Economy

Explaining the New Zealand economy to a Latin American

The following response to three questions (in italics) was published in a prestigious Uruguayan weekly newspaper Brecha. It may be of interest because I am responding to the Latin American economic debate which is slightly different from the New Zealand one (but only slightly). Sorry for the included material necessary for an audience outside New Zealand. Thankyou. Nicola, for checking the translation from Spanish

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National needs a Capital Gains Tax - it's still borrowing to pay for tax cuts

The deficit-funded tax cuts that National gave the high income earners is still being paid for by borrowing.

When National won office at the end of 2008, they had a mandate to give median income earners a tax cut 'north of $50 a week'. At the time John Key made that promise he explicitly pledged not to increase GST to pay for it.  

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Strong New Zealand dollar doesn't mean strong New Zealand economy; it just means our interest rates are higher

What we are witnessing is an old fashioned ideological debate, dressed up as economics.

The high dollar and its causes suit people who have a lot of New Zealand-denominated wealth; a lower dollar is better for producers - people who use capital to earn money.

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