COMMENT: Key bolts door on most big Brash ideas
COMMENT: Key bolts door on most big ideas in Brash report
Nov. 30 (BusinessWire) - Unless there's a great idea just waiting to shine, it seems the biggest ideas in Don Brash's 2025 Productivity Taskforce report are already out in the public domain and already virtually still-born.
We'll know at 1.30 p.m. today exactly what the report says, but at this stage, the only policy bogey not to be ruled out is privatisation, an area where it appears the Government is already thinking carefully about how to carve off and sell parts of its SOEs without scaring the horses, some time in its second term.
However, the
predictability with which Brash and Co are reportedly
recommending and Key immediately poo-poo'ing a flat tax rate
has an almost ritualistic quality about it, and reinforces
the unfortunate fact that not only are most of New Zealand's
economic problems already well-known, but the range of
possible ways to fix them is pretty well understood too.
The trouble is that the answers are like the answers to
climate change: expensive, scary and not guaranteed to work,
so who will ever take the plunge?
That's why Key
continues to grasp for new ways to dress up old ideas, or to
backtrack on the combination of fiscal purity and
perpetually shallow pockets that mean New Zealand businesses
get relatively little direct help from their Government,
even in areas where targeted intervention could be justified
strategically, albeit rarely by a commercial business
plan.
In that respect, perhaps the role of the Brash
report will be to bolster a climate for less radical, but
hopefully meaningful efforts to lift New Zealand's
demonstrably poor productivity. It is being released, after
all, in a frenzy of other heavyweight pre-Christmas
reports.
We already have Energy and Resources
Minister Gerry Brownlee's four reports on "unlocking our
petroleum resources", which at the very least reinforce an
increasingly benign environment for exploration, even if
more radical proposals are ignored.
And tomorrow, we
will have the one day public conference held by the Tax
Working Group, which will bring a practical factual backdrop
for Brash's tax recommendations, i.e., the unsustainable
nature of New Zealand's current tax-gathering, given
projected levels of economic growth, government spending,
and growth in public debt. Their final report will be out
by Christmas.
Then next week, it will be the turn of
the Capital Markets Development Taskforce to report on what
it would do to inject life and depth into New Zealand's
desperately thin capital markets.
All of this work
is feeding into the 2010 Budget and a process that
BureaucratWorld is calling "the EGA", or Economic Growth
Agenda.
A few months ago, it might have seemed
reasonable to assume some big ideas might come of this work,
which is also covering infrastructure investment and
business assistance for innovation, along with the energy
and minerals push.
Key's natural caution, however,
is more and more evident as he steps on ideas that are not
even out of the bag yet.
He is right to observe that
the Australians took it slower in the 1980's and 1990's and
avoided the political speed wobbles that occurred when both
Labour and National Governments hurtled into reforms with,
at times, lemming-like enthusiasm.
However, in
implying that New Zealand can take it slowly and also catch
Australia any time soon, Key creates false hope and
undermines his own goal. Our trans-Tasman neighbours were
never in as much trouble as we were to start with, and
they've continued to pull away dramatically from our
standards of living for the last 25 years.
As
always, there is no silver bullet. However, hopefully what
Key says could be "a few nuggets" in the Brash report to
prevent it from becoming yet another government-ordered
door-stop.
(BusinessWire)