NZ's economy hollow: Cunliffe

23:09, Sep 16 2014

New Zealand is too reliant on dairy booms and our economy needs other sectors to thrive, Labour leader David Cunliffe says.

In an editorial in the Australian Financial Review, Cunliffe said New Zealand had been able to "surf the wave" of record commodity prices - mainly dairy exports to China - and GDP growth has been boosted by one-off insurance cheques for the rebuild of Christchurch.

"But our recovery has been built on soft commodities. Milk and disaster is not a sustainable strategy for the future," he said.

"New Zealand has a hollow core economy, with a manufacturing sector that has gone backwards, a lack of investment in technology, and regions that have fallen by the wayside."

Dairy prices have fallen about 44 per cent since February and Treasury predicts growth in the economy to slow from about 3.5 per cent at present to about 2 per cent in three years' time, Cunliffe said.

He promised an "economic upgrade" based on investment, innovation and industry development.

Cunliffe said Labour would boost savings by making KiwiSaver compulsory and raising contribution rates to the same level as Australia's compulsory scheme over time, as well as re-starting contributions to the New Zealand Superannuation Fund.

It would also introduce a Capital Gains Tax at 15 per cent, create a sovereign wealth fund to "invest in new and existing strategic assets and protect remaining state-owned ones", and boost research and development funding, he said.