Winston Peters' Reserve Bank Bill is a snake oil solution – Joyce
"Trouble with the market being in total control is it always goes to the bust end of the scale before change comes causing untold collateral damage."Featured comment
Economic Development Minister Steven Joyce says the closure of one paper machine at the Kawerau mill was a consequence of the fact that newsprint making was a “declining industry”.
Speaking this weekend on TV3’s The Nation programme at the weekend, he rejected claims from the mill owners, Norske Skog, that the high New Zealand dollar was a factor in the closure.
Asked then if he agreed with Prime Minister John Key earlier in the year that above 73 cents to the American dollar it was “very difficult” for New Zealand manufacturers, Mr Joyce said it was challenging.
“There's no doubt about that, and there's never been an exporter who doesn’t want to lower exchange rate, no matter what level.”
Mr Joyce said the dollar “may” hit parity with the US dollar.
“But that'll be because the US is completely in the toilet. Ultimately, it's market fundamentals.
“And so, ultimately, nobody's going to bid the New Zealand dollar beyond what they consider it should be at.
“Now even if it bounced through say, for example, the quantitative easing that's coming through at the moment, it will come back again.
“Because fundamentally the value of the New Zealand dollar is determined by what the world believes is the future of the New Zealand economy, and if they bid it up too high, then they will look at it and say well actually we've bid it up too high and we'll bid it down again.”
Mr Joyce said the private members bill being introduced by Winston Peters to alter the Reserve Bank’s objectives was a “snake oil solution that would achieve nothing”.
The bill is backed by Labour.
"With the greatest respect to Winston, he's been around for 27 or 30 years. If there's a problem in this country he's part of it, because he's been around for such a long time.
"He had a time as Treasurer and never promoted these views as Treasurer, so now because he's worried, and because he's rightly worried about you know the big commodity manufacturers, and I am too," Mr Joyce said.
Mr Peters wants the primary function of the Reserve Bank to be broadened to include other critical macro-economic factors such as the rate of growth and export growth.
"It's truly ludicrous, and [Labour finance spokesman David] Parker was called on the left this week by his own supporters on the left, who said what he's arguing for, is he's sitting in front of exporters and saying I want to make life easier for you, and then he's turning around to New Zealanders and saying it will have no impact on you.
"And, fundamentally, that is not the case, it's dishonest and you can't say it."
Despite the Kawerau closure, there were opportunities in other areas, Mr Joyce said.
"We have opportunities in the resources area, and I think it is important that we actually take the challenge of adjusting the Resource Management Act to provide those opportunities.
"What I would like to see from the unions, for example, who are supporting these workers [at Kawerau and Spring Creek], is that they turn around and say to their friends in the Labour Party, 'stop opposing RMA changes because RMA changes are very important to give these extractive industries the opportunity to succeed'."