Economic growth more than a matter of size

Don Brash - National Finance Spokesperson

New Zealand’s size and distance from major markets are insufficient reasons for its economic underperformance and decline in relative living standards, says National’s Finance spokesman Dr Don Brash.

Dr Brash was delivering the 2002 Giblin Lecture at the University of Tasmania.

“While the New Zealand economy has grown well over the last decade, it has not been growing sufficiently quickly to prevent a continued widening of the gap in living standards between New Zealand and those countries we most compare ourselves to, such as Australia and the United States.

“The costs of this relative underperformance are large. For example, we are increasingly finding that we can’t afford the sort of healthcare that Australians take for granted.

“There is a growing realisation that this continued relative economic underperformance has costs, and this has finally led to a sense of urgency about the need to “do something”.

“The current Government’s own efforts to transform the New Zealand economy have been far from convincing. Even the New Zealand Treasury remains unconvinced – their projection for the next decade has GDP growth declining from 3.1 per cent this year to only 2 per cent in ten years time.

“The answer for New Zealand is, in my view, actually quite simple. We need:
* A tax system which encourages growth
* A regulatory environment that supports growth, rather than stifles it
* An education system that ensures our children come out of school with the best possible education of which they are capable
* A welfare system that provides a safety net, but does not lock people into dependency
* A sound approach to solving New Zealand’s infrastructure problems.

“The challenge is immense. Unfortunately, we have just re-elected a Government that has no credible plan to deal with any of these issues. Over the next three years, the challenge can only get greater and more urgent. It is my job to help ensure the National Party is ready to meet that challenge,” said Dr Brash.

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