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Productive editorial

Written By: - Date published: 11:40 am, July 27th, 2009 - 29 comments
Categories: economy, national/act government, privatisation - Tags: ,

Interesting editorial on National’s new Productivity Taskforce in Saturday’s Herald. Australia’s Productivity Commission (independent, highly successful, and enjoying cross-party support) could have served as a good model, but:

That possibility was ditched with the appointment of Dr Brash, whose excellent credentials as a former Reserve Bank Governor are compromised by his political partisanship. This will make it harder for the taskforce to gain credibility. Therefore, it is especially important that the yet-to-be-announced members come from different parts of the political spectrum.

Good advice – what do you suppose are the chances of it being taken? Further interesting points follow, with a quick mention of the research on why the gap with Australia has opened up:

A key factor seems to have been capital shallowness; on average each New Zealand worker has had less plant and machinery to work with. While this country has had plenty of noses to the grindstone, Australia has invested in a superior grindstone.

Hello captains of industry – are you listening? Of course it doesn’t help that some of the funds that the Aussies buy their superior grindstones with are profits repatriated from NZ. Anyway, the most telling comment:

Many of the most important decisions that will underpin improved labour productivity lie with the private sector.. But governments have a role to play in infrastructure, the teaching of skills and in encouraging a culture of saving, thereby providing a local and cheaper source of investment capital.

This is interesting both for what it says, and what it doesn’t say. What is says: infrastructure, the broadband initiative is at least in the right ballpark, though arguably misguided and a much smaller step than we were lead to believe.. Otherwise, can’t we do better than cutting research funding and tax credits and building yet more roads? Teaching of skills, an obvious dismal failure of vision from National. Encouraging saving, another fail, with reductions to KiwiSaver and the poor example of cancelled contributions to the Super fund.

So what doesn’t it say? What doesn’t get suggested as government drivers of productivity? Privatisation. Personal tax cuts. Abolishing the minimum wage and driving wages downwards. Gutting the Public Service and contracting out. All the proven failed policies of the neoliberal revolution favoured by National and their productivity Czar Don Brash.

In short, someone at The Herald gets it. They know what needs to be done (National are going backwards). They aren’t pushing National’s wrongheaded agenda. Why don’t they just come right out and say it? National have it all wrong. Why isn’t The Herald shouting it from the rooftops?

– – rOb

29 comments on “Productive editorial ”

  1. A lot to digest and comment on but here’s a few things.

    1. Agreed re the risk of appointing Brash. National will miss an opportunity if they stack it with their own which has not been Key’s signature. Wonder who was pushing for this?

    2. Capital investment is critical. The small size of many of our businesses is a systemic issue.

    3. National doesn’t appear to have got its head around R&D – its policies don’t align to its own strategies. Mapp is a waste of space and needs to go.

    4. Skills debate is still undecided. The changes you note aren’t as major as you make out. More important the real debate is still missing around ensuring we have what skills we need, rather than bums on seats. Less could well be more.

    5. Not surprisingly, you will overlook the problems caused by Labour’s envy tax that contributed to the housing bubble. We need a tax regime that encourages productive investment and savings and does not penalise people decreasing their reliance on govt support. Labour failed dismally on this for ideologically reasons.

    6. There is no evidence that National have it “all wrong” … indeed, it’s a major problem for the left as National and Labour share a sizeable common ground. Ditto there’s no plan to gut the public service but see, you guys can do the spin without CT 🙂

    Another thoughtful post that encourages debate rather than a simply reaction (your last para excepted :))

  2. BLiP 2

    Yep. Spot on. I hope the Saturday’s Herald Leader Writer isn’t now looking for a job.

    A year ago Brash was sniveling his way through crocodile tears, lamenting his missed opportunity to stand up for his pacifist principles when John Key et al decided to support the illegal invasion and on going occupation of Iraq. Brash’s cowardice and subsequent regret had, he said, strengthened his resolve to, should he given the opportunity, push harder for the market fascis (t) policies he so lovingly holds dear.

    Lets hope National Inc shows Brash the same imperious disdain it has shown Greenpeace.

  3. randal 3

    its obvious that the problem of productivity in new zealand is because the owners will not invest more in their own businesses.
    at any moment they are ready to cut and run somewhere else.
    it is becoming increasingly obvious that ownership of business in new zealand is primarily a psychological objective with profits secondary.
    one thing bosses in new zealand love is bashing workers just for the hell of it and appointing a baloney slicer like brash to creep round looking for ways to lower wages is just one more manifestation.

    • Murray 3.1

      What a load of crap.
      its obvious that the problem of productivity in new zealand is because the owners will not invest more in their own businesses.”Why is this obvious”

      As a small business owner its difficult to invest more in the business when our biggest cost is taxation.

      one thing bosses in new zealand love is bashing workers just for the hell of it

      One of the problems employers have faced is getting employees with any sort of motivation to actually do the job, hopefully this recession will sort this out

      • Kevin Welsh 3.1.1

        I work for a small company (18 employees) and recently they deemed it more important to hold a party and invite their clients, than invest the same amount in new computer equipment which will increase worker productivity. The computers that are currently being used are 2004 vintage and, as the IT sucker, I have been pushing for replacement for 2 years.

        Its sad when style rules of substance.

  4. coolas 4

    Brash hasn’t the right sort of brain to lead a program needing imagination and creativity to succeed.

    The unproductive ‘income’ comparison with Australia as a benchmark should be scrapped in favour of a ‘lifestyle’ value which includes environmental and social benefits.

    The entire concept of what constitutes a good lifestyle needs debating, and our slavery to GDP and fiscal growth, needs liberating.

    New ideas are needed. And I doubt Don Brash has had one of those for a very long time.

  5. Ron 5

    Couldn’t agree more, Coolas. I actually think the GDP copmparison will never work as regards Australia because we simply don’t have the same high value resources.

    However, economic/ lifestyle “indicators” such as household incomes, free time for families, income/necessities ratios, work travel times, individual health levels, costs to work ratios- would be more helpful. It would also give an indication as to why some of us choose to live here instead of there despite the much vaunted wage differences. Me – I work 20 minutes from my home, I can fish in the ocean and ski in the afternoon if I chose to, there aren’t too many Australians about the place, I live 10 minutes from a city but can eat entire meals grown within 1 km of where I live, I don’t meet many Australians, my housing outgoings are less than 20% of my income, I live in a country that values and honours it’s full heritage, my kids get a free education in schools that don’t have 15 foor high fences around them, the cops don’t carry guns on their hips and only one of my family is Australian.

    • Anthony Karinski 5.1

      I agree that after a certain level GDP has little impact on the quality of life. However Australia’s higher level of GDP may be partly due to its mineral wealth, although that doesn’t stop countries far less endowed with natural resources, like the Netherlands and Denmark, from exceeding Australia’s per capita GDP figures. Likewise, parts of Africa is busting with natural resources without countries there gaining much in way of GDP from it.

      • Daveski 5.1.1

        Indeed NZ had a better GDP in the past although that was when the primary industry was king and we simply shipped everything to England and lived happily in black and white.

        I have some sympathy for those who say that we should factor in other indicators of “wealth”. The only problem is that these non-monetary indicators don’t pay for the level of services the left typically want to provide.

      • Ron 5.1.2

        Well the Afruican differential can probably be put down to th same thing as ours – investment in plant – the ability to get the gold out of the ground as it were. (Possibly also the effort that major corporates put into depriving the locals of the benefit of their own resources.

        But I immediately want to know what it is that the Netherlands et al are doing differently from us. I suspect we won’t get that alysyses from Don and his mates.

      • Anthony Karinski 5.1.3

        One thing that doesn’t get much mention in the NZ discussion is the types of unions we have and the role they play.

        In continental Europe several countries made a concerted effort to create strong centralised unions when rebuilding after the WWII. These unions span many different types of occupations and it is not uncommon for engineers, doctors, cleaners, teachers and truck drivers to belong to the same union. They may be organised into different departments or sub-unions, but essentially the overall strategy of the union is to look after all its members in the best possible way. The unions’ size and scope forces them to take a broader view of the economy to be able to make decisions that are beneficial to all member groups in the longer term.

        This has given employers, who often have unions of their own, a central partner that acts responsibly and ensures demands are consistent across several sectors of society. The incentives to get things right thus becomes compelling as the power the unions wield is immense and any abuse will soon backfire and hurt their members as much as the employers.

        Contrast this with the British model of the 1950-60’s with small and fragmented unions where everyone were fighting their own battles with individual employers, often hurting other unions and employers, and eventually loosing the war.

        Unfortunately the NZ unions, through no fault of their own, has more in common with the Brits of the mid 20th century.

  6. roger nome 6

    “A key factor seems to have been capital shallowness; on average each New Zealand worker has had less plant and machinery to work with.”

    Fuck me – that’s what i’ve been blogging for the last 2 years. Brash and the rest of the neoliberal cynics will know this too. But to deepen capital is to reduce profitability (shifts risk of doing business on to employers, because you can’t just “fire” machines in times of reduced demand – you have to have them sitting idle, or sell them at a greatly reduced price).


    Wage levels of ordinary kiwis don’t matter to National – only business profits. It’s all there in black and white for anyone who wants to look.


    • Ron 7.1

      I think you’re probabl hijacking a thread here, Doug. But what me laugh (oh, how I laughed until mt sides hurt) is how now that the middle class are starting to feel the crunch all thi stuff about how unfair the welfare system is is oing out. “Whaddya mean I have to use up my own resources before you’ll give me some support?””whaddaya mean I can’t get the dole if my husband has a job?” – it’s “middle New Zealand” finding out something of the reality that a good many people have been living with for years.

      • RedLogix 7.1.1

        Actually the editorial concludes with a blatant stupidity:

        Citizens pay according to their ability through the progressive tax system, and receive according to their need through a welfare programme that rests on income testing.

        And then goes on to say:

        The sooner Mr Goff accepts that, and acknowledges taxpayers should not be subsidising disappointed property investors,

        Hopelessly confusing the difference between income and assets. Until recently most people who needed to apply for the UB probably had little in the way of assets. The crisis we are in changes that, increasingly it is people with long-held assets who are finding themselves cash poor.

        If on the other hand you believe that the UB should be asset tested, then why not just come out and say so honestly.

  7. outofbed 8

    Ron I want to have your babies

  8. RedLogix 9

    In the meantime it’s worth reading this major essay from Kevin Rudd in the SMH; and comparing it with Key’s fatuous little speech last week.

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