Copeland Gordon: Questions for Oral Answer — Questions to Ministers 
Copeland Gordon: Questions for Oral Answer — Questions to Ministers 
[Volume:606;Page:3351] 
10.  
GORDON COPELAND (United Future) 
 to the  
Minister of Finance 
: Does the Minister have concerns about the significant rise of the New Zealand dollar in terms of the flow-on effects for exporters and the current account deficit? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes but it needs to be understood that the appreciation of the dollar is not all bad news. It partly reflects our relatively strong economic performance in recent years and market expectations of future good performance. It can lower the cost of imported capital goods and encourage new investment in the near term. It might facilitate an easing of interest rates. It really depends on how long the appreciation lasts and how strong it is. 
Gordon Copeland 
: In view of the fact that at least some exporters have already signalled their intention to transfer manufacturing off shore with resulting job losses and others are now struggling does the Government have plans to assist their situation? 
Hon Dr MICHAEL CULLEN 
: Any business in that position would be well advised to approach the Ministry of Economic Development or Industry New Zealand to see what assistance is available. But if any business is having to move off shore because of the present level of the New Zealand dollar against the US dollar—which is within the range of the normal equilibrium rates over the last 10 to 20 years—then that business must have been engaging in some strange planning. The present rate of the New Zealand dollar against the “Aussie” of course is much higher but studies suggest that that tends to correct itself quite quickly. 
Dr Don Brash 
: When the Minister changed the policy targets agreement with the Reserve Bank Governor after the election in 1999 and again last year after the appointment of Dr Bollard as Governor was he not hoping that a more flexible approach to monetary policy would reduce the volatility of the New Zealand dollar; and what if anything does he now want the Reserve Bank to do about the situation? 
Hon Dr MICHAEL CULLEN 
: Yes but as the member well knows I do not comment on the Reserve Bank while it is in operation. I suspect that some confidence in the present management is contributing to expectations about future growth in New Zealand which might be part of the upward pressure on the exchange rate.  
Clayton Cosgrove 
: What other factors have contributed to the appreciation of the dollar? 
Hon Dr MICHAEL CULLEN 
: The major influence is undoubtedly the depreciation of the United States dollar. In this small country we frequently tend to look through a telescope from the wrong end but that depreciation is in response to a number of influences including weak US growth concerns about the integrity of corporate sector reporting and about the sustainability of the United States current account deficit.  
Rodney Hide 
: In the light of the Minister’s answer to the primary question does he believe that the Government has the policy framework to return New Zealand to the top half of the OECD; if so would he hazard a guess as to the time frame by which that wonderful goal will be achieved? 
Hon Dr MICHAEL CULLEN 
: Yes and no.