Waikato businesses are keeping a wary eye on the Australian economy while consumers celebrate the Kiwi dollar's near-parity with that of our neighbour.

New Zealand cash reached 99.78 cents against our trans-tasman rivals on Monday, the closest it has come to parity since 1973.

It leaves local exporters and tourist operators groaning at the effective pay cut, while travellers and consumers get to pop the cork on cheaper Australian holidays and goods.

Waikato Chamber of Commerce boss William Durning said businesses were more worried about the health of Australian spending than the value of the dollar, however. The group has 3000 members, 500 of them active, and Durning said the majority would be involved in exporting. 

"Businesses that have been dealing there said 'look, we're more concerned about the state of the Australian economy than necessarily the exchange rate'." he said.

"A strong Australian economy will purchase from New Zealand, whereas if it's struggling or in a state of rebuild, that demand is not there."

Durning said Waikato exported worldwide, so most businesses were likely to survive the pinch.

"They all have a number of markets overseas...as one declines, another one picks up," he said.

"A lot of our exporters are saying there is good opportunity in the [United] States, and there are good opportunities in Asia."

However, Durning agreed with comments made by Finance Minister Bill English that the high dollar might start to cost jobs, for those companies dealing exclusively with Australia.


Two-way trade between the countries is worth about NZ$24 billion each year, according to the New Zealand Trade and Enterprise statistics, as shown below.



English told Radio New Zealand's Morning Report that the pressure exporters had dealt with over the past five years would only be exacerbated by the strength of the dollar.


The manufacturing sector had already dealt with a "terrific amount" of pressure in the last few years, "but the strength of this exchange rate to Australia is a bit new to them and they will have to adapt".


Gallaghers chief financial officer, Simon Graafhuis, said the company was not "going to do anything drastic" on the job front, but it was causing the business some pain.


"It means that we earn less. Australia is a pretty tough market, it's much bigger than here, it's much more competitive, so there's not really the opportunity to increase prices.


"In time you would hope...their consumers might tolerate increases [in prices] of imported products, but where you're competing against local Australian companies it makes it pretty tough."


Meanwhile, consumers are enjoying the bumper Kiwi dollar. According to Expedia.co.nz, trips to Australia's Sunshine Coast are up 69 per cent on this time last year national-wide, while bookings for Perth and Melbourne are up more than 50 per cent.


House of Travel commercial director Brent Thomas said packaged deals in Australia were already priced to reflect the high New Zealand dollar.


Australian hotels were essentially offering dollar for dollar rates whereas a year a go rates were being converted at A80 cents, he said.


NARELLE HENSON

- Waikato Times

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