Taskforce Report Challenges Politicians and Voters

Realistic Taskforce Report Challenges Politicians and Voters

“The Taskforce report on closing the income gap with Australia offers a realistic assessment of New Zealand’s major economic challenges and a substantial programme for achieving the 2025 goal”, Roger Kerr, executive director of the New Zealand Business Roundtable, said today. “Nothing less would do the job.” “The proposed programme would raise living standards all round, especially those of people on low incomes who most need better-paid jobs in a growing economy, rather than welfare benefits.” Mr Kerr said the longer action is delayed the harder it will be for New Zealanders to get anywhere near the living standards of our trans-Tasman neighbours.

“The report is a warning about complacent thinking. Without strong political leadership and action there is every prospect that the income gap with Australia – and other more prosperous countries – will widen and the outflow of enterprising people and capital will accelerate.

“And with the international financial turmoil far from over, the Taskforce underplays the risks of continuing dependence on large-scale overseas borrowing and the urgent need to shift resources from the domestic sector of the economy (especially government activities) to the internationally trading sectors.” “It also underplays the implications for New Zealand, and the lessons for prosperity, of the enormous changes that are occurring around the world, especially the rise of China and India and the relative stagnation of the biggovernment OECD economies.” Mr Kerr said the Taskforce’s strategy of shrinking government in its roles of spending, regulation and ownership and creating greater economic freedom to allow entrepreneurship to flourish was unquestionably right.

“We have seen how the massive expansion of government this decade stunted productivity growth and helped drive the economy into recession.

“The Taskforce’s recommendations reflect mainstream economic thinking and are in line with what many observers and organisations, including the OECD and the Business Roundtable, have advocated. Recent experience shows that it is not credible to argue that a fundamentally different programme would work.

“Perhaps the most important recommendations in the report are those for a Taxpayer Bill of Rights to constrain government spending, a Regulatory Responsibility Act to discipline regulation, divestment of central and local government business enterprises, a first-principles review of resource management legislation, labour market reforms, and a more competitive education system based on equal funding for all types of schools.” Mr Kerr said that with the more open and competitive economy resulting from earlier reforms, the programme did not imply painful adjustments.

2 “While election promises represent a short-term constraint, political leadership consists of doing what is necessary – and what Australia and many other countries have done – in the interests of long-term prosperity.

“In the final analysis, the question for politicians and the public at large is: ‘Do you want to close the income gap or not?’ “The Taskforce has done an excellent job of pointing the way forward in its first report. History will show whether politicians, and voters through the mandate they give governments, are up to the challenge.”

ENDS

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