The Leadership Election

Currently both main political parties seem to be moving towards focus on growth strategies as the critical issue for New Zealand. The Prime Minister made her intent plain in her speech at the opening of Parliament on 12 February. National’s advocacy of growth is at the time of writing less obvious but Bill English’s strong criticism of perceived shortcomings in the Government’s ‘innovation’ package suggests both that more detail is due soon and that National senses soft target.
A focus on growth strategies should be unremarkable. After all, for half century our economic performance has declined relative to other developed nations. The gap between New Zealand and Australia and Canada, for example, is still growing and will probably increase faster.
Growth matters. Again, this should be an unremarkable observation. But too few New Zealanders understand why growth matters, perhaps because too many consider growth as something that benefits few at the cost of many. The opposite is the case. If New Zealand had remained the 3rd wealthiest country in the world, our health expenditure would be 45 percent greater than it is now. Even if we had only managed to match Australia’s growth rate, nearly 30 percent more would have been available for cancer treatment, high tech medicine and competitive salaries for nurses. All without any additional dollars being diverted from other public expenditure to health spending – because the national cake would have been so much bigger. This affects every New Zealander.
Unless we soon match our income to our expectations, rationing in health and other areas will become more and more obvious as the New Zealand cake shrinks in comparison with other countries. growth strategy that addresses the basics as well as the bits that sound more exciting is essential – and must be implemented.
In country that’s spending only about one dollar in four on its future growth and where public memories of the ’80s and early ’90s are still painful, focusing on growth is bold step for politician, especially given our three-year electoral cycle – too short for the scoreboard to show many runs before the next election.
There’s no doubt what playing ‘catch-up’ means in sporting context. In the economic context it’s just as hard. New Zealand has just had couple of years that are about as good as current policy settings permit without coming remotely close to four to seven percent growth on consistent basis. The more we delay getting started, the tougher the task ahead, the further we will have slipped behind and the more young New Zealanders will take their skills and their futures elsewhere.
The real leadership task facing New Zealand’s political leaders is to tell New Zealanders that the big picture actually isn’t as glossy as most think, that genteel poverty is closer to hand than we realise.
Then there is the business of setting out credible steps to get growth in our economy. Business NZ, in dialogue with regional business groups and member companies, has developed list of 20 specific steps that we think would grow the economy (see www.businessnz.org.nz). We think having clear short- to medium-term objectives is essential to achieving larger goal.
That’s what our political leadership should be doing too. It’s encouraging that both Labour and National are talking about growth, but so far National is yet to come up with the specifics, and Labour is ignoring the basics.
With both parties contesting the middle ground, and both focusing on economic growth, the best point of differentiation should be turning words into action. Will one of them stand up this election year and actually do it?

Simon Carlaw is chief executive of Business NZ

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