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JAN 13

Political Stunt?

When the Manufacturing Inquiry was announced we sent out an email to all our members, letting them know and encouraging everyone to make a submission. We had the following response from one of our members:

“This is just a political stunt. Don’t send me this rubbish in future – I’ve got better things to do than pander to the political left.”

While every opinion is valid, in the Association’s view, this is not a political stunt; some might try to make it so but this is a matter of right and wrong, not right and left. It is an opportunity to share real experiences and encourage the policy changes that would help expand added value activity in New Zealand. The independent Chair of the Inquiry is Cameron Moore, Past President, Executive and Life Member of our Association.

Our Association does not promote any political view, but only policy that would better support the expansion of manufacturers and exporters. To achieve this goal we work with any process that will help bring those policies into fruition. We have spent considerable time in the last few years attempting to convince politicians from all sides to recognise the importance of manufacturing to New Zealand, rather than seeing it as a clip-on optional extra. A lot of effort went into our own submissions to the Inquiry and the email circulated was to encourage manufacturers to share their experiences and views of how they see the sector, good or bad, supportive or otherwise as placed by the status quo.

Why is the Manufacturing Inquiry needed?

Over the past years manufacturing has had no real policy focus, local investment in the sector is declining and the resulting unemployment from closures and companies moving offshore is plain to see. Local markets are too small to support niche products, the scale problem, and the continued appreciation of the dollar eats away at the margins of our exporters who have no option but to compete on the world stage; indicators suggest this upward trend is set to continue under current settings. These combine to create an environment where business confidence is low, which has caused much investment to slow or stop. The losses we are seeing in manufacturing and the real economy now have detrimental effects on New Zealand supply chains. As manufacturers are struggling this affects all the companies and areas that they supply to, as well as the suppliers of the inputs manufacturers use. The crisis in manufacturing is not an isolated event; it affects our economy as a whole.

Investment and innovation need to be encouraged to move forward and create opportunities for growth. A better environment also needs to be created to keep our best and brightest in New Zealand; innovative people need innovative jobs and opportunities, the loss of key human capital is perhaps the greatest loss of all.

What do we want to come out of the Inquiry?

We want to see a change of mindset, one that sees investment in manufacturing and exports as a key policy goal. There must first be an acceptance that more can be done to create policy settings which stimulate investment and promote growth. The hands off, let it all happen as it will, approach has been failing and policy needs to be much more selective and directed, particularly in the taxation and currency domains.

This starts with changing the Reserve Bank Act to require more than just inflation targeting. Currency control and employment targets should be added and a wider range of tools introduced to address them. Research and Development needs to be encouraged and incentivised to create innovation that will keep New Zealand on the forefront and settings need to create economic stability to allow investment. Without investment our growth will stagnate and cripple businesses in the future. We can follow the examples set around the world, such as Switzerland, Singapore and Japan, who make active decisions to protect their real economies and are bold enough to do so.

We can hope the manufacturing inquiry will be a spark for change.

tags: manufacturing, inquiry, exports, reserve bank
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