Our 2011 election manifesto - Labour Party

great speed and little predictability. When our exchange rate surges, it undermines the
competitiveness of our prices in destination markets. When the exchange rate falls, the price
of inputs like fuel can soar unexpectedly.
Our current policy is not well designed to produce a stable and competitive exchange rate,
nor to keep interest rates as low as possible. In fact, it often operates the other way round.
Labour will reform monetary policy to ensure our exporters are not undermined by
extreme exchange fluctuations, including by:
Introducing a 15 per cent capital gains tax
Introducing universal KiwiSaver
Broadening the objectives of the Reserve Bank Act
Ensuring the interests of exporters are represented on the Reserve Bank
Board
Taking pressure off the official cash rate through complementary monetary
and prudential policy tools, and
Encouraging more selective Reserve Bank interventions to impose costs on
currency speculation.
Currently the sole focus of the objectives of the Reserve Bank Act is on the maintenance of
price stability – or inflation. We agree with the approach taken by Australia that recognises
that along with inflation control, employment, economic prosperity, and the health of the
export sector are at least as important.
For further information, see Labour‟s Monetary policy.
Research and development tax credit
Countries similar in size to New Zealand like Finland, Singapore, Denmark and Israel put
substantial emphasis on increasing R&D done by businesses. They receive significant
government support.
Although Kiwis are an inventive people, our low level of business expenditure is a drag on
New Zealand‟s ability to innovate and grow. Treasury had previously argued that the tax
credit was a more effective means of incentivising business R&D than discretionary grants,
as they are more driven by business and reach many more firms. Yet National axed the
policy and introduced a system of grants less than half the value of a tax credit.
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