The government's commitment to achieve faster economic growth is clear-cut and welcome. The priority now is for action that matches words.

Growing average incomes is not everything, but it does make everything easier: more money to go round in households, more jobs and less welfare dependency, fewer families losing their kids to greener pastures abroad, better public services, and more capacity to take care of the environment.

We know we can do it because we’ve done it before. The economy has done much better since the difficult economic reforms of the 1980s and early 1990s. It grew by 3.3 percent a year on average in the 10 years to 2002, matching the US economic boom. Inflation, public debt and other outcomes have greatly improved. Talk of continuing economic decline is simply wrong.

Treasury analysis confirms that over the past decade, "good policy foundations and favourable external conditions have lifted New Zealand 's growth rate towards the OECD average." Sustaining growth requires that we rely more on "good policy foundations" and less on "favourable external conditions".

The government is not short of good advice. The Knowledge Wave Trust has suggested that all its policies and initiatives should be evaluated using a 'growth lens': do they enhance or retard growth?

The OECD, reflecting the experience of the world's leading countries, has put forward ideas on how New Zealand 's successful market-oriented policies could be improved.

Business organisations have been highlighting the importance of reining in central and local government claims on the economy, which are too high for fast growth.

The government's 2001 Tax Review made sound recommendations for lowering and flattening tax rates.

Its compliance cost panel pinpointed key problem areas of business regulation, although the Ministry of Economic Development has rightly pointed out that the underlying regulatory costs, not just the compliance costs, are the real burden for business and where the government needs to focus.

This body of advice should be heeded. The government cannot go on ruling out reductions in government spending, tax cuts, meaningful changes to resource management and employment law, moving state-owned businesses to the private sector and the like while maintaining it has a credible growth strategy.

Viewed through a 'growth lens', its plans for ratification of the Kyoto Protocol, local government and occupational health and safety are harmful and should be reconsidered.

Other countries are not standing still. Across the Tasman Australia is not joining Kyoto , the federal and state governments are continuing with privatisation, and Australia is improving its international tax regime.

Total federal, state and local government spending in Australia is around 33 percent of GDP compared with around 40 percent in New Zealand . The economy simply can't grow rapidly with that amount of lead in its saddlebags.

Singapore is cutting personal and company tax rates to a maximum of 20 percent because of fears of becoming unattractive as an investment location.

New Zealand cannot afford to fall behind. We must make up for being small and distant by having truly first class public policy. We will not achieve that by lowering our sights and settling for incremental change that takes us forward in some areas and backwards in others. We will not talk ourselves back into the top half of the OECD – that requires urgency, focus and coherent action.

The prime minister has courageously used political capital to allow GM technology to be adopted. Similar leadership is needed to bring about other important changes, which are almost always controversial.

For more information, contact:

David Young
Communications Manager
Ph: 04 499 0790
Email: dyoung@nzbr.org.nz

Web: www.nzbr.org.nz