Rod Oram at Newsroom:
Rod Oram: ‘Why new leaders and policies are needed’
National’s track record:
It came to power in November 2008 at the height of the Global Financial Crisis. It was singularly unprepared for the job. It had spent the previous nine years in opposition micro-managing issues and shuffling leaders seeking to regain power. It had failed to develop its policies to respond to the fast-changing world.
A year later, its economic strategy still consisted of only a dozen or so A3 sheets of paper, reported Colin James, the veteran political journalist.
As it promised in the election, National established a tax working party, which later proposed many remedies to the distortions in our tax system. But the government ignored them. Instead it cut the top rate of tax; and it raised GST, which it promised in the election it wouldn’t do.
National’s third term has benefited from big booms in migration, tourism, housing, and construction. Again, the government has been highly opportunistic, but it has lagged badly on strategic policies and investment to cope. Infrastructure, housing, construction capacity, the environment and climate are just five of the crucial areas.
It has managed government finances well. But it has been weak on economic strategy. For example, it offers no views on how rapidly the global economy is changing; or on how to reorient technology, education, skills and other policies New Zealanders need to seize those abundant opportunities.
Under nine years of National’s governance GDP per capita has grown by barely 1% a year in real terms, which is not much ahead of the OECD average. Wealth inequality has risen, environmental sustainability has fallen and productivity growth, the factor determining our standard of living and economic resilience, remains among the lowest in the OECD.
On current trends and policies, we will achieve none of National’s 2025 goals: catching up with Australia’s GDP per capita; lifting exports from 30% of GDP to 40%; and doubling the value of exports.
The near future:
National says there’s no need to change policies. It says current ones and the strong economy will deliver much more, enabling it in a fourth term to make big inroads on the big economic and social challenges outstanding.
But that’s not the future Treasury or the Reserve Bank forecast last month. They said GDP growth will peak next calendar year then decline. The Reserve Bank is the more cautious of the two, forecasting growth of 2.1% in the year to September 2020 – just before the next election.
Treasury forecasts multifactor productivity — the key determinant of improvements in our wages and wealth — will actually decline in the next two years, then grow weakly in the following two years. We will remain near the bottom of the OECD on this vital measure of economic health and competitiveness. As a consequence, wage growth will barely outpace inflation.
Treasury also forecasts the growth of export volumes will ease in the next two years to less than 2% a year, which is below their long-term average; and our current account deficit – the key measure of our trade and investment relationships with the rest of the world — will worsen.
National’s top three priorities for business are: “train kids”; continue to grow R&D; and ensuring New Zealand was open to the world, Steven Joyce, its finance spokesman, told business leaders at the Mood of the Boardroom breakfast on Tuesday.
Labour’s are: “A relentless focus on skills and retraining”; lifting R&D; and to give small businesses more access to capital, Grant Robertson, its finance spokesman, told the audience.
Superficially, there’s little difference between the two parties. But in those brief lists, Robertson demonstrated greater understanding of, and ambition for, New Zealand businesses than Joyce.
National, in contrast, is far too busy defending its record of the past nine years to admit where it has failed, let alone to think about how it might do better.
Joyce, for example, denies there is a housing crisis. He says home construction will boom for the next six years. But his own government’s recent construction pipeline report shows it will peak next year then fall back, for example, in Auckland to the previous peak in 2005. The government had done nothing to grow the capacity of the construction sector, nor is it offering any policies to do so.
English says productivity is growing nicely. But his own government’s data and analysis show he is absolutely wrong. He also says wages have grown twice as fast as inflation. But that assertion surprises many voters.
More of the same won’t deliver for New Zealand. Hopefully, new leaders and policies will. ….
These are just a few extracts from a long, balanced, and interesting piece. Go read the whole thing on Newsroom…