The nine years from 1999 to 2008 were ones of wasted opportunities.
Successive Labour led governments squandered the surpluses, concentrated on redistribution rather than growth, created huge liabilities for future generations (ACC, KiwiRail . . . ) and turned middle and upper income families into beneficiaries.
In doing so they lost sight of their aim to return New Zealand to the top half of the OECD.
The New York Times’ Economix blog has a post asking: What Happened to Argentina?
A century ago, there were only seven countries in the world that were more prosperous than Argentina (Belgium, Switzerland, Britain and four former English colonies including the United States), according to Angus Maddison’s historic incomes database.
New Zealand was one of those former British colonies and we too have lost ground since then.
This week’s Idealog newsletter points out that every country to the left of New Zealand on this graph was poorer than us in 1909, all the ones above us are wealthier than we are now.
This is why we’re so disappointed that the previous government failed to see through its stated aim to return New Zealand to the top half of the OECD, and why we’d like to see John Key’s government commit itself to achieving the task. This isn’t about wanting more toys, overseas holidays or dining out more often; it’s about being able to afford the education, health care, infrastructure and quality of life that we want for ourselves and our loved ones. We must reverse this slide.
This point was also made by Don Brash in a speech entitled New Zealand’s Economic Outlook: Can We Ever Catch Australia?
Far from raising New Zealand into the top half of the OECD, we actually sank back a rung or two over the nine years that Labour was in office.
This is extremely serious. If we continue to languish in the bottom third of OECD countries – even worse if we continue to slide backwards – the things which have made New Zealand a pleasant place to live and work will gradually disappear. We won’t be able to afford the healthcare which those in richer countries take for granted, nor the standard of education which richer countries take for granted. Income distribution will become progressively less egalitarian – as we’re forced to pay our most skilled people some approximation of the lifestyle-adjusted incomes they can earn abroad – with all the social implications of that.
Economic growth isn’t about wealth for wealth’s sake.
It’s about earning the money to afford the first world services and infrastructure we need.
Afford doesn’t mean borrowing to saddle future generations with debt. It means earning what we we need by increasing economic growth.
The difficulties we face in doing that are many.
Labour not only wasted the opportunities provided by surpluses when they were in power, they increased public spending to a level which isn’t sustainable. That is now adding to our debt and holding back the recovery.
Thanks to them benefits are no longer regarded as temporary assistance for people in need as most ought to be, they’ve become “entitlements” to which people feel they have a right regardless of whether or not they need them. Working/welfare for families, interest free student loans and paid parental leave are all examples of that.
Another of the barriers to growth is illustrated by the hysterical reaction to the suggestion by Gerry Brownlee that the government does a stock take of mineral resources under public land. Anyone would think he was suggesting clear-felling every tree and turning every national park into an open cast mine.
All he’s doing is sensibly suggesting that we ought to know what we’ve got. Once we do can we make intelligent decisions on what, if anything, we do with it.
Every centimetre of every part of the DOC estate is not pristine wilderness. Some of it is weed and pest infested wasteland – the weeds and pests on which threaten native species. Some might well be more attractive if it was mined and replanted than if it is left untouched.
We’ve had nine years of going backwards. We can’t afford to waste opportunities now and among the opportunities available is the mineral wealth which lies beneath the ground.
If it is possible to use some of that, without damaging the environment, we should do so to help foster the economic growth which will enable us to fund the first world services we need but can no longer afford.