Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Govt Choices Make It Hard to Close the Income Gap

MEDIA STATEMENT
Monday 30 November 2009
Embargoed Until 1.30 pm

Government Choices Make It Hard to Close the Income Gap


The 2025 Taskforce says that poor choices made by successive governments explain why the New Zealand economy isn’t doing better.

“Successive governments, with only short-lived exceptions, have failed to grapple with the full extent of our economic decline, and with what it would take to staunch the exodus of our young people.” Taskforce Chairman Don Brash said today.

“Governments have a vital role in a huge range of areas: from international relations and defence, to maintaining law and order, enforcing contracts and administering regulations; from funding and where necessary providing important social services to conserving and promoting the nation’s natural and cultural heritage. Governments set the “rules of the game” and they need to do these things excellently and efficiently.

“However, the overwhelming historical and contemporary evidence, both domestically and internationally, is that the best route to much higher living standards is to empower markets, and the people and firms working within them.”

Dr Brash said this practical observation had shaped the recommendations in the Taskforce’s report. It had found no evidence that governments can improve living standards by trying to identify and back apparently promising sectors or industries, attempting to tilt the playing field one way or another, or becoming a more active participant in business itself.

“We’ve tried that sort of approach many times before, and it has failed every time,” Dr Brash said. “Government officials and Ministers just don’t have the information or the incentives to get such judgements right.

The Taskforce spent a lot of time looking at a wide range of common explanations for why New Zealand had fallen from being roughly on a par with Australia for most of our history to there now being a very significant gap, Dr Brash said.

“It is very clear that our problems have nothing to do with Kiwi culture or demographics; our size and distance from the world; who owns our houses; the quality of our entrepreneurs, managers and workers; a lack of minerals; or the way we run monetary policy.

“New Zealand’s relative decline is one of the most stark in modern history. The Taskforce’s report focuses on what we have and haven’t done in response, and on why the income gap isn’t closing again now. Our conclusion is that New Zealand simply has not consistently done what is required. Reversing a sharp decades-long decline requires making choices which governments have only rarely been willing to make consistently.”

Dr Brash said New Zealanders therefore shouldn’t be surprised the country was currently failing to catch up with Australia and other OECD countries.

“The policies we’ve been running over the last 10-15 years fly in the face of well-established international evidence about what works and what does not. We have:
• increased tax rates, and in particular effective marginal tax rates for the middle class
• expanded the role of the state in business, including through an increasingly constraining web of regulation
• failed to demand value for money from government spending
“And, over the last five years in particular, total government spending has been increased hugely, crowding out room for productive private sector activity.

“Countries that are fast-growing, and successfully closing the income gaps, don’t do any of these things.”

Dr Brash said it was even more important for New Zealand to empower people working in markets than for better-off countries.

“Closing a big income gap is much more challenging than just maintaining a position near the top of the OECD league tables. It is much more important for us than it is for already-rich countries like Norway, the United States, or perhaps even Australia, to get the “rules of the game” right. If New Zealand is going to once again match these sorts of countries, we have to adopt the policies and institutions that will enable our people to make the most of themselves and which mean that strong, competitive and innovative firms see New Zealand as among the best places in the world to do business.

“Markets excel in helping ensure we get the most out of what we have, both now and in the future. Competitive markets are powerful in making space for innovations, rewarding success and weeding out failure. We recommend governments focus primarily on removing obstacles which dull incentives to work, save and invest, and that limit the ability of markets to work well.

“Adjusting the balance of the whole economy away from government and towards competitive markets is, in our unanimous view, the only credible way for the Government to help New Zealand entrepreneurs, managers and workers lift incomes at the pace we need to achieve the Prime Minister’s 2025 vision. In turn, the evidence is also clear that it is only higher national income, not bigger government, that will deliver the better social, environmental and other values that New Zealanders rightly aspire to,” Dr Brash concluded.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Why Welfare Reform Has No Champions In Parliament

Ever since Victorian times, the unemployed have been a problem for those more fortunate, wealthy and powerful. Down the ages, society has been torn between providing for them as victims of misfortune, or dealing to them as the shiftless agents of their own condition. Either way, the poor are commonly regarded as The Other – as a group of outsiders gathered pitifully, reproachfully, or (depending on your POV) threateningly at the gates of polite society.... More>>


 

National: "Todd Muller Announces Shape Of Next Government"

National Party Leader Todd Muller has announced the line-up of the next Government. “New Zealand is facing perhaps the toughest time that almost anyone alive can remember. “We are borrowing tens of billions of dollars to get us through this crisis. There ... More>>

ALSO:

Lockdown Rules: Timeline For Moving To Level 1 Needed

The BusinessNZ Network is calling for more clarity about the conditions under which businesses can move to Covid level 1. The network is concerned about large numbers of businesses that are at risk of closure if restrictions continue at the current ... More>>

Gordon Campbell: On National’s Day Of Reckoning

Congratulations. You are one of the 55 members of the National caucus being called together tomorrow to choose who will lead you to either (a) catastrophic or (b) honourable defeat on September 19, thereby saving some (but not all) of the jobs currently on the line. Good luck. Your decision process starts NOW... More>>

ALSO:


Budget 2020: Jobs Budget To Get Economy Moving Again

Investments to both save and create jobs in Budget 2020 mean unemployment can be back to pre COVID-19 levels within two years and could see the economy growing again as early as next year. More>>

ALSO:

Covid-19 Response: Law Setting Up Legal Framework For Covid-19 Alert Level 2 Passes


The law establishing a legal framework for the response to Covid-19 has passed its final reading and will become law in time for the move to Alert Level 2 tonight.
This is a bespoke Act designed specifically to stop the spread of COVID-19... More>>

ALSO:

ACT: Parliament Quits MP Cut Pay Debate To Go Home Early

“In an outrageous move, Parliament has today passed voluntary MP pay cuts and avoided any debate over whether to make them compulsory and transparent”, says ACT Leader David Seymour.... More>>

ALSO:

Trans-Tasman Bubble: PMs Jacinda And Morrison Announce Plans

Australia and New Zealand are committed to introducing a trans-Tasman COVID-safe travel zone as soon as it is safe to do so, Prime Minister Rt Hon Jacinda Ardern and Prime Minister the Hon Scott Morrison MP have announced... More>>

ALSO:

Government: New Zealand Joins Global Search For COVID-19 Vaccine

Foreign Affairs Minister Winston Peters, Research, Science and Innovation Minister Megan Woods, and Health Minister David Clark today announced a COVID-19 vaccine strategy, which will enable New Zealand scientists to contribute to global research efforts ... More>>

ALSO:

The Dig: Steady State Economics: We’ve Got Some (systems) Thinking To Do

In this time of impending economic and ecological crises, we urgently need to aim for a sustainable or ‘steady state’ economy. In order to get there, we will need to adopt a ‘systems-thinking’ outlook taking into account the interconnections of our complex world.

In short, we’ve got some systems thinking to do... More>>

ALSO:

Election 2020: Parties Get Into gear

The Green Party is pleased to reveal its candidate list for the upcoming election. With a mix of familiar faces and fresh new talent, this exceptional group of candidates are ready to lead the Greens back into Government. Using the most democratic list ... More>>

ALSO:

Insight Into Regenerative Agriculture In New Zealand

There is a fast growing movement in New Zealand that has been happening out in paddocks, fields, gardens and hill country across the nation. It is a movement that holds the promise to reshape our productive land use industries towards systems that work with the natural environment to regenerate the land. The movement is that of regenerative agriculture. More>>

ALSO:

Covid-19: Tracer App Released To Support Contact Tracing

The Ministry of Health has today formally released the NZ COVID Tracer app to support contact tracing in New Zealand. Kiwis who download the app will create a digital diary of the places they visit by scanning QR codes displayed at the entrances to ... More>>

ALSO:

Government: Freshwater Package Backed By Comprehensive Economic Analysis

Decisions on the Action for Healthy Waterways package are supported by comprehensive environmental and economic impact analysis by leading New Zealand research institutes, universities, and private sector firms. More>>

ALSO:

Govt: Concern At Introduction Of National Security Legislation For Hong Kong
Foreign Affairs Minister Winston Peters says the New Zealand Government has reacted with concern at the introduction of legislation in China’s National People’s Congress relating to national security in Hong Kong... More>>

ALSO:


 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels