24 Sep 2010

Economic framework seen as biased against productive sector

9:01 am on 24 September 2010

Manufacturers say a sharp drop in manufacturing activity in the June quarter shows the economic is skewed against the productive sector.

Growth in Gross Domestic Product for the June quarter was much weaker than expected, dragged down by a 4% drop in manufacturing, the biggest fall in over a year.

The Manufacturers Exporters Association says the Government is not doing enough to encourage research and development, and trade.

Chief executive John Walley says the tax structure is still biased in favour of property investment and stricter monetary controls are needed to stabilise the exchange rate.

He says manufacturing is experiencing a lift in the current quarter, but sustained growth needs major structural change.

ASB economist Jane Turner says the economy has not experienced the strong rebound in stock and infrastructure investment that usually follows a recession.

CTU comment

The Council of Trade Unions says the economy is in danger of stagnation if the Government does not take action now.

CTU economist Bill Rosenberg says the results underline fears that the country's economic recovery is stalling.

He says says the Government should follow Australia's lead and roll out more infrastructure programmes to boost economic activity.