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IMF report shows NZ economy needs modernising

Monday 11 June 2012, 12:15PM

By Labour Party

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An IMF warning that ‘the pace of New Zealand’s economic recovery is likely to remain modest’ is a reminder that the economy needs modernising to grow jobs and incomes faster, Labour’s Finance spokesperson David Parker says.

“The IMF is warning of a ‘medium likelihood’ of falling exports, which would reduce growth in New Zealand even further. That means lower incomes and fewer jobs unless the economy is modernised.

“It’s important to continue on a path to surplus, as Labour would, but the IMF says that isn’t enough,” David Parker said.

“The Government needs to stop ignoring the rest of the IMF’s advice. It is also warning that our ‘large net liabilities present a risk’ and are likely to increase.

“We need more savings, pro-growth tax reform and a modernised monetary policy, instead of the present one designed for the inflation problems of the 80s.

“The IMF has correctly noted that, unlike a lot of other countries, when NZ ran a budget surplus we didn’t have a current account surplus.

“That’s why the report reinforces the need for other policy changes like pro-growth tax reform, improved savings, and an R&D tax credit to increase our exports - and it’s unstated, but obvious, that selling off our assets and farmland is only going to make our overseas liabilities worse,” said David Parker.