Call For Monetary Reform

27 July 2007
In light of a further increase in the OCR announced this week, New Zealand wood processors are calling for a major review of monetary policy. “By giving the Reserve Bank the OCR as the only tool to manage inflation, the country’s export sector is put at risk by the effect this tool has on exchange rate”, says Wood Processors Association chairman David Anderson. He says that the policy is clearly not working.
Businesses have gone to the wall or moved production overseas, and those who have stayed are facing lower profits and an uncertain future, he says. The wood processing sector is losing an estimated $500m annually, which is profit not going back into the New Zealand economy.
Anderson urges the Finance and Select Committee enquiry on monetary policy to ensure a whole of economy view is taken, not just the narrow focused inflation rate focal point of the current policy. Anderson says the existing attention on interest rates causes commentators with vested interests to talk up the currency, which is severely harming the export-based economy that New Zealand is dependent on.

Queensland Shining Light For Housing

Queensland’s most comprehensive report card on the housing industry highlights a stronger state environment than applies to Australia as a whole.
Housing in the north of the state remains strong while the southeast corner is in recovery mode once more.
The Housing Industry Association’s June quarter outlook predicts housing activity will grow from 39,000 starts in 2006-07 to 41,000 this financial year and 44,000 by 2008-09. But after two weaker years in the middle of the decade, the recovery in residential construction is constrained by record low housing affordability.
“Taxes and charges on new land for housing are continuing to creep higher in Queensland in 2007 in a climate of a lack of affordable land, and increasing planning and red tape hurdles,” says HIA executive director, Queensland, Warwick Temby.
With no immediate relief in sight, the report underlines the importance of the recently launched Residential Infrastructure Plan. This proposes that state and local governments could be assisted in meeting the cost of building and upgrading essential community infrastructure in regional and urban centres rather than lumping the cost onto the new land buyer.
“It’s time to be smart and fair about housing affordability so that the affordability constraint on new residential activity can be eased,” Temby said.
The crisis in affordability is, however, providing a significant boost to renovation activity as many potential home buyers stay put and add floor area to existing homes rather than face the prohibitively high transaction costs associated with moving house. Total investment in renovations in 2006-07 is expected to have been higher than the previous year and growth of nearly 6% cent is forecast for 2007-08. This would take spending on renovations to a record level of $8.9 billion.

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