Keeping up with the Joneses:
Full Scoop Coverage of the Brash Speech at AUT
by Nicola Kean
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“Political courage of the highest order” will be required to catch up economically with Australia and keep skilled
workers from fleeing across the Tasman, former Reserve Bank Governor and National Party leader Don Brash outlined
yesterday afternoon.
But whether he meant courage of the old BBC comedy Yes Minister we'll have to wait to find out. The AUT Adjunct Professor of Banking put his spinning skills to good use in front of an
audience of students, stopping short of elaborating a model for closing the income and productivity gap with our
neighbours across the Tasman.
Recently appointed the head of the 2025 Taskforce, it was no surprise that Brash considers closing the gap a top
priority. “This is arguably the biggest challenge New Zealand has faced since the Second World War,” he said. “Small
policy changes here and there won't cut the mustard. Substantial changes will be needed in government spending, in the
regulatory framework, in investment, in tax structures”.
Australian workers enjoy a one-third higher income than their counterparts in New Zealand, as anyone who has worked a
bum job across the Tasman will know. Unpacking dishwashers and cleaning coffee machines at a Melbourne-based company for
a month earlier this year, I earned an eye-watering $1000 a week after tax. And Brash speculated that the gap could
increase another ten percent as the Australian economy bounces back faster.
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Brash used the speech to put paid to the widely-held belief that it was Australia's wealth of natural resources that is
responsible for the income gap. He cited a World Bank report that stated New Zealand was second only to Saudi Arabia in
natural wealth per capita – although much of the iron sands and coal remain out of reach in protected areas.
And neither was locking up our meager savings in housing to blame for the income gap. New Zealanders' investment in
between 1990 and 2005 housing are actually lower than the OECD average, and almost a percentage lower than Australia, he
said. Nor was our inability to save responsible, pointing to Japan as an example of a country with an embedded culture
of saving but with a lack of rapid growth.
To an extent Brash rehashed the arguments of the 2005 election – though carefully avoiding mentioning privatisation.
Those who fear him as the far-right bogeyman of “The Hollowmen” will recognise his argument of economic reform = good,
softening reforms = bad. It was Helen Clark's and Michael Cullen's reversing the reforms of the 80s and early 90s that
saw a drop in productivity during their term, he claimed.
Economists on the other ideological side of the coin say otherwise, and blame the very legislative instruments Brash
heralds as being responsible for our lower wages.
Not surprisingly, then, Brash welcomed the Key government's changes to the Resource Management Act, increase in
infrastructure funding and commitment to look at the regulatory framework. “Will it be enough? I don't believe anybody –
whether in the Government or in the wider community – thinks that it will be, yet. And I'm certainly not going to
prejudge the conclusions of the advisory group which I've been asked to chair”.
But keeping up with the Joneses across the Tasman is possible, though it would prove a challenge to achieve by 2025.“We
will have to grow consistently faster than Australia for many years, and that means we will need to have better policies
than Australia, and better institutions across a broad range of policy areas”.
This did not necessarily include privatising state-owned assets, which Brash said was not a “top priority” when
questioned by a member of the audience. However, with New Zealanders spending to maintain a life-style we haven't really
earned – to paraphrase - it was an option. “We're overspending... and to fund that overspending we borrow or sell
assets”.
Overall, there was little in the speech that we hadn't heard before from Brash, and few clues to pre-empt the findings
of the Taskforce. And rightly so, given that it has yet to be appointed. On that, in the spirit of multi-partisanship,
Brash said he had recommended a Labour-leaning member. However, he admitted with only five positions available, it was
unable to accommodate representatives of all parties.
For me, having very recently returned from across the ditch, there's more to Australia's attraction than higher wages
and pleasant weather. In terms of day-to-day life, it's being able to get to work on efficient and cheap public
transport, it's about having decent choice in mobile phone and internet providers, it's about being able to even
consider about buying a house and it's about more varied career opportunities. So Brash is right in one respect; we've
got a lot of catching up to do.
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