By Bernard Hickey
The Opposition's inquiry into manufacturing has released a report recommending a new monetary policy, but has not included details of any new policy, other than to say it should reflect a 'new orthodoxy' developing overseas.
The inquiry by Labour, Green, NZ First and the Mana party said any new government should "adopt macroeconomic settings that are supportive of manufacturing and exporting, including: a fairer and less volatile exchange rate through reforms to monetary policy; refocusing capital investment into the productive economy, rather than housing speculation; and lowering structural costs in the economy, such as electricity prices."
It recommended tax credits for research and development as part of a package to support "innovative manufacturing, supporting exports and quality jobs."
It recommended any new government adopt a national procurement policy that favoured New Zealand-made products.
The 40 page report was written after an inquiry was launched in October last year into the state of the manufacturing sector and concerns a high New Zealand dollar was hurting jobs in the sector.
It heard submissions from manufacturers and others in 4 hearings over January, February and March.
It received 128 submissions. Manufacturers employ about 12% of the workforce and jobs in the sector have fallen from around 235,000 to 190,000 between 2005 and 2012.
"A strong consensus across submissions rejected a 'there is no alternative' approach to economic settings and implored government to consider other settings," it said.
"The inquiry accepts that a re-assessment of macro-economic settings in New Zealand is long overdue, and that the 'new orthodoxy' offers an alternative policy framework in which the manufacturing sector is more likely to prosper," it said, without detailing what that framework was.
Other recommendations included:
- The tax system is used to boost investment in new technology and machinery. An accelerated depreciation regime should be implemented for the manufacturing sector.
- A wide range of funding is available for manufacturers to invest in their business and employees. Measures to encourage the availability of venture capital and mezzanine funding should be continued, including government funds through commercial-managers.
- Businesses are supported to achieve 21st Century organisation and practices. Policies such as NZTE’s focus on Lean Management, and the work of the High Performance Work Initiative should be extended. Apprenticeship training support for the sector should be reviewed immediately.
- Manufacturers are given a voice in FTA negotiations. From the outset of FTA negotiations the interests of manufacturing must be explicitly addressed. Negotiating teams must keep the sector informed.
- Measures to encourage foreign direct investment in manufacturers should be consistent with the strategic direction of New Zealand’s manufacturing and exports.
- Government should lower compliance costs wherever they can be consistent with maintaining New Zealand’s values including workers’ rights, environmental standards, and product quality assurance.
- Manufacturing’s ability to create jobs and boost exports should be recognised in national, regional and industry policies.
- Taskforces of government local government, businesses and unions, be established to assess and act on new business and job opportunities in the wake of major closures or restructuring in the manufacturing sector.
Political reaction
The Engineering, Printing and Manufacturing Union (EPMU) said the government should drop its planned changes to employment law and adopt the recommendations of the inquiry instead.
“This is a clear alternative to the Government’s failed hands-off approach, which has seen our manufacturing sector fall into crisis," EPMU national secretary Bill Newson said. “There are now 40,000 fewer jobs in manufacturing than there were four years ago, and on Friday alone we saw 84 highly skilled aircraft engineering jobs go at Safe Air in Blenheim because of failed Government policy," Newson said.
The EMPU said there had been mass redundancies in the last year at Dynamic Controls, Rakon, Solid Energy, Norske Skog in Kawerau, the Tiwai Point aluminimum smelter, Axiam Metals, Nuplex Industries, Aquaheat, Flotech, Summit Wool Spinners, Norman Ellison Carpets, Goulds Fine Foods, Fisher & Paykel Appliances, KiwiRail, the Christchurch Engine Centre, Geon, Carter Holt Harvey, Telecom, Contact Energy, Mainzeal and Safe Air.
Green co-leader Russel Norman said the release of the inquiry's report was an historic event. "For the first time, we have half the parties in Parliament signing up to an alternative economic vision for New Zealand," he said.
Economic Development Minister Steven Joyce said the Inquiry was a failed political stunt "with a bunch of re-tread solutions and a lack of knowledge of the measures the Government is already implementing."
“Labour, the Greens, New Zealand First and Mana are determined to manufacture a crisis in manufacturing. The massive problem for them is that while individual firms face real challenges at different times, no crisis exists,” Mr Joyce says.
See the full report attached here.
(Updated with more details, link to full report)
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