Key plan to ditch Kiwi dollar makes no sense
Finance Minister Michael Cullen today expressed surprise at National Leader John Key going out on a limb and suggesting currency union with Australia.
"Anyone with even a passing acquaintance with the Australia government could tell Mr Key that a joint currency has never been on the table at any point," said Dr Cullen.
"Australia has made it clear that if New Zealand wishes to adopt its currency it is by and large a matter for us.
"There is no reason why they would wish to adopt a joint currency given the fact that even though New Zealand is their fifth largest export market, we are still quite a small percentage of their total trade.
"The disadvantages from New Zealand's perspective are very obvious. While Australia is New Zealand's largest trading partner, it accounts for just 20 per cent of our total trade. The vast bulk of our trade is with other countries, most of it denominated in United States dollars
"Adopting the Australian dollar would mean that our monetary policy would be run from Australia and would be dictated by fluctuations particularly in prices for coal, gas and other minerals and the Australian housing market.
"It would also mean that the New Zealand government would lose at least $140 million in revenue from running its own currency, while the Australian government would gain further revenue from having New Zealand use its currency.
"While it is understandable businesses going to the forum from the New Zealand side would tend to be interested in a joint currency, this by no means reflects all of New Zealand and in particular does not reflect the interests of New Zealand primary producers who still earn the bulk of our export income.
"If Mr Key really wanted to help the New Zealand/Australian relationship there is one very simple thing he could do now, listen to his colleague Tim Groser rather than his colleagues Tony Ryall and Murray McCully and get National off the limb it is out on in relation to its quite pointless and stupid opposition to the trans-Tasman Therapeutics Goods Agency."
"Anyone with even a passing acquaintance with the Australia government could tell Mr Key that a joint currency has never been on the table at any point," said Dr Cullen.
"Australia has made it clear that if New Zealand wishes to adopt its currency it is by and large a matter for us.
"There is no reason why they would wish to adopt a joint currency given the fact that even though New Zealand is their fifth largest export market, we are still quite a small percentage of their total trade.
"The disadvantages from New Zealand's perspective are very obvious. While Australia is New Zealand's largest trading partner, it accounts for just 20 per cent of our total trade. The vast bulk of our trade is with other countries, most of it denominated in United States dollars
"Adopting the Australian dollar would mean that our monetary policy would be run from Australia and would be dictated by fluctuations particularly in prices for coal, gas and other minerals and the Australian housing market.
"It would also mean that the New Zealand government would lose at least $140 million in revenue from running its own currency, while the Australian government would gain further revenue from having New Zealand use its currency.
"While it is understandable businesses going to the forum from the New Zealand side would tend to be interested in a joint currency, this by no means reflects all of New Zealand and in particular does not reflect the interests of New Zealand primary producers who still earn the bulk of our export income.
"If Mr Key really wanted to help the New Zealand/Australian relationship there is one very simple thing he could do now, listen to his colleague Tim Groser rather than his colleagues Tony Ryall and Murray McCully and get National off the limb it is out on in relation to its quite pointless and stupid opposition to the trans-Tasman Therapeutics Goods Agency."