Editorial: Greens' plan misses the mark

Last updated 05:00 09/10/2012

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OPINION: The Green Party suggestion that the Reserve Bank print money to bring down the value of the dollar is an elaborate form of cross-subsidy. To assist hard-pressed exporters, the party wants the rest of the country to pay more for petrol and other imports. The idea should not get off the ground.

New Zealand must operate in the world as it is, not the world as it wishes it to be.

It is a world that is often arbitrary and unfair. Eleven years ago the kiwi was trading at 40 cents against the United States dollar. Today one kiwi buys US81c.

Great for those buying US goods - they get twice as much for their money - but ruinous for those trying to sell into the US market.

However, New Zealand should have learned from bitter experience that it cannot shield itself from the vagaries of the international market. Labour and National tried that in the 1970s and early 1980s and ran up debts that took a generation to repay.

New Zealand is a small trading nation a long way from its markets. The only way for it to survive and prosper is to be flexible, adaptable and resilient. If the balance of economic power in the world is shifting, there is no use pretending it is not.

The decline in the value of the US dollar and the euro is a reflection of the decline in the relative worth of the American and European economies.

The attempts by American and some European policy-makers to reboot their economies by printing money are acts of political desperation.

It makes no sense for a country which has weathered the global financial crisis better than most of its Western counterparts to emulate their risky tactics. Printing money - or quantitative easing as it is technically known - fuels inflation, devalues assets and reduces purchasing power. Once started it is difficult to stop, as Germans discovered in the 1920s when wheelbarrows replaced wallets as the most efficient means of carting cash.

If the Greens are serious about assisting exporters there is plenty they can do. They could start by focusing on initiatives that will reduce business costs while preserving the things New Zealanders hold dear.

Into the latter category fall such things as this country's unique environment, an education system that attempts to give every child an opportunity to fulfil his or her potential, the public health system, a welfare system that acts as a safety net at times of misfortune, and a pension scheme that provides for dignity in old age.

Into the unaffordable-luxury category should be put the extras that have been added on to curry favour with voters. Interest-free student loans and the many and various forms of middle-class welfare devised by successive governments come at a cost. It is a cost borne by exporters and their staff. So too is the cost of indulging New Zealanders' love affair with property speculation - an anomaly rightly highlighted by Green Party co-leader Russel Norman.

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Exporters and their employees need help. However, it will not come in the form of a magic bullet. The solution is sound, consistent policy.

- The Dominion Post

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