KEY POINTS:
Export New Zealand chief executive Bob Walters is philosophical but realistic about the rollercoaster ride exporters have been taken on by the record-breaking Kiwi dollar.
He believes exporters will be encouraged by the kiwi's fall back to US$0.7840 in response to Reserve Bank governor Alan Bollard's comment on Thursday that the four rate hikes delivered this year should be sufficient to contain inflation.
Bollard, in raising the official cash rate to 8.25 per cent, also said that the high New Zealand dollar is not sustainable in the medium term.
Some of the country's exporters have struggled to cope with the high currency, which hit a post-float high of US$0.8110 earlier in the week.
But Walters is pragmatic, and takes the view that few countries have ever benefited from a devaluing currency.
Exporters are, however, disappointed that they continue to be punished every time the currency rallies in response to a rate hike from the Reserve Bank.
He blames politics for that, as exporters form a relatively small part of the voting public. "You have only got a couple of thousand businesses generating pretty nearly all the foreign exchange earnings, one way or another."
Walters, with many other business groups, blames central and local government for not keeping a tight rein on their own prices and charges for much of the inflationary pressure.
Most of the New Zealand dollar's strength has been the result of the weak US dollar and from very strong dairy prices, but many exporters run both domestic and international businesses to bring a natural balance to their offshore earnings.
Walters is encouraged that debate on monetary policy is starting to happen.
The Reserve Bank, in its submission to Parliament's finance and expenditure committee inquiry into the future monetary policy framework published on Friday, made several suggestions.
It wants the committee to "encourage work by the relevant agencies" to make sure new subdivisions are not held up by regulatory constraints.
It also asks for a review of the way investment income is taxed.
Changing rules that allow any "losses on investment activities to be fully offset against a taxpayer's other income at that taxpayers marginal tax rate", or that "ring-fencing" should be considered.
The bank also wants the committee to "encourage the development of a framework under which higher thresholds are in place before substantial increases in Government spending (or tax reductions), especially those financed from unexpected revenue gains, occur at times when demand pressures in the economy are intense".
It should also consider whether changes to the way migrants are approved, so it could be used during times when demand pressures in the economy are becoming "particularly intense".
