FOR IMMEDIATE RELEASE

Growth needed to fix NZ’s wicked problems

Wellington (13 March 2015): If you have recently been told that economic growth makes us unhappy, that it spoils the environment and that it increases inequality in society, think again. That is the key message of a new report from public policy think tank The New Zealand Initiative.

The Case for Economic Growth, which was launched by Minister of Finance Hon Bill English at the Initiative’s members’ dinner in Auckland last night, brings together New Zealand and international data in an easily accessible format. It argues that New Zealand cannot hope to tackle child poverty, environmental degradation or any other social problems without economic growth.

Dr Eric Crampton, the Initiative’s Head of Research and co-author of the report, said that economic growth does not only improve health, longevity, and education. It is also a fix for persistent problems faced by our society.

“We hear far too many stories saying that we need to choose between economic growth and environmental quality, or between economic growth and helping the poor”, said Dr Crampton. “Economic growth is what allows us to afford both.”

The report shows that many of the critiques against economic growth do not stand up to scrutiny. For example, in New Zealand, real incomes for the wealthiest 1 percent increased by 50 percent in New Zealand from 1953 to 2011. However, incomes for those in the bottom 90 percent doubled over the same period.

“People often believe that economic growth makes the rich richer and the poor poorer”, said Jenesa Jeram, a researcher at the Initiative and co-author of the report. “Our research shows that this common belief is patently untrue.”

“In our open economy, most people in poverty don’t stay there for very long, and the top of the earnings scale is just as changeable,” Jeram said.

The report also found that higher levels of economic growth are a good long-term defence against natural disasters, with inhabitants of richer countries able to afford more protections and better building standards.

The authors show that a 4 percent real growth rate over 20 years would more than halve the expected number of casualties in a future Wellington earthquake. At a 1 percent real growth rate, only 12 percent fewer people would die.

“It is hard to predict natural disasters, but we can prepare for them. Economic growth and wealth creation are the best overall insurance policy against future catastrophes,” said Dr Crampton.

The report recommends that all government policies should be made consistent with the goal of promoting economic growth.

Commenting on the report, the Initiative’s Executive Director, Dr Oliver Hartwich said:

“This report provides ample facts to counter the widespread growth pessimism and replaces it with an entirely different narrative: It is not growth that we need to be afraid of but the absence of it. Growth is good. We have to make it happen.”

The report is available for free download here.

ENDS

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