The Greens are proposing a radical new move to drive down the value of the New Zealand dollar by requiring the Reserve Bank to essentially ''print money'' to invest in earthquake bonds and to buy overseas assets to rebuild EQC funds.
Co-leader Russel Norman said the measure would improve New Zealand's competitiveness, boost jobs and send a message to speculators that the Kiwi currency, underpinned by higher interest rates than in most economies, was no longer a one-way bet.
The Greens argue the so-called quantitative easing (QE) should be done in stages - perhaps $1 billion at a time - but could amount to as much as $7b to refinance EQC - which currently has a deficit of $1b after paying for the Christchurch earthquakes - and another $7b for bonds to finance the non-EQC cost to the Government of the quakes.
Norman said QE had been implemented by a number of countries around the world while New Zealand maintained an orthodox approach which was harming our interests and costing manufacturing and tourism jobs.
''The Global Financial Crisis has changed all the rules and National's doctrinaire approach is no longer serving our economy well,'' he said.
''New Zealand can no longer afford to be a pacifist in a currency war.''
The high exchange rate was hurting exporters. Manufactured exports had fallen by 12.4 per cent, or $1.7b, in the last four years while 40,000 jobs had been lost in the sector.
Income from international tourism had fallen by 18.1 per cent or $1.25b in real terms.
While QE would lower the value of the currency, and therefore in theory push up the price of imports such as petrol and goods priced internationally, the ''real world experience of QE is it does not cause runaway inflation''.
He said the move was part of a suite of measures, including a capital gains tax (excluding the family home) and a broader mandate for the Reserve Bank - including new tools to mange asset bubbles - that would curb the high dollar.
The proposal is not Green policy, which would be set closer to the next election when circumstances may be different, but if the Greens were in Government now they would implement such a move.
Norman said buying earthquake bonds would reduce the need for the Government to borrow overseas. Putting the money into the rebuild would reduce the inflationary impact of QE ''because the rebuilding of Christchurch was already factored into projections, which would not change if the funding came from QE''.
Nearly all New Zealand's trading partners were using QE or other measures to lower the value of their currencies.
The United States was into its third round of QE, the EU was using it to stabilise aspects of its financial markets and China had pegged its exchange rate to the US dollar to remain competitive and build up foreign reserves.
''No system of monetary policy is perfect and New Zealand cannot remain the last devotee to a failed monetary theory while the rest of the world moves on,'' Norman said.
He had arranged to brief Labour finance spokesman David Parker and NZ First leader Winston Peters before today's announcement.
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