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.

Mobile Communications Will Drive Economic Growth

At the GSMA's Leadership Summit, bringing together 400 CEOs, government ministers and officials, industry leaders today stressed the unique role that broadband, specifically mobile broadband, can play as an economic stimulus. Those leaders called for governments to support the rollout of mobile broadband services to drive economic growth.
The release of new spectrum for mobile broadband services in 2009 will ultimately add the equivalent of $211 billion to China's GDP, and could add the equivalent of $95 billion to India's GDP1, according to a new report by Professor Leonard Waverman and consultancy LECG for the GSMA, which represents the global mobile industry. The rollout of mobile broadband networks will create hundreds of thousands of jobs, encourage new businesses across the value chain, improve productivity and boost consumer spending.

As the mobile industry is one of the few parts of the private sector currently capable of providing an economic stimulus, governments need to ensure they adopt policies that encourage more investment in mobile services and networks. Wherever possible, governments should seek to create a stable regulatory environment, while licensing spectrum on the right terms to encourage spending on network infrastructure and services, stimulating economic growth.

Innovative centrist solutions required to combat recession

The tired old policies of keynesian pump-priming of the Old left and severe retrenchment of the Old Right are no longer the solutions we need to combat today's economic woes. Borrow and hope policies cannot be a long term solution to today's crisis. But harsh cuts in social spending mean the most vulnerable are left to fend for themselves when they can least afford it. Perhaps the time has come to defer income tax cuts for the wealthy, for wage restraint for employees, and for significant State investment in infrastructure projects that will be of value to the nation long after the recession. Better roads, improved broadband, and large scale home insulation programmes would be welcome steps in the right direction.

Step Change Needed in Economic Performance

New Zealand needs a step change in economic performance if it is to raise the living standards of all its people and to afford the increasingly expensive healthcare treatments now available. In addition we also have a large number of baby-boomers coming through the system to retirement during the next two decades.

Productivity growth, adoption of hi-tech production methods and lower income tax rates are all part of the policy mix required. We also need to agree and implement a NZ Broadband Strategy and build links between our education system, job training and the global marketplace in a way that encourages kiwi companies to remain headquartered here and to be smart about retention of Intellectual Property rights here in New Zealand.

Whichever parties are involved in forming the next government should probably consider convening a NZ Summit of the type David Lange convened after the 1984 election. We need to debate and agree some key national goals and then set about achieving them.