Let's Not Talk The Economy Down

11 March 2005
Media Release

Let’s Not Talk The Economy Down

Most businesses are resilient and won’t be put under by one interest rate call, a union wage rise campaign and the pressures of the “high” dollar.

“This is because in the last five years, businesses have toughened up to operate with less dependence on what the Government and other outside controlling agencies like the Reserve Bank may or may not do,” suggests Auckland Chamber of Commerce chief executive Michael Barnett.

At the same time, with a basket of big pressures coming on the economy together – that’s a signal for both business and Government leaders to take stock of their situation and make adjustments.

For businesses keen to protect markets and grow:
- They have no choice over factoring in fuel rises, the $, interest rates, local government costs, taxes….
- But they can adjust prices, wages, staff turnover and growth plans.

“Smart businesses will adjust their operating plans to the realities of the business cycle – most will survive. Many will stay growth-focused.”

For a government keen to promote a growth-led economy:
- They need to be careful they don’t create the anti-thesis of their desire for more growth and higher productivity.
- A thriving economy means businesses and people in jobs generate the tax revenue needed for social services and infrastructure – everything from a better health system to better roads and public transport.

“A smart government will take notice of the Reserve Bank’s warning that inflationary pressures remain ‘in the system’ and that further interest rate rises cannot be ruled out.

“Clearly, big rises in public sector wages like the recent 7% nurses’ settlement, and big leaps in local government rates recently signalled will fuel inflation,” warns Mr Barnett.

“Some smart Government leadership may be needed to encourage local government to keep rate rises in check and public sector and union-led wage claims within inflation-productivity guidelines….

ENDS

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