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May We Have More 'Failed Policies' Please?

May We Have More 'Failed Policies' Please?

"Statistics New Zealand's figures for real gross domestic product released last week show that New Zealand has had the best decade of economic growth since the 1960s", the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.

For the 10 years to the end of 2002, average growth in real terms was 3.6 percent a year. This means the economy in 2002 was over 40 percent larger than it was 10 years earlier.

Even more importantly, real per capita GDP – reflecting the average income of all New Zealanders – grew by 2.5 percent a year on average in that decade. This means that average incomes were 28 percent higher in 2002 than they were 10 years ago.

Having regard to increased government spending on services such as health and education – the so-called social wage – in that period, it is not credible to suggest that the vast majority of New Zealanders did not benefit from this improvement.

Growth for the 10 years from 1992, when the economy began to expand after the structural reforms of the 1980s and the additional fiscal and labour market measures of the early 1990s, was comparable to the decade of the 1960s and any 10-year period up to 1973/74, and much better than the 1970s as a whole and the 1980s.

Productivity improvements were clearly responsible for a significant part of the improved growth performance.

In addition, there were major improvements in inflation, employment, unemployment, the government's fiscal position including public debt, and New Zealand's credit rating.

"While there was much about the reforms that was imperfect and incomplete, to refer to them as the 'failed policies of the past' is clearly ludicrous", Mr Kerr said. "We need more moves in the direction of greater economic freedom and lower tax, regulatory and welfare burdens if the government's growth objectives are to be achieved."

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