Faster Growth? If We Want It
Reserve Bank Governor Don Brash today said that if New Zealand is to achieve faster economic growth, first of all New Zealanders have to want it.
Speaking at the "Catching the Knowledge Wave" conference in Auckland, Dr Brash said that, to achieve markedly faster growth, an attitudinal change was required.
"This attitudinal change is probably the most important single need if we are to radically increase our per capita growth rate. We need to want faster growth or, in personal terms, higher income.
Dr Brash said that to regain income levels in the top half of the OECD within a decade "would require GDP per capita growth in New Zealand of about 3.6 per cent per annum, somewhat more than double the growth in per capita GDP achieved by New Zealand in the nineties. * Increasing GDP per capita by 3.6 per cent per annum means at least trebling the rate of productivity improvement which New Zealand has achieved in recent years."
Faster growth could not be engineered by monetary policy, he said. Rather, the quality of New Zealand's education system urgently needed improvement, and bureaucratic and taxation obstacles to research and development, the adoption of new technology, and investment needed to be removed.
On the issue of R&D incentives, Dr Brash said that New Zealand's unhappy experience of the past made us nervous of governments' providing incentives to private activities, but it had to be a concern that businesses in, for example, Australia spend on average double what New Zealand firms spend on R&D relative to GDP.
"Getting ourselves back to around the middle of the OECD pack in terms of GDP per capita within a decade - indeed, even within two decades - will still be a major challenge to all of us. Fortunately, our history suggests that we thrive on major challenges," Dr Brash concluded.