Russel Norman

Next steps on a fair exchange rate

by Russel Norman

The Greens are committed to pragmatic steps to get the dollar down and stabilise the exchange rate so that our exporters and local businesses have a level playing field against international competitors. That will mean more jobs and higher wages for New Zealanders.

Last year, I released a proposal on monetary policy. Today, I’m launching a new member’s bill based on that discussion document and the feedback we’ve received.

My Bill will make the Reserve Bank’s Board responsible for setting the Official Cash Rate (OCR), not the Governor alone, and require the Board to publish their minutes within a fortnight of meeting.

No other country in the OECD gives full responsibility for the OCR decision to one person – the Reserve Bank Governor.

This is decidedly antiquated. It leads to poorer decisions; decisions which don’t reflect the wider economic interests at stake when the Official Cash Rate is set.

We’d bring the Reserve Bank into the twenty-first century by making the Reserve Bank Board accountable for setting the Official Cash Rate, rather than the Governor alone.

In Government we would also ensure that the Board includes representatives from the export and manufacturing sectors so that Reserve Bank decisions represent the broader economy.

That discussion document also proposed the use of quantitative easing, as has been widely used in other countries, to help lower the dollar. The feedback we’ve received on that element of our proposal made clear it did not have the broad support it would need to work.

New Zealanders expect their politicians to listen, the Greens do listen, and so we’re not pursuing the QE element of our monetary policy package.

Instead, we’re focused on the pragmatic changes I’m announcing today, along with the rest of our agenda for improving the New Zealand economy, creating jobs, alleviating poverty, improving child health, making housing more affordable, and reducing power costs to families and businesses.

Published in Environment & Resource Management by Russel Norman on Wed, June 19th, 2013   

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