Has Labour changed their policy regarding exchange rates?

Labour and David Shearer have been banging on forever about the exchange rate being too high. That we needed to come down urgently in order to kick start the economy.

Yesterday on Q+A though he said the exact opposite, and he even stopped Susan Wood from interrupting so he could make the point:

SUSAN         But give me some specifics here of what you would do. We know what this government is doing. How would you raise a couple of billion to get the books back in balance?

DAVID          Well, what I’m saying is that what we need to do is to grow the economy in a way that it’s not growing at the moment, and we’ll be talking about Tiwai Point in a little while…one of the big problems about – no, no, let me finish – one of the biggest problems about that is that the exchange rate is so low that we’re seeing many of our businesses actually going out of business because they’re not being able to succeed. We’re not putting our money in the profitable sector; it’s going into the property market because we don’t have a capital gains tax that will help us direct money into those areas. And if you’re wanting to raise money, then at least put money into businesses- invest in businesses through the incentives of capital gains, and that brings, obviously, money into the government as well. 

At first glance I thought the transcript was wrong, so I went and watched the video at TVNZ OnDemand…and no there it was…the very words of David Shearer saying that “one of the biggest problems about that is that the exchange rate is so low that we’re seeing many of our businesses actually going out of business.”

Really? So low?

dollar

 

At what level does David Shearer want the dollar? Parity? higher?

Is this really a change of heart for the Labour party? Remember he interrupted Susan Wood to really make this point.

If a leader of a party can’t keep his own party’s policy straight in his head, forgets banks accounts with 7 figure sums in them…well I’m not sure he is fit to be a leader.

There is a big difference between calling for the exchange rate to be lower for months on end and then claiming that the exchange rate is so low that it is costing Kiwis jobs.

In this instance we really are better off having the country run by a currency trader at least he knows up from down.

 


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  • Maybe he meant to say “interest rates”. Then again, I’m sure that low-income Labour Party supporters would be delighted to hear that mortgage interest rates would go up under a government led by David Shearer.

    • Phar Lap

      Good point,seems Lie-bour true to form will up the interest rates and gouge the mortgage holders.Just like they did with the huge power increases from 2001 -2007 which were not required.Sullen Cullen then called the gouged billions . A surplus.

  • Steve R

    I noticed that too . I’m starting to believe that shearer really has been planted in the Labour Party by the Nats and that the rest of the Labour Party really are to stupid to know. Haha

  • pidge

    I’m assuming he misspoke “low” instead of saying “high” (lets not go into why he might have misspoke for now…). I think this is one of those occasions where checking that what he said is what he intended and allowing him to correct hist statement would be graceful gesture. There’s plenty of bigger things to fry him (and Labour) over.

  • LesleyNZ

    It is so easy to say “we will grow the economy”. Words!

  • Phar Lap

    Maybe he was in fact talking about the interest returns he was getting on his secret bank accounts ,salted away overseas.Think in USA or in Switzerland the returns are below one percent.Pity Susan didn’t pick up on it.John Key would have said “Where is your money hidden ,Shonky Shearer.”

  • peterwn

    Capital gains tax to direct investment away from the property market – sorry David Shearer it is the tenants who will effectively pay the tax. There is no property bubble, so if investment is directed away from property, less will be built and rents will rise, thus inducing investment. So while property investors will be lumbered with a capital gains tax, it will be offset by a higher rate of return – met by the tenants. There is also a very simple way of mitigating the bite of capital gains tax – acquire assets to keep for the long haul.

    • johnbronkhorst

      Apart from passing costs on…..aren’t rental properties in short supply? These properties are supplied, by and large, by PRIVATE investors. SO, if you DISCOURAGE private investment in the property market, doesn’t that make the problem worst and increase the current rents?

      • peterwn

        But that is not what Bernard Hickey and various economists have been telling us. They keep banging on about how property prices are going to collapse as they did in the USA, etc. My shought on them – ostrich / head / sand oe put another way ‘Tui’. And on the strength of this some prospective home buyers have been waiting for this collapse. As long as there is growth, even modest growth, the prices fetched for suitable properties will always be underpinned by the cost of new construction.

  • John1234

    He said “exchange rate is so low” but he was thinking “bank balance in NZ$ is so low”.

    Just another example of Shearer’s problems with speech.

  • Positan

    It’s obvious isn’t it – Alice has just found Wonderland.

    • parorchestia

      Smart Alec has found Blunderland.

  • In Vino Veritas

    It was a genuine mistake………..
    Of more concern was Shearer’s continued banging on about the loss of dividend revenue from MRP when it is floated. I would have though any aspiring PM would have some finance sense. The pricing of MRP shares takes into account discounted future cashflows. The Government is selling shares to collect those cashflows in todays dollars instead of waiting for them (or letting a LabourGreens led Government waste them [or perhaps use them to buy votes in the future!!]) Maybe that’s his real gripe.

    • johnbronkhorst

      absolutely “[or perhaps use them to buy votes in the future!!]) Maybe that’s his real gripe.”….As Helen Clarke did.

    • Sir Cullen’s Sidekick

      IVV – Yes, it was slip of the tongue by Sheep. Not a newsworthy item

      • johnbronkhorst

        Agree, it isn’t the word blunders here that are interesting……..It’s the rest of the stupidity (eg CGT) that he is pedalling.

  • johnbronkhorst

    “we don’t have a capital gains tax that will help us direct money into those areas.”…Please read Alan Reynolds report on the first 15 years of CGT in Australia (for the ASX). Nothing but negative impact. Didn’t collect a single cent for 5 years, then impacted on EVERY aspect of Aussie life and……wait for it….caused a massive increase in housing costs BEFORE 1999. In NZ we have to consider a couple of other effects….CGT will be on share sales (labour want to make kiwi saver compulsory), National super and kiwi saver, in part, increase YOUR retirement fund by share speculation. Which will mean labour will TAX your retirement savings potential.

    • Patrick

      Certainly hasn’t helped stem the housing prices in Perth WA – that is the basis of GCT proponents arguments. It is a crock. It is just another tax on Cullens “rich pricks” i.e. anyone who gets off their arse, gets a job, saves their money & tries to provide for themselves in their retirement. The lefties utopia would see the entire country cap in hand to the WINZ office every week – only then when they completely control the masses will they be happy.

      • johnbronkhorst

        Read “Das Capital” and you know where Cullen got his ideas from. After all his PhD is in mid 19th century economic history (right in the time of MARX).

  • Justsayn

    You devalue the rest of your criticisms of him by playing on what is a obvious error. Are you auditioning for a strategy job at Labour?

  • cows4me

    Without doubt old Mumbles has lost the plot. Why the fuck is the exchange rate to low, bloody idiot should be pushing for a much lower rate. Surely if one had a spare million in a secret account one would want the lowest rate possible to inflate ones returns. God there won’t be much hope for the country if this noddy is giving the cheque book.

    • BJ

      The exchange rate is indeed too low – for him! From US$ to NZ$prospective – he was thinking of wanting to bring his own money home and that conflicts with the Labour message he should have been imparting – tripped himself up there. Neither him nor Wussel who seem to have a naive grasp of finances should be anywhere near the Treasury – heaven forbid!

      It is my observation that he shuts interviewers down not because he has a point to make but because he wants to take up all the interview time thus avoiding further probing questions. I found his demeanor rather nasty in that interview – he is on edge – and notice how he always says ‘you’ instead of taking ownership of his position – whatever that may be.

  • Sir Cullen’s Sidekick

    Boys – Let us move on. Not a biggie. As IVV has pointed out Sheep meant – “exchange rate is too high”. Sheep and Commie will peg the US-NZ exchange rate to 0.50 to make our businesses flourish.

    • johnbronkhorst

      US-NZ exchange rate to 0.50 to make our businesses flourish…Fuck, I hope not, it would just about kill mine. I import technology, not made in NZ, that enhances NZ business’s.

      • Sir Cullen’s Sidekick

        You would be surprised what else Sheep and the Commie have planned for the future of New Zealand…..what about import tariffs back on agenda?

  • spollyike

    None of it matters because of what will happen if Labour forms a coalition with the Greens and Mana: a ramshackle cut n paste job from the ludicrous economic policies of these sad political parties. It would be a montage of all their most effective ideas to destroy the country’s economy once and for all. I can picture it now looking like some kindergarten paper mache.

  • DavidW

    Why has no-one asked Shearer on-camera just how many offshore accounts he actually has and in what countries are the accounts domiciled. Ultimately he will be proven to have lied through his teeth.

    • johnbronkhorst

      Nicely spotted…with all this who har over the one account (which is bad enough). Nobody has thought to ask. Is it the ONLY account?

  • Agent BallSack

    House ownership is already out of reach for most average Kiwis so lets add another tax adding 20-50k on top of them, that will help. /Tui.

  • Presumably he misspoke, but actually he is correct; as one of the few businessmen in NZ who is an exporter I know a thing or two about exchange rates (rather than the large numbers of “the dollar is too high” experts who don’t actually export or know what they are talking about).

    If the dollar rose to parity it would be a wonderful thing for exporters – you may get a bit less but your costs would drop significantly meaning your margins would be similar or higher.

    10 years ago I entered into a supply agreement with a local firm to supply my company with our largest cost imput (the biggest raw material we need to manufacture in order to export) which has to be imported. Back then it cost $950 per unit; now it is $546 per unit thanks to the dollar going from 55cents to 82 cents in that time; at parity would be barely $400.

    In that 10 years I have gone from 6 staff to 163 and my monthly turnover has gone from $40,000 to well over 7 figures and 97% of our turnover is exports.

    What happens in NZ is a lot of idiots are businessmen who are manufacturing and trying to compete with Chinese slave labour manufactured imports supplying minute markets in Timaru or Hamilton – and do not succeed.

    Instead of heading to Melbourne (where there are 50 customers for every 1 in Hamilton) with an order book to double their turnover in about a week, they prefer Hamilton because it is safe and cosy – and they expect the government to ensure they are safe and cosy – and so never export and never make any money. I assure you the empty pockets of NZ businessmen have nothing to do with the exchange rate and all to do with mismanagement.

    If I can export to Australia and make a success of it anyone can do it.

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