Is the political worm turning at the Herald?
In politics, as in all spheres of life, timing is everything. Take the report into manufacturing released yesterday by the Labour, Greens, New Zealand First and Mana parties. When their inquiry began last October, times were uncommonly tough in the sector. Just last Friday, however, the latest BNZ-Business NZ performance of manufacturing index indicated that it was expanding at its fastest rate since 2003, and at one of the world’s highest rates. Equally, a tumbling exchange rate has eased many of the sector’s woes. In that context, the report’s talk of the killing of manufacturing seemed lame at best.
It smacked of a strategic retreat, a once over lightly, get it out of the way kind of report, that in a weeks time after the recess will be barely mentioned.
Yet even if current conditions had mimicked those of eight months ago, the report would have been counted a barren exercise. Its three core recommendations are as flawed as they are predictable. The first wants monetary policy to be aimed at achieving a lower and more stable exchange rate, as well as a lowering of structural costs in the economy, such as electricity prices, and a refocusing of capital investment into the productive economy, rather than housing speculation. Only the third part of that triple jump, which implies a capital gains tax, is worthy of consideration. The other two would simply introduce a new set of problems.
Even the capital gains tax is fraught with danger…if taxing our way to productivity and prosperity were real options then taxation would be at 100%.
The report’s recommendation for a lowering of structural costs in the economy refers specifically to electricity prices. This is a clear nod to the Labour-Green proposal for a single buyer to purchase all electricity generation at what it deems a fair price. Presumably, this is seen as the forerunner of a greater emphasis on central planning. Manufacturers would, of course, applaud lower power costs. But what they would also get would be inefficiencies, unintended consequences and, if history is a guide, blackouts.
Ask Russians how central planning worked for them. Or North Koreans.
The Opposition parties’ report is entitled Manufacturing: The New Consensus. This confirms that Labour has abandoned a major-party consensus that had endured for some three decades. That is doubly regrettable in that its new agenda fails to acknowledge the sector’s real challenges. These have far more to do with the emergence of China and other Asian manufacturing bases than shortcomings, largely imagined, in this country. Even then, talk of a crisis is clearly overstated. As is the need for this “new consensus”.
The Labour naysaying rent-a-letter mob will be frantically scribbling as we speak in support of this socialist pipedream. The stench of Russel Norman’s communist background is very evident.
Kiwis 50+ need little reminding of the days of protected shoddy locally made goods, rationed overseas currency for personal use and home loans at 20%.
A vote for David Shearer is a vote for Russel Norman to sit on the treasury benches.