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The Column – Muriel Newman

The Column – Muriel Newman

The Truth Behind Labour Spin

The global economy is a weave of intricate and complex relationships between nations. Small shifts in government policy to reflect political favour or disfavour can have a huge impact on economic performance. In that context, how overseas governments perceive New Zealand is critical to our future prosperity.

It is, therefore, disturbing that Finance Minister Dr Michael Cullen’s address to a Business Breakfast meeting in Tokyo last week did little to enhance our international standing in Japan.

His audience included the Japanese Deputy Prime Minister, Finance and Revenue Ministers, the Leader of the House and eminent business people who collectively determine the relationship we have with our third most important export market.

Our dairy, timber and seafood industries are at greatest risk of any tightening of access to this crucial market.

Dr Cullen did his best to portray New Zealand as a prosperous nation with a clear framework for long-term growth. Unfortunately, what he told Japan’s business and political leaders bears little resemblance to what is actually happening here.

He explained that the Labour Government has “constructed” a growth and innovation framework, comprised of three core elements. Firstly, a focus on strengthening the foundation for economic growth through “sound Government finances, a competitive economy, a cohesive society, a healthy and skilled population, sound environmental management, a strong research base and a globally connected society”. The second element of this framework consists of increasing innovation “through a mix of attracting and developing talent, creating new venture investment funds, making better linkages between tertiary institutions, industry and communities, and by increasing global connectedness.” And the third element focussed Government on areas to boost growth and innovation: “biotechnology, information and communications technology and the creative industries.”

While I have little doubt that Dr Cullen believes his own rhetoric, it is clear he has not been able to convince his colleagues that real long-term sustainable growth will take much more than upbeat talk and a splattering of taxpayer subsidies.

The reality is that New Zealand is struggling to maintain its competitive advantages. Our society is far from cohesive, with a racial divide that – since 1999, when Labour became the Government – has continued to widen. We have a worrying shortage of both skilled and unskilled labour – exacerbated by a creeping elitism in the education sector, which fails to give vocational training the priority it deserves. Environmental management is mired in the Resource Management Act, and our best researchers now practice overseas.

Further, Labour has failed to understand that a hands-on approach – using taxpayers’ money to pick winners, like giving the Warehouse a $100,000 grant – will not deliver the accelerated growth rate New Zealand really needs.

Alisdair Thompson, Chief Executive of the Employers and Manufacturer’s Association put it this way: “what we seem to have failed to get across, and its not for want of trying, is that we are actually not looking for handouts or subsidies or assistance from Government. What we want is a government that is really sensitive to the needs of business in everything it does.”

If Dr Cullen had reflected on these concerns, he could surely not help but notice that a major temptation for his Government is that, by running surpluses – at $5 billion dollars, Labour is taking $1,250 a year more than it needs from every man, woman and child – it becomes arrogant and greedy, believing it can spend the money better than those who earned it.

Taxpayers, meanwhile, who watch the Government throwing their money around to curry favour, can be excused for feeling bitter – especially if they recall Dr Cullen’s now infamous response: “we won, you lost, eat that.”

New Zealand undoubtedly has tremendous advantages but, if they are to be properly utilised, we must be realistic about our place in the world. As a nation, our wealth depends largely on the good will of our trading partners. That, in turn, depends on the precision with which Government and business interests work together to capture market niches.

The role of central government is to work in partnership with business – domestically and internationally – as a facilitator, rather than a manipulator. While I’m sure Dr Cullen understands this, I fear it is an argument he lost to his Labour party colleagues many years ago.

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