Oram on the Nats’ ‘plan’

Written By: - Date published: 11:17 am, November 14th, 2011 - 39 comments
Categories: Economy, election 2011, national - Tags:

New Zealand has drifted under National for 3 years. They came to power with a plan they developed years earlier at the peak of the good times: cut taxes, sell assets, build roads. They haven’t altered that plan despite the weakest ‘recovery’ in history, no jobs, record borrowing, and the dark clouds on the economic horizon. They have, in Bill English’s words “muddled through” while we’ve got poorer.

They’ve failed to turn the economy around, failed to lay the foundations for the future but they predict things will magically get better with ridiculous scenarios like the dairy herd doubling in 15 years – where would the water come from – and tourism also doubling despite 4 years of rapid decline.

A 2nd term would be same muddling through as the 1st plus asset sales. Rod Oram fillets them:

“National has a straightforward and comprehensive plan to build a more competitive economy,” Prime Minister John Key told delegates to the Deloitte-Business New Zealand election forum last Monday.

A few hours later, the two organisations announced the results of their pre-meeting survey of business. “Does the government currently have a co-ordinated plan of action focused on raising New Zealand’s economic performance?” was the first question asked.

Yes, said 34.5%; No, said 27.7%; Unsure, said 37.8%.

So, does National have a plan or not?

In fact, it has two: the simple one Key described and Finance Minister Bill English defended later in the meeting, and the complex one it never talks about, its Economic Growth Agenda Mark II.

No wonder lots of people are confused or underwhelmed.

“No matter how often the government talks about a plan to get economic growth, it is not resonating with business,” said Deloitte’s chief executive Murray Jack.

Key tried. He conveyed the simple plan in a few well-worn phrases. English said this would deliver what the country needed, “systemic improvement right across the economy, not just some rinky-dink scheme that one sector or another thinks it might benefit from.”

As it happens, though, sector schemes such as the Primary Growth Partnership, in which the government is investing $70 million a year, are central to the government’s Economic Growth Agenda.

English added it would take five to seven years for the benefits of systemic improvement to emerge.

On that timetable, the economic growth rate would start to accelerate in 2013 and be humming by 2015. But, in fact, Treasury and other forecasters reckon growth will spike in 2012-14 then fall back to its long-term average of around 2%.

Half of that spike will come from rebuilding Christchurch and fixing leaky homes, and that won’t boost export-led growth.

So, despite our longest boom in 60 years, followed by our longest recession in 40 and a change of government, the growth rate will remain chronically short of the 4% to 5% required to meet our economic, social and environmental needs.

That’s because the generic plan, if executed well, would only improve the playing field for business. It won’t be much help turning companies into sophisticated, global, high-value, growth enterprises.

So that’s where the government’s Economic Growth Agenda Mark II is supposed to kick in – by the way, you can forget about Mark I, it was a scanty thing the government cobbled together during its first 18 months in office.

It’s very hard to find a description of EGA II among all the government’s documents. It took a while earlier this year to winkle it out of the bureaucracy.

The two main goals for 2025 are to catch up with Australia and to lift exports to 40% of GDP from 30%. Government long ago stopped discussing the first. Indeed, the GDP per capita gap between Australia and us has grown since National came to office. Ours remains below its 2007 level, while Australia’s continues to grow.

EGA II identifies five “cross-cutting themes” that will work the magic:

Stronger International Connections through initiatives such as “NZ Inc, regional and country strategies”, a NZ major events fund and air connectivity.

Better Business Innovation actions such as “investment strategies aligned across agencies” and refocusing government assistance “to address better innovation needs of high value sectors”.

Smarter Capital through the likes of “improved flow of quality foreign direct investment” and “stronger firm management capability”.

Competitive Cities thanks to “economic development strategy and spatial plan for Auckland and other cities”.

Economy and the Environment through an “advisory group to recommend ways to develop and leverage NZ’s clean green brand”.

The themes are right, but the implementation is a shambles.

The government’s thinking is shallow, its sub-plans few, patchy and often inconsistent or contradictory. Execution is painfully slow.

EGA II has picked four export sectors to deliver the big economic uplift required to meet its 2025 goals:

Knowledge intensive manufacturing and services are supposed to treble their exports from $9b in 2009, to $29b in 2025

Food and beverage is likewise meant to treble to $58b

Tourism revenues from overseas visitors almost double to $14b

Minerals and petroleum are meant to grow strongly from $4b (the government hasn’t set a target for them, but alludes to billions of dollars of royalty income to help fund schools and hospitals).

All these are targets are incredible, in the literal sense of the word. For example, dairy would have to roughly double its output to treble its value. But where will the extra 4.4 million cows go?

Knowledge intensive sectors will largely happen in transformed urban economies, but the government is stomping all over the ambitious plans of our three main cities for achieving that shift.

Tourism is going backwards. Short-stay, low-spending Australians are making up in volume, but not value, for steep declines in our high-value European, Japanese and US visitors. Tourism jobs are low value and seasonal, so each new job is no help in lifting GDP per capita.

And on petroleum, the government’s energy strategy document shows that output from deep offshore fields ramps up only after 2025, and that relies on technology that doesn’t yet exist.

No wonder business is worried.

39 comments on “Oram on the Nats’ ‘plan’ ”

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  1. compulsive_blogger 1
    14 November 2011 at 11:32 am

    Calling all analysts .. what is the correlation between compulsive blogging and electoral success ?

  2. Zaphod Beeblebrox 2
    14 November 2011 at 1:10 pm

    Wait for it………

    GFC….Earthquake……Labour deficits……..It’s not our fault……..

  3. Draco T Bastard 3
    14 November 2011 at 1:13 pm

    All these are targets are incredible, in the literal sense of the word. For example, dairy would have to roughly double its output to treble its value. But where will the extra 4.4 million cows go?

    This is a good example of the Business as Usual delusion that most, if not all, political parties subscribe to and promote. Resources are limited but they keep pushing the growth meme anyway. It’s nothing short of insanity.

    We have exactly one option, define exactly what resources we have on a sustainable basis (the Renewable Resource Base) and then configure the economy and society to fit within those limits.

  4. Galeandra 4
    14 November 2011 at 1:26 pm

    Deafening silence from the right, apart from the lone voice from the crypt.

    Meantime, what are we to do when our borrowing proves to be unsustainable in the face of escalating interest costs and increasing unwillingness of international banks and funds to ‘invest’ in supporting our growing tranche of unemployed and underemployed?

    The EGA Pt II sounds mostly as though its aspirational, hardly ‘dynamic’.
    A giant leap backwards to the commodity-driven past. Threefold increase in national dairy herd! Hell, one cow produces equivalent urinary /faecal waste to sixty people.

  5. aerobubble 5
    14 November 2011 at 1:54 pm

    I watch Key, he never answered a question, he wiggled like he’d
    just sold a client a bad investment. But he did say a few things…
    …the too pay down debt when we recover he’ll reduce WFF
    and benefits… …and also… …he’ll react in the same way he
    did before to fiscal collapse, lower taxes for businesss and
    the top tax payers while raisin gst and raiding kiwisaver to
    shift the burden on employees rather than employers.

    Now its obvious he won’t run on his policies becuase most
    small businesses have seen thier customer base collapse.

  6. newsense 6
    14 November 2011 at 1:56 pm

    So if business isn’t sure, economics editors and business commentators are cutting them to shreds how do they manage to still be the party of the public thinks can manage the economy?

    We should poll like this:

    Do you believe there are WMDs in Iraq?

    Which NZ politician did the NZ Herald economics editor describe as “fatuous and self serving” in his plan for NZ’s future?

    (give options)

    How old is Santa Claus?

    (free answer)

    How do you rate the following parties on the following factors…etc

  7. newsense 7
    14 November 2011 at 1:57 pm

    A speculator, not a builder

  8. insider 8
    14 November 2011 at 2:35 pm

    Why do NZ businesses need a govt imposed plan to be successful? By contrast we had lots of plans and strategies aimed at the economy and business in Labour’s nine years that Rod Oram drooled over and how many of them came to fulfilment and achieved anything? Knowlege economy/knowledge wave? The world’s first sustainable country? Super yacht centre of the world?

    The world tends to move a lot faster than the time it takes govts and bureaucrats to write and consult on plans, let alone execute them. And accurate govt foresight is not guaranteed. WHere were all the plans that anticipated the GFC, or the resource boom? I don’t want a plan, because that implies a rigidity of thinking that values and rewards certain businesses (and their owners) that fit the current view of what is fashionable or in the plan, but could mean we are not encouraging value adding businesses outside the plan.

    I want consistency of principles such as commitment to a lawful society, anti corruption, tax strategy, infrastructure decision making, education and training, trade relations, energy availability and environmental management. I don’t want the govt trying to make micromanagement decisions for businesses, picking winners and chucking money at favoured clients like Sovereign Yachts or Weta, or Hobbits, or dairy, and I don’t want business beating up how a change in circumstances means they are not being treated fairly or deserve dollops of cash.

    • Blighty 8.1
      14 November 2011 at 3:06 pm

      New Zealand had its longest period of growth since WW2 under Labour. Under National, it’s had the weakest period of growth in at least 50 years.

      We’re a small country, what the government does has a huge influence on how business goes. In fact, that’s true of any country. If 30% of your economy is “muddling through” it’s pretty tough on the rest of it.

      • insider 8.1.1
        14 November 2011 at 3:34 pm

        But that growth and decline didn’t miraculously co-incide with Labour being in power and was not unique to NZ. And I suspect almost none of it was due to Labour’s plans which also don’t seem to have shielded us from the downturn, and it’s the value of grand strategic plans that’s the issue isn’t it?

        • Colonial Viper 8.1.1.1
          14 November 2011 at 4:33 pm

          If NZ businesses don’t need the NZ Government to help them be successful as you claim, why not get rid of National now?

          What good are they?

          • mik e 8.1.1.1.1
            14 November 2011 at 9:46 pm

            Tax cuts are a waste of time if you don’t have the income to enjoy them less and less New Zealanders are in that upper income bracket thanks to Nationals Muddling no plan a few band aids here and there thats it + borrow and hope!

            • aerobubble 8.1.1.1.1.1
              15 November 2011 at 10:06 am

              I agree with the right when they say government gets in the way of the
              economy, but I also agree with the left that without government
              intervention there would not be an economy. The right have had
              it easy with Labour introducing neo-liberalism to NZ, but this
              was always on the back of excessive cheap middle east oil.
              So it stands to reason that now we are on the door step of
              peak oil that neo-liberalism is dead, a dead dodo, we’ve eaten
              the last dodo. So Labour have policies to finally bring the
              NZ tax system up to a competive position, where the managers
              have to do comples CGT and GST calculations like their
              competitors in the US, OZ, UK, EU, etc. We’ve carried the
              managers of NZ far too lang, and how they have served us?
              By running us consistently into further malaise, they get
              paid too much and think they are supermen. Its caused
              third world diseases and growing inewquality,even a threat
              to National security as our young people see OZ as their
              home in the future.

              But Labour is only arguing for us normalize, not to
              seize the new green economy. That’s why you need
              to vote Labour in the seat and Green on the list.

    • Draco T Bastard 8.2
      14 November 2011 at 4:01 pm

      The world tends to move a lot faster than the time it takes govts and bureaucrats to write and consult on plans, let alone execute them.

      So, according to you:
      Government bureaucrats = bad
      Business bureaucrats = good

      WHere were all the plans that anticipated the GFC, or the resource boom?

      Well, most of the economists were going on about The Great Moderation so it would be a little difficult to make plans for something that wasn’t going to happen. Thankfully, the last Labour led government paid down debt and made sure that we were in a strong position just in case the economists were wrong.

      I don’t want a plan…

      I want…

      That system doesn’t work so why do you want it?

      Yes, the country does actually need a plan. One that everyone should have input into from a position of informed consent. What this means is having all of our resources duly counted, categorised and published. Democracy implemented on a national, regional, local and cooperative level so that everyone has equal say in how our resources are used but set up in such a way so that we cannot use more than what we have (biggest problem with borrowing/money is that it allows use of resources we don’t sustainably have).

      This would remove the dictatorial systems that we presently have, poverty becomes a thing of the past (poverty is a direct result of capitalism) and our society becomes sustainable.

      • insider 8.2.1
        14 November 2011 at 4:38 pm

        No according to me I made no such inference about good or bad, just relative timeframes.

        “Yes, the country does actually need a plan. One that everyone should have input into from a position of informed consent.”

        Everyone? Informed consent? What if one person says they weren’t fully informed? Nice in theory but reinforces my point about timeframes – by the time you did all that the world would have moved on to the next economic cycle. But you could argue that’s what an election does.

        “What this means is having all of our resources duly counted, categorised and published.”

        That’s already done to an extent but we’ve been mining oil in NZ for 150 years and we still don’t know how much there is, so you are likely asking for the impossible. There are things out there that we may not even consider a resource that could have great value yet might be ignored because it’s not on your list.

        “poverty is a direct result of capitalism”

        Exclusively? So non capitalist systems don;t have poverty? Or have you defined poverty like some define racism so it only exists in highly defined circumstances even if the non racism duck quacks, waddles, flies and craps on the lawn in exactly the same way.

        Sounds like you are calling for a highly planned economy that is ‘democratic’ – well that was something we heard many times in the 20th century and usually democracy was never the endpoint.

        • Draco T Bastard 8.2.1.1
          14 November 2011 at 4:58 pm

          No according to me I made no such inference about good or bad, just relative timeframes.

          Bureaucracies exists in government and private businesses. They all have the same weaknesses and yet you only complained about government bureaucracies. The inference that you made was that private business reacts faster and so you were, effectively, saying:
          Government bureaucrats = bad
          Business bureaucrats = good

          BTW, time isn’t really a problem in an open and sustainable society. It only becomes a problem under capitalism where a few people are dictating to everyone else so that they can have more money.

          Everyone? Informed consent? What if one person says they weren’t fully informed?

          The information is available, it’s put in a place that they have access to, and, during voting, asks if they’ve read it and understand what’s said. Yes, it is possible to have everyone informed.

          That’s already done to an extent but we’ve been mining oil in NZ for 150 years and we still don’t know how much there is, so you are likely asking for the impossible. There are things out there that we may not even consider a resource that could have great value yet might be ignored because it’s not on your list.

          There’s this really remarkable process that you obviously haven’t heard of called research that continuously updates what we know.

          Sounds like you are calling for a highly planned economy that is ‘democratic’ – well that was something we heard many times in the 20th century and usually democracy was never the endpoint.

          Yep, places like the USA, UK, NZ… where the plan was to remove the wealth from the people and give it to the capitalists.

          You can tell a democracy because people participate in the process rather than get told what’s going on afterwards as happens in representative democracies and commun1st China.

          • insider 8.2.1.1.1
            14 November 2011 at 5:20 pm

            You are reading into this far more than I actually said. I said ‘the world tends to move a lot faster’; I didn’t mention business. Think about the recent copyright law as an example. The world of technology, business and users have sped along and the law can’t match it. It’s good that you are able to read my mind for me though, rather than the words. My clarity is your gift.

            • Draco T Bastard 8.2.1.1.1.1
              14 November 2011 at 6:08 pm

              The world of technology, business and users have sped along and the law can’t match it.

              From what I’m seeing the people have moved along but business and government haven’t.

              And, despite your protestations, you’ve just said the same thing again.

              The world of technology, business and users have sped along… Business bureaucrats = good
              …and the law can’t match it. Government bureaucrats = bad

              Business is still trying to maintain the laws as they were written 500 years ago and government is listening to them rather than the people to protect monopoly incomes. The problem is capitalism.

              BTW, we were talking about plans, not laws. There’s a significant difference and the government should be doing both.

            • Colonial Viper 8.2.1.1.1.2
              14 November 2011 at 6:16 pm

              Think about the recent copyright law as an example. The world of technology, business and users have sped along and the law can’t match it.

              You mean the copyright and intellectual property law currently being manipulated by large corporates to stamp out competition and creativity? Good example.

        • Colonial Viper 8.2.1.2
          14 November 2011 at 5:19 pm

          Exclusively? So non capitalist systems don;t have poverty?

          Fact of the matter is that the richest 150 on the NZ rich list control about $45B between them, while at the same time we have 200,000 children living in poverty.

          The system is damaging NZers on all sides of it, both at the super rich end and at the very poor end. The sooner we recognise that the better.

      • Colonial Viper 8.2.2
        14 November 2011 at 4:38 pm

        Insider must think that countries like China, Germany, Singapore, South Korea and Norway all succeeded economically without significant central government planning and intervention aimed at specific points of the economy.

        RWNJs are really stupid, they ran the US into the ground now they are trying for NZ.

        • insider 8.2.2.1
          14 November 2011 at 5:08 pm

          I don’t think the need for a plan is as clear cut. If a plan guarantees success then how did the US become the wealthiest/most powerful nation? How did Zimbabwe USSR/Russia and North Korea not? WHat did the knowledge wave and sustainable economy plans of the last govt actually deliver compared to basic old balanced books.

          • Colonial Viper 8.2.2.1.1
            14 November 2011 at 5:22 pm

            If a plan guarantees success

            What kind of idiot RWNJ are you? Planning does not guarantee success, but having no plan guarantees failure.

            BTW the knowledge wave and sustainable economy plans were woeful. China’s plan to strip manufacturing money and jobs away from the US, now that was a real plan.

            • *_* 8.2.2.1.1.1
              15 November 2011 at 12:16 am

              One who makes sense given your hateful reaction.

              It doesn’t take a genius to see what insider is suggesting about reality moving faster than we can plan for has some merit in it.

              BTW the tone of the left here is getting rather hateful to anyone who makes the slightest ideological deviation. Are you all as spiteful in real life?

              • Colonial Viper …
                15 November 2011 at 12:26 am

                Yep. The 1% will be taken down and taken down bone crushingly hard.

                You got a problem with that?

                It doesn’t take a genius to see what insider is suggesting about reality moving faster than we can plan for has some merit in it.

                Sure. However, corporations and banksters both carry on with their strategic and operational planning every single day. Big fucking deal in fact, good planning is business best practice. Don’t get too over-awed by it, lameass.

                • *_* …
                  15 November 2011 at 12:37 am

                  Having worked for a number of large corporations and seen the results of ‘strategic planning’ I would be the last person to be overawed by it.

                  “good planning is business best practice.”

                  This is usually an excuse used by those in the planning process to justify their own positions. I guess that the kind of mindset cost centers have and which deadwood such as yourself exemplfy.

                  • Colonial Viper …
                    15 November 2011 at 12:48 am

                    Making big macs does not count as “working for a large corporation”, moron.

                    Mind you, McDonalds does meticulous supply chain and marketing operations planning, little things you dismiss at the drop of a meat patty.

                    I guess that the kind of mindset cost centers have and which deadwood such as yourself exemplfy.

                    Cripes, you are a cost centre to human civilisation in of yourself, mate.

                    • *_* …
                      15 November 2011 at 1:00 am

                      So from your tone you are inferring that someone who works for McDonald’s is basicially a lower form of human life whose opinions shouldn’t be taken seriously since they work there because they’re too stupid to get a real job? I’m sure UNITE would beg to differ.

                      At least the people working there are producing something that people actually want to pay for whihc is more than you can say for bureaucrats in large organisations.

                      It’s a sad day for the standard when a right winger has to defend the reputation as fast food workers from posters who pretend to have the interest of the 99% at heart.

                    • felix …
                      15 November 2011 at 1:28 am

                      “more than you can say for bureaucrats in large organisations.”

                      LOLWUT?

                      You think the bureaucrats in a large organisation like McDonalds don’t produce anything people want, but the worker flipping the burger in front of you does because you can see her.

                      Awesome.

                      ps inferred doesn’t mean the same thing as implied. Implication is unspoken meaning conveyed, inference is unspoken meaning deduced.

                      You should learn the difference so people don’t think you’re a fool trying to sound clever.

          • Luxated 8.2.2.1.2
            14 November 2011 at 5:49 pm

            I’m reminded of a saying “If you fail to plan, you plan to fail.”.

            A Laissez Faire approach is akin to the million proverbial monkey’s on typewriters, eventually you may get the complete works of Shakespeare but it will hardly be effective (the building industry is a good example here). The other end of the spectrum is focusing so completely on the plan that all other considerations are neglected, that is you get ten well educated typists to do the work but lock them in the room until they’re done and forget to feed them (see Zimbabwe’s single focus on throwing out Caucasian farmers and North Korea and the Soviet Union’s focus on military power).

            Basically doing either one of these extremes is the wrong approach in most circumstances, you need a balance between the two. I’ll leave it as an exercise to the reader to determine where the ‘Free Market’ sits on this spectrum.

          • Draco T Bastard 8.2.2.1.3
            14 November 2011 at 5:56 pm

            If a plan guarantees success then how did the US become the wealthiest/most powerful nation?

            By planning for it at the government level. It wasn’t the free-market which developed all that the US has done but government projects.

            • Colonial Viper 8.2.2.1.3.1
              14 November 2011 at 6:18 pm

              Not to mention deliberate subsidising of the military industrial complex to the tune of hundreds of billions a year.

              Nah that doesn’t sound planned at all, that just happened by accident.

              • aerobubble …
                17 November 2011 at 10:29 am

                world wars make planners of everyone. for want of a horse the war was lost…

                I thing most people nowadays think that rules are a burden and the wealth
                of past times appears with the least effort.

                I personally believe you get what you put in, that nothing ventured nothing
                gained, that obviously means tax cuts will fuel those who benefit from
                the tax cut to find the best return (overseas) for their money, and so
                actually harmed our economy because they came from raising GST
                on most people.

                But if most voters in NZ don’t get that, don’t understand what National
                did, that fair and balanced it wasn’t, then they will continue to see
                declining National outcomes for them and their families.

      • mik e 8.2.3
        14 November 2011 at 9:55 pm

        Business bureaucrats ie like pike river avoiding regulations that impact on peoples lives
        spin doctors that tell lies
        accountants that avoid tax
        lawyers to avoid responsibility
        Salesmen to con you into buying into dodgy finance deals
        Investment bankers to sell our companies and rip us of with derivatives ie meridian energy has been ripped of to the tune of $105 million on a futures trade over electricity supply to Tiwai smelter when we are already subsidizing their electricity.Tiwai smelter is getting power below cost.

    • Maggie May 8.3
      14 November 2011 at 5:33 pm

      If the Nasty Nats get back in there will be a resistance movement start up to oppose govt and I will be there for sure, there will be opposition, and much more serious than we have ever seen before, we will look like Syria and the world will be watching us.

      Where ill the recovery be for the favoured few then.

  9. bbfloyd 9
    14 November 2011 at 4:39 pm

    to question the need for an overarching philosophy and economic structure to act as guiding principles behind the development, and healthy evolution of human society denotes a vacuum of thought and conscience….. NOTHING, that exists on this planet does so without it’s “plan” to guide it’s actions…. to have no plan is to allow an aimless drift into irrelevancy and extinction…

    the task we have is to get over how frightfully clever we are and find the balance that will let us live within the environment that gave us life… make choices based on reality rather than expedience and the side affects of emotional imbalance….

    “don’t need a plan”…….. what a copout….

  10. Bored 10
    14 November 2011 at 5:20 pm

    From a business viewpoint I can conclude that Nact / Shonkey have absolutely no plans. In my business I am planning on how to contain costs and nail up enough annuity revenues, and sales funnel that can be readily converted (normal practice for any business) in the face of a severe recession. I have made allowances for revenue diminution, bad debts, slow payment and operation plans that can be executed to cut costs, primarily the wage bill and non essential capex. What it all adds up to is a compressed bottom line. Should my dire prognostications not come true I will be truly rolling in the profit……

    Were Key to have ever been in charge of a P&L (as opposed to a Forex gambling screen) he might have some cognisance of how real businesses that have to produce output operate. He has done nothing to rein in the cost of power and telecommunications SOEs / corporations that exist in an oligarchic rentier fashion. He has done nothing to ensure that the new employees come well educated (as opposed to ticketed by a university meal ticket factory that leaves them high indebted and expecting more than they are worth). He has done nothing to ensure that finance delivers money to non speculative productive businesses, but has bailed out the speculators at the cost of the taxpayer (meaning my business taxes are higher than they should be).

    As for strategic direction he has at least indicated that owners of cycle sales and repair shops might have some hope of being stoked by tax payer action…I got asked by one, “Where the fuck is the cycleway?” Where indeed!

    • tc 10.1
      14 November 2011 at 8:49 pm

      Spot on bored and when the former Greek PM tried to take it to the people for a decision similar to the one Iceland took….BAMM you’re outa there and replaced with a banker….everything’s gonna be just fine with a banker up front…..or will it.

  11. mik e 11
    14 November 2011 at 9:55 pm

    ROD ORAM FOR FINANCE MINISTER