July 2, 2011

Export-led recovery needed now

One of New Zealand's risk areas is its 40 year habit of borrowing to sustain the lifestyle we have become accustomed to. Since 1973 NZ has run ongoing current account deficits - that is we have been paying out more for imports and debt servicing then we have been earning from exports each year. The end result is that on a per capita basis NZ Inc (public and private sectors) now owes almost as much as the basket case economies of Greece, Spain and Ireland. Contributing factors were: the oil price shocks of 1973 and 1979; the UK's entry into the EU and the loss of traditional trading markets; and poor policy decisions here at home.

To get out from this hole NZ needs to change a few things:
1. Stop digging a deeper hole - stop borrowing so much overseas - earn more from selling high value products in overseas markets.
2. Invest more in research & development - especially into high value products for the export market.
3. Ensure we have an efficient and well-maintained infrastructure - transport, broadband communications, and financial services.
4. Make it easier for overseas investors to live and do business in NZ - including joint ventures, PPPs, and high-value exports where the economic benefits flow back to the national economy.
5. Provide policy settings than encourage kiwis to work or start their own businesses - rather than rely on welfare, promote education and training for 21st century living and working; encourage savings and investment rather than consumption and spending.
6. Encourage kiwis to look outwards to the global economy for their incomes - while living in NZ and building a strong sense of national identity and of place here in Aotearoa New Zealand.
7. Promote equal opportunities - regardless of class, gender or race. Break the long tail of underachievement and ensure that all kiwis have the chance to be part of the economic, educational and social mainstream of Aotearoa NZ.
8. Keep our clean green environment in good shape for future generations.

If any politicians out there want to pick up this recipe - feel free. Oh- one other thing - NZ should be setting a course and sticking with it - we need to avoid these lurches to the right and the left - especially on matter such as employment law, superannuation and compulsory saving. A good piece of bi-partisanship would be very helpful to our long term future. Both major parties know superannuation needs to be made affordable and the age probably needs raising. Why not agree on a few principles that the main parties will work within?  I think the public are ready - provided there is plenty of notice and no one has the rug pulled out from under them.

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