Agriculture, industry, tourism and manufacturing are believed by most to be the lifeblood of the New Zealand economy. All are hurting because of the high value of the New Zealand currency.
Dairy farmers and other agricultural exporters face reduced income in the coming season (dairy giant Fonterra, for instance, has reduced its payout forecast). Tourists from the United States, Australia and Japan will find it much cheaper to holiday elsewhere as the kiwi continues to hover above US80c.
In fact, Australian tourists can bask in their currency being worth consistently more than the US dollar when they holiday in places such as Disneyland. And, sadly, manufacturing job losses have again been piling up around the country - with the threat of more to come. The rebalancing of the economy has so far not been a huge success, despite four years of Prime Minister John Key and Finance Minister Bill English at the helm.
The cries for intervention to reduce the value of the dollar became louder at the weekend with the release by Green Party co-leader Russel Norman of some rewarmed ideas on monetary policy. Not for the first time has Dr Norman called for a revamp of the Reserve Bank Act to allow the central bank to address the high value of the dollar. Dr Norman is far from alone in calling for a broader mandate for the Reserve Bank to enable a lower official cash rate and for new tools to manage asset bubbles. And, on the same theme, he and the Labour Party want a capital gains tax.
But the Greens do stand alone among the mainstream parties in wanting quantitative easing in New Zealand, a big tool of the US Federal Reserve in which it prints money and pumps it into the economy to try to keep businesses afloat.
In the case of New Zealand, Dr Norman wants the Reserve Bank to purchase government earthquake recovery bonds to pay for the Government's costs in rebuilding Christchurch and refilling the Natural Disaster Fund. That suite of measures, in combination, would work to lower the high exchange rate and help restore the productive sector, he says.
But will it?
Well, not according to the Government, which has become overly dismissive in engaging in any form of discussion about the situation. It seems it is acceptable to talk about rebalancing the economy through the balancing of the Government's fiscal accounts, as long as households are reducing their debt. But lately, as job losses because of the soaring currency make headlines, the time has also come when clearer talking is needed from Messrs Key and English.
With Mr English overseas at the Frankfurt Book Fair, among other appointments, it was left to Economic Development Minister Steven Joyce to bat away the Greens' arguments. He called Dr Norman's suggestions a snake-oil solution of no help to the New Zealand economy. New Zealand, he said, had one of the strongest economies in the OECD during the past 12 months. In the post-global financial crisis world, New Zealand was doing better than most. The economy was 2.6% larger than it was this time last year and the economy had added 57,000 jobs in the past two years.
According to Mr Joyce, the way to achieve faster growth and more, higher paying jobs, was to first have responsible fiscal and monetary policy. Then, New Zealand firms could be assisted to become competitive in the area of skills innovation, infrastructure, access to raw materials, capitals and markets. Yesterday, Mr Key labelled the Greens' plan "pretty wacky" and said it could cause a financial crisis.
Next week, the value of the dollar and what the Reserve Bank could or should do about it is expected to again hit the headlines, with New Zealand First leader Winston Peters' Bill to amend the Reserve Bank Act due for its first reading in Parliament.
If the Bill gets through that reading, it will go to a select committee where groups representing manufacturers through to workers facing redundancies will make their views heard. At that time, it will be beholden on the Government to make sure it explains, in plain language, why it believes interfering in the currency is so wrong.
