in overall well-being, as shown by the fact that it ranks among the top countries in a large number of topics in the Better Life Index.. .

. . . When asked, 77% of people in New Zealand said they were satisfied with their life, above the OECD average of 59%.

Our average incomes are lower than those for the OECD but we’re above average for most other factors. However, the report acknowledges that while money can’t buy happiness it contributes to higher living standards.

That reminds me of a quote attributed to Margaret Thatcher:

“No one would remember the Good Samaritan if he’d only had good intentions – he had money too.”

A high standard of living must take into account more than material possessions, but it still requires material goods and services and the money to buy them unless you remove yourself from society and become wholly self-sufficient.

You don’t need a lot of money to have a good life but you’ll have a better life if you, and your country, have more than enough.


Feds’ election wish-list pt 3

04/11/2008

Federated Farmers 42 page election manifesto is certainly comprehensive.

I looked at the first 16 pages a couple of posts back and pages 17 – 24 in the last post.

Page 25 continues with a list of what it wants local and central government to do:

Local government should:

* Take better account of inter-generational equity through prudent use of debt . .

* make greater use of uniform annual charges.

* Make greater use of targetted rates to ensure that there is a better link between the funding of services and a resident’s acces to an benefit from such services.

* Provide ratepayers with itemised tates assessments.

*Report financial information consistently to enable comparisons.

*Participate in performance benchmarking.

Central government should:

* Enable councils to move away from having to fully-fund depreciation.

*Provide more revenue from petrol taxes and road user charges to ensure that local roads (like state highways) are funded according to road use rather than property value.

Given how little use some country roads get this might mean very little funding for them.

* Commit funds to councils if it is imposing increased roles, responsiblities and costs on them.

* Commit one cent of the 12.5 cents of GST as a general revenue share for local government to recognise new legislation obligations.

* Remove all rating exmpetions on land, including Department of Conservation land.

* Issue a clear policy direction that central government retains all responsbilitiy for income redistribution and that this is not a role for councils.

Rates have increased far more than the rate of inflation and one of the reasons for this is the imposition of extra responsbilities by central government without any extra funding.

The policy then moves on to pest management and asks for:

* Management plan to deal with bee pests not currently in New Zealand.

* The removal of restrictions on management of Canada Geese.

* Action plan to make New Zealand TB free and reduce rabbit population.

* The continued use of 1080 poison and public information campaign spearheaded by government.

* Research into alternatives to 1080 to ensure the msot effective tool is being used.

* Remove all rating exemptions on land, including Department of Conservation land, to fully fund pest management at a regional level.

I don’t think any party is prepared to remove the rating exemptions on government land so an alternative would be central government funding for pest management in lieu of rates.

* A Regulatory Responsibility bill to be introduced and passed in the next parliament.

* An independent agency, modelled on the Toronto Red Tape Commission, to revisit all primary legislation, statutory instruments and by-laws for unnecessary compliance cost implications.

I’d add unnecessary rules and laws, especially those eneacted nationally to solve a local problem, to the last point.

* A staged uplift in science and research from 1.2% of GDP to 3% of GDP by 2029.

* A focussing of research funds into the primary sectors which underpin the New Zealand economy.

* Flexibility for Crown research Institutions to reward the best scientists commensurate with their abilities.

* A ring fencing of investment to prevent its access by social scientists and related practitioners.

 If we want to retain our place as one of the world leaders in agriculture adequately funded research is essential.

 * Full market compensation for landowners if land use is restricted under the RMA.

*  Compulsory consultation with affected landowners.

* Clear policy direction for the Department of Conservation in respect of its advocacy role.

* The streamlining of resource consents and the plan processes to minimise activities that need consents and to clamp down on vexatious submitters.

* Long-term economic viability enabled by using transferable development rights, trade offs and creative subdivision policies.

*The changing nature of landscapes acknowledged by reworking the Act’s

emphasis on the protection of amenity.

The theory behind the RMA is good but it needs an overhaul to ensure it works more fairly, effectively and less expensively.


Stats confirm agriculture still important

28/07/2008

NZIER economist Chris Nixon was speaking to the converted when he explained the importance of agriculture at the AGMARDT breakfast during the National Bank Young Farmer Contest.

He said that although agriculture contributes only about 5% of GDP at the farm gate that is only part of the story.

Agriculture has a major impact on downstream and upstream activities. The impact of these industries suggests that roughly 20% of GDP is directly affected by on-farm agricultural activity. These include businesses that service the farming community (downstream) and those that turn farm produce into consumer products – transport and logistics, processing, and marketing activities.

Furthermore, agriculture has a major impact on exports. Land and sea based exports are roughly 42% of exports.

 

The importance of agriculture to our economy is confirmed by a Statistics New Zealand report prepared for Fontera which showed dairy products accounted for 27% of exports earnings for the year to May and all but 2% of that was from Fonterra.

Fonterra is the world’s largest dairy exporter, fifth largest dairy company globally and trades in 140 countries. Chairman Henry van der Heyden said much of the increase had been driven by record commodity prices.

“If we hadn’t had the drought, which saw our milk production drop by around 4 per cent, the figure could have been even higher,” he said.

World economic growth and demand from emerging markets – along with reduced supply, drought in Australia and biofuel production driving up the costs of feedstock – helped drive up dairy commodity prices.

The ANZ Commodity Price Index for dairy products hit 291.9 in November, having risen for 15 consecutive months from 127.6 in August 2006. The dairy index has since fallen in all but one month to reach 256.7 in June.

“We’re seeing continued investment from farmers and in our processing capacity. That’s a huge boost, particularly for regions like Southland with a lot of new jobs and benefits flowing through,” van der Heyden said.

“It’s great that dairying is able to make such a positive and timely contribution to the New Zealand economy at a time when the broader economy is facing increasing pressure.”

It is indeed, although the best may still be ahead of us. Nixon said it takes roughly 18 months for export performance to filter through to the domestic economy so the impact of the good prices farmers are getting now won’t show up beyond the farm gate until the end of next year.


Quango Hunting Season Opens

10/07/2008

Those of us out in the real world will not be surrprised by ANZ Chief economist Cameron Bagrie’s  conclusion that Government spending is being directed into non productive areas.

His study, prompted by a rise in government spending in relation to the economy, found it impossible to assess whether spending was productive, “because no one really knows the counterfactual”.

So instead, Mr Bagrie examined the spending mix — how much was spent on front-line activities, such as welfare benefits, health and education services and police rather than on “back office” (departmental outputs).

`What we find is that back-office (departmental) expenses have exceeded our definition of front-line spending, resulting in an upward trend.”

Growth in departmental outputs has averaged close to 7 percent a year since 1997 while front-line spending increased by 5 percent.

Nominal GDP growth within the economy averaged 5.5 percent. Government spending as a proportion of GDP has fallen from 42 percent in 1995 to 39 percent in 2001 and risen back to the OECD average of 40 percent in 1997.

Mr Bagrie said if the back-office ratio had remained in line with front-line spending then there would have been an extra $1 billion free for other activities and a cumulative saving since 1997 of $3 billion.

It would not have been difficult for people at the front line of public services to find a good use for that money, or some could have been better spent on tax cuts. 

In education, back-office spending had grown annually at 12 percent since 1997, massively outstripping front-line purchases.

Similarly, benefit spending increases had averaged 3 percent while back-office spending had been 7.5 percent a year.

Meanwhile unemployment is at record lows so there are more people in a department helping fewer beneficiaries.

However, in health, the trend was the opposite.

While it was encouraging spending for tomorrow in activities such as education and infrastructure was increasing, it was puzzling relatively more money was going into departmental spending, Mr Bagrie said.

The study found spending in productive government activities (education, law and order, science, housing, defence, employment initiatives, and transport) grew at 5.2 percent compared with those in non productive (departmental outputs, heritage, culture, recreation and economic and industrial services) at 8.4 percent.

That’s a damning indictment on Labour’s priorities.

In another gauge of the spending mix, Mr Bagrie said it appeared growth in spending in “hand-up” activities (front-line education excluding student loans and employment initiatives) was outpacing “hand-out” (benefits) by 4.4 percent to 3.3
percent.

At least that is encouraging.

Mr Bagrie acknowledged shortcomings in his definitions and noted the Government may have been playing “catch-up” in departmental spending due to previous under-spending.

He said there were no benchmarks and the mix of spending was not necessarily wrong, particularly as spending priorities were the result of living in a democratic society.

“Nonetheless, we believe the trend across our gauges is sufficiently clear: more government spending is being directed at areas that are not going to the front-line and for consumption today relatively to tomorrow.”

Mr Bagrie said there needed to be measurable benchmarks introduced into the Government’s stated objectives such as the Fiscal Strategy Report.

However, he said the requirement for transparency and rigorous analysis of spending could be overdone and may be part of the problem. Many resources in education and elsewhere were tied up in approval and monitoring rather than simply getting the job done.

In other words too much time, energy and money is wasted on form filling and box ticking.

With 41 government departments, 65 crown entities, 21 District Health Boards and 9 Crown Research Institutes, Mr Bagrie said it may be time for a repeat of the 1980s “quango hunt” to slim government down.

A quango hunt what fun! Let’s start by reducing the number of DHBs.

Exporters Irked by Nat’s Monetary Policy Stance

08/07/2008

The NZ Manufacturers and Exporters Association is not impressed by National’s support for the current monetary policy.

The party’s defence of the current system failed to acknowledge the damage the policy had caused to New Zealand’s tradeable sector, association chief executive John Walley said.

The approach used interest rates dictated by the Reserve Bank’s official cash rate to curb demand and influence inflation.

That approach had seen exports dropping from 33% of GDP in 2001 to 22% in 2007.

“What we are seeing at the moment is increasing fuel and commodity prices driving inflation which in turn is holding up interest rates and exchange rates.

“These forces are unlikely to stop any time soon so we need to break the link between inflation and the exchange rate,” he said.

He’s right about the problems but I’m not convinced playing politics with monetary policy is the solution.

Associate Finance Minister Trevor Mallard last week announced that the Government was open to looking at alternative monetary policy settings.

National finance spokesman Bill English said now was not the time to start tinkering with a monetary framework.

The Reserve Bank recognised the effect that international oil and food prices were having and the central bank was not going to strangle the economy because of imported inflation.

“It has been well recognised by government officials and commentators that increases in government spending, poor quality spending and increases in government charges are also stoking inflation domestically,” Mr English said.

“Trevor Mallard would be well advised to focus on these inflation factors, rather than signalling a drastic rethink on monetary policy,” Mr English said.

Quite. I have never been able to understand Labour’s belief that their spending of public money is not inflationary but allowing us to keep more of what we earn would be.

Mr Walley hoped National was making a typical election-year response.

Unless policy changes were made, all that could be expected was more of the same as the trade balance deteriorated and the economic situation worsened, he said.

A more responsible approach to the spending of public money might make a difference without the need to make monetary policy a party political issue.


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