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Speech: Jobs crisis - Winston Peters

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Fuseworks Media

Rt Hon Winston Peters

New Zealand First Leader

12 October 2012

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Speech: EPMU Jobs Summit

9 Madeira Lane, Grafton, Auckland

Friday 12 October 2012, 12.30pm

‘Jobs Crisis in Manufacturing and Export Industries’

Thank you for the opportunity to speak at this Summit.

Congratulations to all of you who have made the effort to put this assembly together.

We are all here for a serious purpose.

Without exaggeration our manufacturing sector - and much of our export sector - is in crisis.

Let’s start by putting things in context with a few important numbers.

As at June this year New Zealand’s net international indebtedness stood at $149 billion.

Let us not slide past that fact - New Zealand owes the rest of the world $149 billion.

That sum represents 72 per cent our gross domestic product (GDP).

This is against a backdrop of the so-called Global Financial Crisis which a recent US Financial Crisis Inquiry Commission found was avoidable. These were the main causes:

- Widespread failures in financial regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages.

- Dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk.

- An explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis.

- Key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw.

- Systemic breaches in accountability and ethics at all levels.

All this points to a lack of ethics and greed at the top of Wall Street.

Wheeler dealers, bankers, speculators and traders made billions in profits and bonuses.

They made money on successes and they made money betting on failures.

So, the global crisis was not caused by ordinary people yet ordinary people are the worst affected. The money dealers are still reaping their hefty bonuses.

For New Zealand however the debt time bomb is ticking!

How are we ever going to repay this massive $149 billion debt while we are eroding our manufacturing and export capacity?

What we do know is that to pay our way as a nation we must grow and make products the world wants.

In short, we must be internationally competitive.

Yet our manufacturers and exporters are facing a gale force headwind from an overvalued dollar.

Would there be anyone in this room who does not believe the New Zealand dollar is seriously overvalued?

No of course not. And nor does any serious economic commentator.

But we have a Government adamant, obdurate, stubbornly resisting all attempts to reform and update the current Reserve Bank Act.

The Government is locked into an outdated economic orthodoxy.

A Government fixated on inflation as public enemy number one - and every other economic policy has to be subordinate to that.

And unfortunately this Government is aided and abetted by people who should know better such as Bruce Wills - President of Federated Farmers.

In one breath he acknowledges that the exchange rate is too high but then asserts without any basis in evidence that "tinkering with the monetary policy framework will get us nowhere".

That is staggering coming from the chief representative of the primary production sector of this country.

There never really was an era where that sort of thinking made any economic sense.

Except the era when that sort of thinking unleashed the dogs of inflation in New Zealand between 1984 - 1989.

Inflation has been under control for a long time and can remain in check while saving our manufacturing and large parts of our export sector belatedly becomes the priority.

Sadly, the export businesses that we see closing are not coming back.

Because you cannot just bring successful manufacturing and export businesses into existence overnight.

Typically such businesses take years to develop.

Even for our biggest and most buoyant export sector - the dairy industry - the strong dollar is estimated to have had a $1 billion loss impact in the year to July 2012.

The chronically overvalued dollar is massively damaging in an era of competitive devaluations.

And yet the head of Federated Farmers thinks addressing this issue, as other sound economies have, is "tinkering".

As Nobel winning economist Joseph Stiglitz points out employment is not the preserve of Reserve Bank Governors. That is a political responsibility and those that shrink from that concept support the unelected running the country.

That understanding is at the heart of the matter.

Our Government is sticking to its conventional wisdom that the exchange rate is beyond its power of influence.

Yet that is in stark contrast to countries throughout the world that are striving to protect their export sectors in the wake of the global economic crisis.

With a context of global uncertainty and weakness, countries that depend on exports as we do, are exploring every means, every opportunity and every mechanism to stay competitive.

That is why 17 October, next Wednesday, should be a significant date.

That is the day our amendment Bill to the Reserve Bank Act is having its first reading in Parliament - an amendment that meets the needs of current conditions and removes a brake on the economy.

If the Bill is supported, and we are grateful to the other parties here that they have agreed to, the Reserve Bank will at long last be able to pursue a balanced economic policy in which price stability, while important, is no longer the overriding policy objective.

The Bill is the best news for our manufacturing and export sector because it will give the Reserve Bank the flexibility it needs to promote growth, employment and our export base.

By tackling the overvalued exchange rate it will create the conditions in which our manufacturers and exporters can at least have a sporting chance - a fair go in the international marketplace - as will our workers of getting and keeping a job with decent pay and conditions.

We acknowledge our Bill is not perfect.

Certainly we expect it to be improved in the light of close debate and scrutiny.

If this Bill goes to a Select Committee, New Zealanders can have the comprehensive debate on monetary and exchange rate policy that is so necessary and now so long overdue.

Our Bill is not a panacea - but is the pathway to an exchange rate that reflects New Zealand’s economic fundamentals - that we are an export dependent nation - and that is what our manufacturers, exporters, and workers so desperately need.

It will mean that our manufacturers, exporters and workers will have grounds for optimism that the exchange rate cards will not always be stacked against them.

They will have a future with confidence - not a death sentence.

But a note of caution.

The Government should be here today.

But the same sort of people who caused the global financial crisis are those running the country.

Do not expect any relief from that quarter. We all know that policies based on greed and the concentration of great wealth in the hands of the chosen few never get changed without ACTION. POLITICAL ACTION.

We can talk here today with all the best will in the world but it will only be talk. We know the problem.

Every problem has a solution. Think about this.

With just one more seat in parliament we would have stopped the asset sales.

With one more seat we would have forced an easing of the exchange rate and we would have spread the burden more fairly.

We would never have let the Westpac boss get away with a tax cut of five thousand dollars a week.

During the election campaign we told this to anyone who would listen.

And what happened? About a million people stayed home on election day.

The best action to come from today would be for everyone to get out there and convince people to vote.

Convince your friends, your workmates, everyone you know that the people still have the power.

They have the power to change things around. But only if they vote.

We don’t have violent revolutions in New Zealand to overthrow governments but ordinary people have the power to throw out those whose callous policies make life hard for them.

Every day we hear more propaganda about the "market" and market forces.

Ladies and gentlemen the unfettered market and unrestrained market forces have failed humanity.

We cannot rely on the people and the systems that caused the problems to fix them! They are just making things worse.

The only way to fix things is by political action.

We’ve fixed things before in New Zealand and it has always been the result of the ballot box and the efforts of ordinary people.

We have to work hard to prevent more damage.

We have to bring forward ideas and sound policies.

We have to remember that leaders are but the trusted servants of the people…and we have to keep reminding the leaders about that.

The non-voters at the last election is an appalling figure that fits the political culture of National.

For the last thing the National Party wants is people thinking about politics and acting on it.

So ladies and gentlemen let’s face it.

Our greatest problem, our greatest enemy, is the apathy of our own people.

If we do something about that today, this summit will have been well worthwhile.

Don’t think for one moment that we can fail, if we are resolute, in the actions we must take.

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