Farmers break with exporters
By
MARTIN FREETH
in Wellington
Federated Farmers has broken with other exporter groups over a call on the Government to depress .the value of the dollar.
The federation’s president, Mr Peter Elworthy, said yesterday it did not agree with proposals to indirectly affect the exchange rate with tax and interest rate changes that had been advanced by other exporters. Mr Elworthy said farmers did agree that the exchange rate was too high and this was having a devastating effect on exporters. However, the answer lay in tackling the fundamental problems of the New Zealand economy by moving faster to chop away import protection
from manufacturing, to deregulate the labour market, and to cut the fiscal deficit, he said.
An exporters’ group, of five producer boards, the Export Institute, and the Manufacturers’ Federation, meet the Minister of Finance, Mr Douglas, on July 10 to push for a tightening of withholding tax on the interest paid to foreign Investors in New Zealand Government stock and an indexing of the interest on those securities against the rate of inflation.
The proposals were set out in a paper by Professor Bryan Philpott, a Wellington economist commissioned by the exporters’ group, as ways the Government could act on the exchange rate without making a significant “U turn” in its policy
Mr Douglas rejected the' idea of tax or interest rate changes to influence the exchange rate, but indicated that he would consider the issue of indexed stock if the money market showed a demand for it and that withholding tax would be considered as part of a continuing overhaul of the taxation system.
Mr Elworthy said the federation had "grave reservations" about using those measures to depress the exchange rate. They could not achieve this permanently and could be seen overseas as Government intervention into the New Zealand economy.
The federation did not join the exporters delegation to Mr Douglas on July 10 although it had been part of the group until then.
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Bibliographic details
Press, 16 July 1986, Page 3
Word Count
332Farmers break with exporters Press, 16 July 1986, Page 3
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