8 Apr 2015

Job risk in NZ dollar strength - English

11:08 am on 8 April 2015

Jobs could go in the export sector if the New Zealand dollar remains high against the Australian currency, Finance Minister Bill English says.

Finance Minister Bill English releasing the Government financial statements.

Finance Minister Bill English releasing the Government financial statements. Photo: RNZ / Diego Opatowski

The New Zealand dollar reached a record high of 99.78 Australian cents at the weekend and there were predictions it would reach parity with the Australian dollar yesterday. But it eased back after the Reserve Bank of Australia kept the Official Cash Rate on hold at 2.25 percent.

Mr English told Morning Report exporters had dealt with a tremendous amount of pressure over the past five years and near-parity would only add to that.

Though export businesses were resilient, there was a risk jobs would go. "The income they can get from their goods is less, unless they put their prices up in Australia," said Mr English.

"We're fortunate to have a very resilient manufacturing sector. It's dealt with a terrific amount of pressure over the last four or five years.

"But the strength of this exchange rate to Australia is a bit new for them and they will have to adapt."

However, to the extent the exchange rate is a measure of general progress of the economy, New Zealand was in a better position relative to a lot of other countries.

"We strengthened against most of the other developed country currencies and for our households that is a positive benefit - they have stronger purchasing power." But that had to be balanced against the extra pressure on exporters.

The Labour Party says the exchange rate is potentially bad news for exporters and job creation, while the benefits for the travel industry are short term only.

Labour finance spokesperson Grant Robertson told Morning Report, said governments should concentrate on job creation, and high-paying jobs come from exports. "New Zealand's a small internal market, we've always traded overseas, and that's where those high-value jobs will come from."

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