Budget 07 – A good step in the right direction

01 June 2007
IMMEDIATE RELEASE

Budget 07 – A good step in the right direction, but we need to do more

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during May 2007, shows total sales in April 2007 increased just over 6% (export sales decreased 16.5% with domestic sales increasing around 24%) on April 2006.

The CMA survey sample this month reported NZ$308m in annualised sales, with an export content of 35%.

Net confidence was recorded at 25, an increase from the March 07 result, which was -8.

The current performance index (a combination of profitability and cash flow) is at 95, up from the previous month’s 94, the change index (capacity utilisation, staff levels, orders and inventories) remained at 99 on the previous month, and the forecast index (investment, sales, profitability and staff) rose to 105 from 102 recorded in March. Anything less than 100 indicates a contraction.

Constraints reported 17% production, 8% staff, 8% capital and markets 67%.

Staff numbers for January decreased 2.5%.

“This survey was completed during Budget week. The budget was seen by the productive sector as positive in that the Government may be starting to recognise that the tax system can be used to deliver the right incentives into the economy in order to build sustainable growth”, says Chief Executive John Walley.

“It was pleasing to see research and development, export development and skills training considered. There is some confidence within the productive sector that the Government is listening to its issues and problems, although few would have been pleased that some funding increases will be delivered through NZTE, as the tax system is a better way to support the productive sector”.

“Export sales for April fell sharply in comparison to the same time last year, and with the NZD remaining above $USD.72, this is a further reminder to the Government that its task of supporting the tradable sector is by no means accomplished. The NZ$3.4 billion over four years that the Budget provided for “innovation” must be compared to the adverse currency movements that in the past year alone have amounted to around NZ$5 billion. The closures we are seeing in the “high tech” space are being mirrored in basic manufacturers, such as wood processing – so if we cannot sustain high tech or basic manufacture; just where will our future be? Living standards will track export sales”.

“Therefore, the CMA sustains the call that policies able to control domestic inflation and not kill exporters, must have priority. We also need to see business organisations, up and down New Zealand, adding their voice and support in pressing the Government for changes in policy settings, otherwise it will be a case of business as usual and we will see more elaborate and basic manufacturing activity lost”.

“Often what happens in our survey is that the results do not always seem consistent. Today’s sales results are a product of historical effort, how respondents feel, and depend on more recent and immediate events. Export sales are weak and falling while domestic sales, particularly suppliers to the building sector are strong and confidence improved on last month; largely as a reaction to the budget. However of these, if sales numbers continue on trend then the future looks bleak”.

“An overvalued currency might not only make our companies downsize locally but may also make our best exports, such as productive jobs, our children or even whole families relocate, as our competitiveness falls and opportunities look even better elsewhere in more productive economies”.

“Policy support and consideration for exporters is long overdue”.

ends

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