December 23, 2009

The Brash Report

The government invested into the 2025 Taskforce. As a centrist, who is sceptical about a purist market approach delivering good social policy outcomes, readers will not be surprised that I have reservations about certain aspects of the Taskforce prescription. However, when an effort has been made to address New Zealand’s deep-seated problems I am inclined to the view that it’s worth giving it proper consideration.

Certain aspects of the Taskforce prescription are worth exploring further:

• The relative decline in New Zealand’s GDP per capita is not well understood by the public – it needs to be;

• The substantial increase in government spending since 2005 is unsustainable and needs to be curbed is a useful observation but needs to be considered in the context of the global recession of 2009.

• The trebling of subsidies for early childhood education and day care is also worthy of evaluation to see whether such expenditure is getting the benefits expected of it.

• Reforming the welfare system to curb abuses is also going to be important over the next decade.

• Ensuring that our income and company tax rates are competitive with Australia, the UK and other competitors for kiwi talent is important.

There are, however, other parts of the report that appear to lack sufficient analysis:

• The attribution of New Zealand’s decline in economic performance to “the impact of the protectionist regime put in place in the 1930s” is questionable given that our best economic performance occurred in the 1950s and 1960s under such policies;

• There is little in the way of consideration of how new research, science and technology can help drive faster growth rates and diversity in our economy.

• As most business people will tell you selling assets is not a very well thought through strategy for long term economic prosperity. Raising productivity and skill levels – together with NZ-based research capacity is likely to deliver longer term gains for the country’s prosperity.

2010 represents a year of opportunity for the government to introduce overdue economic reforms. The studies it has commissioned in 2009 will offer a useful base of work from which to consider remedies for New Zealand’s economic ailments. Social policy considerations - such as social cohesion- will have their place alongside economic goals in any intelligent programme of reform in 2010.

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