By BRIAN FALLOW
WELLINGTON - Businesses are strongly in favour of an Anzac dollar, according to a survey carried out as part of a study of the pros and cons of monetary union.
But one of the report's authors, Arthur Grimes, said an Anzac dollar was no silver bullet.
``The economic data suggests it may not be hugely advantageous, but it is not disadvantageous. The business [survey] data, on the other hand, suggests it could be strongly positive for New Zealand businesses trying to enlarge their scope by trading across the Tasman.''
The study by Victoria University's Institute of Policy Studies was funded by the Australia-New Zealand Business Council and released yesterday.
``If you just look at the economic data -- things like terms of trade cycles, interest rate cycles, GDP cycles -- you can't draw a strong conclusion one way or the other,'' said Dr Grimes. ``If anything, the Australian dollar would have been fractionally better, but that could change.''
However, the detail of the survey suggested potential for significant gains from a common currency that would help beginner exporters to gain a foothold in Australia, he said.
The survey piggy-backed on the National Bank's monthly business confidence survey. Of the 409 respondents, 58 per cent said currency union would be positive for their business; 14 per cent were negative; the rest did not think it would make any difference.
Slicing the survey population by sectors or size (measured by the number of staff) makes scant difference. Service firms are a little more positive (63 per cent) than manufacturers (57 per cent), and agricultural firms only slightly less so (52 per cent).
Support for a single currency is strongest among firms with between 11 and 20 staff.
For firms with fewer than 20 staff, exports represent 6 or 7 per cent of sales; with more than 20 staff the export ratio jumps to 14 per cent.
``Up to 20 employees exporting is hard work. Beyond there it starts getting easier,'' said Dr Grimes. ``If we can help firms which are on that growth path to make that big step it could be a big advantage for New Zealand.''
The firms surveyed found the average level of the transtasman exchange rate over the past five years fairly neutral to slightly negative, but all found that fluctuations in the cross rate had an adverse effect.
Even so, and despite most firms considering that the costs of exchange rate hedging were not high, a majority of firms do not hedge their exposures, and many others hedge only some exposures.
Finance Minister Michael Cullen said monetary union was not on the Government's agenda but the issue was worth debating.
Thumbs up for Anzac dollar
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