The muddle-headed 2025 taskforce report recommends policies that would not only drive more New Zealanders across the ditch, they would fail to catch Australia's GDP growth.
Since the 2025 Taskforce was announced on July 21, it's been on a journey that, sadly, could have been scripted on July 20. Its predictable membership produced a predictable report that has prompted a predictable small government vs. big government debate. New Zealand, it seems, lacks the imagination to burrow its way out of the neo-liberal rabbit-hole we've been stuck in for more than 20 years.
What's been forgotten in the debate over the past 24 hours is why this taskforce, led by former National party leader Dr Don Brash, was formed in the first place.
The short answer is because ACT demanded it as part of its support of the government. But the real answer is that New Zealanders are genuinely concerned about the wage gap between New Zealand and Australia because it means on a personal level a loss of loved ones overseas and, on a national level, the loss of our best and brightest.
That perception is only partially warranted. Migration rates to Australia, for example, were never has hideous as National made out whilst in Opposition. They've been both higher and lower in the past generation, and, in large part due to the recession, they're on their way down again. Having said that, to my mind the criminally low wages in New Zealand remain the biggest immediate problem facing the government. Fix that, you fix most of what's broken in this country.
For all that, the comparisons with Australia matter to New Zealanders. We want to catch up. There is a public desire for solutions. The political ground is fertile.
The taskforce understands that, but little else.
It seems to think we want to catch Australia for the sake of ticking some statistical boxes and some academic economic comparisons. It fails to recognise the humanity amidst the equations; which has always been Dr Brash's downfall in public life. He understands formulae, not people.
For most New Zealanders, the aim here is to keep our loved ones close, ease the financial strains, and make sure our kids are better off than we are. So why on earth would we want to abolish free doctors' visits, cut funding for early childcare and university students, slash the minimum wage and open the country up to greater foreign ownership? We would be cutting off our nose to spite our face; climbing one ladder while sliding down any number of other snakes.
Or, to reach for more ancient language, what would it profit us to gain the whole world but to sell our soul? Decent health and education for all is who we are.
Even if we caught up to Australia's productivity with these policies, we would have created a country that few would want to live in. Migration to Australia would surge because, by crikey, it would have the social services we expect as citizens of a modern developed state.
The double tragedy of this report is that not only would these policies fail in that ultimate goal of keeping New Zealanders at home, they would fail in their stated aim of bridging the productivity gap between the two countries.
Simply, the economics doesn't even work. New Zealand's GDP per capita started to lag behind Australia's during the wool crash in the late 1960s. It widened most dramatically during the late 80s and 90s, the very time when the new right was in power implementing just these sorts of policies. See here. Deregulation and the Employment Contracts Act drove down wages, there's simply no way round that fact. Yet the taskforce wants more of the same.
To read the report is enough to break your spirit, as you feel drawn back into the destructive arguments of the 80s and 90s. Let me offer some case studies.
The ideology that drives this group begins in the Executive Summary, when it damns the "protectionist policies" of the 1930s as "mistakes", and drones on from there. The time period it repeatedly criticises is the past decade, not acknowledging that we actually out-grew Australia then. It lists the country's sins during that time, including increasing government subsidies and business ownership and imposing heavier labour market regulation. What it doesn't state is that many countries have done the former and in the latter case we entered the 21st century with one of the most deregulated labour markets in the developed world.
Its recommendations are strikingly similar to ACT's 2008 manifesto; they even include references to specific ACT policies, such as the Taxpayer Bill of Rights. The economic policies of other parties don't warrant a mention.
A personal favourite is its list of countries that have outgrown Australia by the required 1.8% per year – South Korea, Poland, Slovakia, Slovenia and Ireland. The taskforce says they've done it and, by heck, so can we. But take a look at those names... The South Korean government is a huge player in its economy (much of its rapid growth stemmed from the government-driven business conglomerates called chaebols). The middle three are former Soviet states that are growing rapidly from a very low GDP per capita. And Ireland, as we all now know, deregulated so much it's now an economic basket-case following the credit crisis. Are they seriously being offered as our economic role models?
I could go on, but these examples are sufficient to expose the report's intellectual dishonesty. Oh, and it's batty too. Local business is crying out for investment and profits made here flood offshore, yet it recommends cashing in the Super Fund. Good grief, many business leaders admit that Australia's savings base is one of its key advantages over us, and this taskforce wants us to toss out the Cullen Fund? It's so funny I want to cry.
The opportunity for a balanced, search-the-world-for-fresh-ideas inquiry into growing our GDP and wages has been lost. Instead, we got an ideological whinge of no political use to anyone.
This report is a political point-scoring exercise, nothing more. But given the membership, what else could it be? Ask a lion how the circus should be run and you'll get plenty of meat but not much straw or new tents. The appointment of Brash made it a political show from the outset, rather than a rigorous economic investigation.
The truth is that no developed country is going to grow as fast as is needed for us to catch Australia by 2025. Unless we try totalitarianism (Singapore), buy the snake oil of deregulation (Ireland), or have millions of poor people desperate for work at any price and no welfare system (most of Asia), then rapid GDP growth ain't going to happen.
The damage was done by the Rogernomes and we can only rebuild slowly and steadily. Or hope for some technological or geo-political game-changer. As in sport, playing catch-up doesn't make for good decision making. We need calm heads, not zealots who advocate tossing the ball around willy-nilly.
Coming as it does towards the end (we hope) of this global recession, the report reads like a last hurrah of ideas so discredited that even a right-wing government and most business leaders will reject them out of hand. The taskforce have, I'm afraid, embarrassed themselves. They look like communists in 1990, insisting that Warsaw Pact politics are still relevant. In the same vein, we're best simply to ignore them. History will sweep up them and their report and toss them in the bin.