KEY POINTS:
The Government is indicating it would prefer a select committee inquiry into monetary policy rather than formal-cross party talks.
Finance Minister Michael Cullen floated the idea today and was supported by Prime Minister Helen Clark.
NZPA understands that late last week senior Labour ministers approached other parties about possible terms of reference for a select committee inquiry.
Dr Cullen and Helen Clark said today that past attempts at direct talks between National and Labour on contentious political issues had quickly collapsed and a select committee might be the best forum for it.
Helen Clark said the finance select committee, chaired by Labour MP Shane Jones, had a wide range of representation and could draw up the inquiry's terms of reference.
Soaring interest rates and a higher dollar have brought the issue of monetary policy back into the political spotlight.
This was further highlighted last Thursday when whiteware company Fisher & Paykel partly blamed the difficult operating environment in New Zealand for moving 350 manufacturing jobs to Thailand.
This in turn sparked debate about whether there was a need to revive a previously stalled attempt at cross-party talks on monetary policy.
Those talks collapsed earlier this year in a hail of political rhetoric after it emerged officials were still looking at a direct levy on mortgages.
A levy would allow the Reserve Bank to increase the cost of mortgages and curb consumer spending, with less effect on the wider economy than is being caused by its manipulation of interest rates.
Dr Cullen said he was sceptical about more formal cross-party talks because of National's attitude in the past to discussion on monetary policy and family violence.
He also said there was no point in having talks or an inquiry about the entire economy, because that would be like re-opening the last election campaign.
The issue, he said, was whether there was a way for monetary policy to achieve its objectives at a minimal cost, particularly to the export sector.
There were no silver bullets and any alternative tools would cause pain as well.
Dr Cullen said talks at a senior political level or through a select committee process would only work if the parties went into them on an honest basis and did not use them as a forum for political point-scoring.
The Government's desire avoid a wider economic debate was not reflected by National's finance spokesman, Bill English.
He said changes to the tax rate, red tape, infrastructure costs, and labour laws would make a difference for exporters.
The Government has said it is developing incentives for exporters, which will form part of its expected billion dollar business tax-cut package in the May 17 Budget.
Dr Cullen said people had to be realistic about what monetary policy could achieve to stop firms that relied on cheap labour moving to countries with lower costs.
"Nothing at all will stop the export of lower wage jobs to lower wage countries. The high dollar was probably not the most important factor in the Fisher & Paykel move."
- NZPA
