Elections might change Parliaments but they don’t dispose of issues. And there are some whoppers.
First, the economy must navigate the flash flood that followed the bursting of the debt dam.
Step one was the immediate assurance of credit and avoidance of spiral of consumer and business confidence. Step two is to convert stopgap, on-the-hoof decisions during the election campaign into durable policy settings that don’t take us back to the counter-productive interventions of the 1970s and early 1980s.
If there is not an early exit from the sweeping taxpayer guarantees for banks and near-banks, there is great potential for serious and perverse distortions of lending patterns and for moral hazard.
But New Zealand will not be able to exit to sanity until Australia does and Australia will not be able to move until the big northern-hemisphere countries decide they have got workable long-term regulatory systems.
That will need, first, recovery of trust – which may be some time coming. The viral spread of the credit crunch exposed the complexity of, and the interdependencies in, the world financial ecosystem.
Piecemeal regulation – by institution, sector or country – won’t fix that broken complex system. The danger is that countries will be tempted after time to look to their own interests, which may, perversely, turn out to be bad for their interests.
New Zealand is caught up in this international web. Moreover, its supply chains in and out are long and complex.
That leads to the second post-election issue: the need to build international relationships, secure trade deals and get taken more seriously than four million people merit.
That is at three levels: bilateral, particularly with Australia and major trading and financial partners, from China to the United States; pluri-lateral, with like-minded groups of countries which want to keep their economies open; and multilateral, in the many international forums, where seats on committees, especially agenda-setting ones, are crucial.
That is hard work and needs properly resourced foreign ministry (unlikely, judging by the main parties’ pre-election positioning).
One topic demanding this combination of luck, skill and international good citizenship is climate change – the third big issue. There is risk to New Zealand’s brand if, once the economic crisis has faded, the major countries resume talks on post-Kyoto deal.
Lose the brand and we risk losing custom. That is not the route to high-wage economy. Defining and defending the brand by doing what it takes could be among the highest priorities over the next five to 10 years.
But brand and trade are not in themselves route to high wages. That requires action on the fourth issue: building an innovation culture.
There is lot of innovative thinking and entrepreneurialism. The government’s role is to reinforce that by pushing its funding of research, science and technology back above OECD average levels to make up for lost time and money and to back seed and venture-capital funding.
Tax policy is another ingredient. That is the fifth issue: to make the tax system internationally competitive. The record is mixture of good and bad. Just lowering personal income tax won’t do.
The sixth issue is to get the infrastructure up to scratch. big start has been made on the hard infrastructure and both major parties announced plans for broadband. But water management has yet to be tackled. And at least as important is education: the building of human capital.
That is not just schools, post-school training and “standards” (which risk diverting teachers from real and relevant learning). It is ensuring as many children as possible have the start in life – from at least age zero, if not earlier – that enables them to learn and gives them maximum opportunity to make the best of life. Needlessly carrying passengers is not the way to high-wage economy.
Seriously tackling that is expensive, intellectually difficult and potentially highly intrusive into “dysfunctional” households.
That leads to the seventh big challenge: developing better processes than adversarial parliamentary politics, to generate consensus on major issues.
Adversarial politics can contribute to the contest of ideas, which in turn can generate innovative responses. But more often it throws obstacles in the path of development. Citizens’ juries and assemblies, roundtables of interest groups and all political parties and referendums are alternatives other countries use.
That’s big agenda. Hands up those who thought parties got to grips with much of it in their pre-election policies.
Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist.
