In Robert Frost's poem, taking 'the road less travelled' made all the difference, and so it is with the economic choices we face as a country. Will it be growth for growth's sake, or a more sustainable growth?

You might call it the tale of two growths. When the 2025 Taskforce published its second report last week on how we can close the income gap with Australia in the next 15 years, the language was urgent and “growth” was the word used time and again.

In a statement accompanying the report, chair Dr Don Brash said:

“The starting point has to be an unwavering focus on growth-promoting policies, aiming to match or exceed best practice world-wide. Unless this happens, those of us who remain in New Zealand will spend increasingly more of our time and money visiting children and grandchildren overseas”.

And how do we apply this unwavering focus on growth? With more foreign investment encouraged by treating investors the same as locals; making the RMA more permissive; re-instating the youth minimum wage and making the labour market more “flexible”. Taxes should be cut and health services privatised… on it went, a list of new right policies that were at the heart of our economic policies in the 1980s and 90s when the income gap between New Zealand and Australia grew at its most rapid rate.

It was a document as forward-looking as a rear-view mirror, repeating the same old mantra in praise of small government and business that’s free to do as it pleases. Quite apart from the obvious criticism, that an utterly free business focused purely on short-term growth tends to desire low wages, high returns off low investment and the freedom to, say, move to Sydney at the drop of a hat, it’s simply stale thinking at a time when new, disruptive ideas are needed.

Then on Q+A on Sunday we spoke to Jeremy Moon, the chief executive of New Zealand clothing company Icebreaker and a man who was briefly part of the taskforce, but who stood aside a year ago.

Icebreaker is a New Zealand success story, a company that has doubled its global revenues in the past three years even during a recession and has a turnover of $120 million and growing. When we asked him about the race to catch Australia, he said:

“For me it’s actually a red herring because I’m not interested in catching Australia… really it’s about quality of life. However, you’ve gotta balance that against ‘how do we create high-paying jobs here?’. Because if there is a brain drain, it’s about people going offshore to chase opportunities”


This is the start of my post at To continue reading, click here. But feel free to add comments and debate below.

Comments (8)

by stuart munro on November 12, 2010
stuart munro

I suspect that instead we will, as usual, be taking the path of no grow that all. The reserve bank has come out on the high dollar, claiming that it will erode the 'weak recovery' those foolish enough to remain in New Zealand are presently enjoying. But this uncharacteristic recognition of the blindingly obvious shows no sign of translating into a rational policy response. The US is able to face its problems and try something (anything) to dig their way out. But Bollard is too ideologically pure.

One might expect the same kind of behaviour from experimental rats, if one decoupled their reward from the desired behaviour. NZ treasury enjoys bonuses even in the years (decades actually, lets be frank) when their efforts create negative growth, or negative growth against a comparable baseline like, say, the Australian economy.

We need to improve the feedback mechanism between failing ideologically driven economic actors and the economy, so that they learn to prefer policies that work, rather than ones that flatter their neo-liberal prejudices.

by Claire Browning on November 12, 2010
Claire Browning

In Robert Frost's poem, taking 'the road less travelled' made all the difference, and so it is with the economic choices we face as a country ...

That's a nice metaphor you've got yourself there, my friend. You heard it first here on Pundit. :)

[PS. The post is not bad, either.]

by Mark Wilson on November 12, 2010
Mark Wilson

Tim, with the greatest respect the choice is starker than you say. And by the way I don't know anyone serious who is arguing for a free for all for business, just as I don 't know anyone serious arguing for full state control so "business that’s free to do as it pleases" is a straw man.

You make the assumption that the world will stand still for us while we make a nice little world for us to live in. It won't. And the punishment for falling behind will be higher than ever before. Do you want your children to live in a world where they cannot afford a level of medical care that the rich can - biotechnology will be able to significantly enhance life spans life enjoyment for the rich and rich countries but will not be affordable  for the masses in the poor ones. The world of 30 to 50 years away is not going to be anything like the world of today. 

Keeping up is going to hurt and if we decide as a nation that we can't or won't take the pain that's fine but we will be living the equivalent lifestyle to the rich parts of the world as an Amish lifestyle is to our own now. Don't think so? Well some of the world's finest minds disagree with you.

And our most competitive will flee in greater numbers than they do now - the top earning ethnic group in OZ, including European Australians, are Kiwis. How many of our best and brightest have to leave before we end up in an uncontrollable downward spiral.

by The Falcon on November 12, 2010
The Falcon

Obviously this post is advocating left-wing economics, and that's to be expected. But some of the sloganeering is just too irritating for me to let it slide.

It was a document as forward-looking as a rear-view mirror, repeating the same old mantra in praise of small government and business that’s free to do as it pleases.

So let's get this straight. You're criticising a revival of neoliberalism, a movement popular in the 1980s and 90s, for being old-fashioned and "backwards looking"... and then proposing to bring back protectionist, socialist policies that had their heyday from the 1890s to the 1950s?

Left-wingers have been using the "going backwards to the 1980s" slogan for too long, it was time someone put an end to it. The 4th Labour government were the forward-looking reformers who put an end to socialist stagnation and mediocrity.

by Ian MacKay on November 12, 2010
Ian MacKay

I do not understand economics because each economist contradicts the other.

What I do know is that there seems to be little point in trying to "catch" Australia. And if it is so much better by all means go there. Good luck.

And I do not understand why the population has to keep growing. Somewhere there must be a point when someone says enough! What is that figure? May be now is enough and not 20 million?

Which is really the same as this mantra about growth of the economy. I guess if the gap between rich and poor wasn't widening, it would be more credible but the growth seems to be for the benefit of the rich.

So you see I am quite pleased that I don't need or want to argue with economists. I just want a simpler adequate life for me and my family and their friends and the hell with the rich ones pretending that I am jealous!

by stuart munro on November 13, 2010
stuart munro

The 4th Labour government were the forward-looking reformers who put an end to socialist stagnation and mediocrity.

The 4th Labour government were a failure and a disgrace. They allowed the right wing to operate uncontested, which is why our economy is such a mess now. They substituted personality politics and race and gender issues for economics, and fiddled while treasury immolated the wealth of two generations of New Zealanders.

And they still haven't learned their hard lesson. What's their major policy investment- early childhood education. It's hard to knock- but what's the payoff horizon? 20-30 years. NZ needs jobs in this generation. Families wracked by chronic underemployment are not optimally placed to benefit from better education, should it be delivered.

by Tim Watkin on November 14, 2010
Tim Watkin

Sorry y'all, in my rush I forgot to add the link to the remainder of the post. It's there now, cos there are a few more points made!

Falcon, I don't remember talking about protectionism or socialism once in the post, so I think you've missed the point. Seriously, it does my head in when people think there are simply two economic models – the pure free market or 'socialism'.

There are a range of more subtle variations in between – a whole range of mixed economy options – and what I was writing about was one that stresses environmental care, new products and high-wage jobs. I think that holds huge opportunities for NZ, and it seems some 'socialists' such as Moon, Rob Fyfe, Geoff Ross and Stephen Tindall think so too.

The 4th Labour government did some good things, some bad. It certainly wasn't as binary as you suggest. But one of the reasons I don't want to try that prescription all over again is that the evidence is strong that it was in the late '80s and '90s that the income gap with Australia grew most dramatically. I've written about it before.

If you really think it's the free market or bust, one day you're going to have to explain the growth of South Korea, Singapore, heck, just about every Asian economy including Australia!

by Judy Martin on November 14, 2010
Judy Martin

Along these lines, I'm surprised how little comment webwide there has been about this conference on sustainable economics held in Parliament on Friday

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