John Gascoigne: NZ's wellbeing vision confined by economic retardation

Wellbeing costs money. Period. Photo / File

COMMENT

There are five nations in the developed world with an almost identical population of five million. They are Denmark, Norway, Finland, Singapore and New Zealand. All enjoy the world's highest living standards and unmatched quality of life. Except New Zealand. We remain the forlorn outlier on economic and social performance.

The Government's Wellbeing Budget claims to put children and the planet first. In reality, it is just a patchwork response to the ravages of neoliberalism. That extreme economic model is notorious for inequality.

The Wellbeing Budget does not confront, let alone recognise, the very powerful forces of economic retardation that have brought us to the grim situation of the moment.

Universal wellbeing or greatly enhanced quality of life will only be achieved through New Zealand's transformation into a highly egalitarian, high-income nation. Wellbeing costs money. Period.

John Gascoigne

There is no child poverty in the tiny, highly egalitarian, high-income nations. Unlike New Zealand, those nations have the means - their huge productive sectors - to provide all their citizens with world-leading public health, education systems and social safety nets. And the world's highest personal incomes.

Since 1984, successive governments have greatly reduced our means through a combination of neoliberalism and strong population growth fuelled by immigration. Accordingly, our reduced means are now stretched over a much larger population. Hence the holes in the fabric.

Thirty years of economic reform or neoliberalism have left New Zealand a low-wage, cash-strapped, debt-encrusted nation. That result aligns with neoliberal experiments elsewhere.

Will cosmetic changes to the basic neoliberal model raise New Zealand's living standards ? Categorically, no. We have no future under the present economic and social policy setting.

The stated intention of the Wellbeing Budget, to create a fairer society, is highly commendable. No argument there. But universal wellbeing or greatly enhanced quality of life (for the 99 per cent) will only be achieved through New Zealand's transformation into a highly egalitarian, high-income nation. Wellbeing costs money. Period.

The Wellbeing Budget, while not transformational, is a departure. Regional development initiatives, the billion trees, the re-establishment of the old, world-renowned New Zealand Forest Service and upgrading of our dilapidated rail network are all positive steps. Positive, but far from sufficient.

New Zealand will only achieve rich-nation status (i.e. very high per capita income) through a massive expansion of our productive sector under an economic development strategy.

John Gascoigne

The most positive contribution of the Wellbeing Budget is the rejection of the Gross Domestic Product ( GDP ) metric as the sole, conclusive indicator of national economic performance. The GDP was invented by an American economist, Simon Kuznets, back in the 1930s. Kuznets, however, also knew the limitations of his invention. He famously cautioned that the wellbeing of a nation can scarcely be inferred from a measurement of its national income.

The rejection of the GDP metric, however, does not go far enough. The Wellbeing Budget does not require independent disclosure of that set of indicators including real per capita income growth, the median wage, household disposable income and inequality which would confirm the country's direction once and for all.

The reversal of New Zealand's relative economic decline simply cannot be achieved within a one year financial cycle.

New Zealand will only achieve rich-nation status (i.e. very high per-capita income) through a massive expansion of our productive sector under an economic development strategy.

There are, however, several major problems with a national development strategy. Firstly, the strategy would require broad, bi-partisan support over several decades. Secondly, economic development requires a very strong sense of national purpose and common interest. And, finally, development will only succeed in an environment free of all threat of political or ideological disruption. Economic development is a hard business.

In 1986, the Department of Trade and Industry produced an excellent strategy document, "Ten by 2010", which detailed the steps required to raise New Zealand's living standards into the top 10 nations of the world. But the popular narrative of the time insisted that unadulterated neoliberalism, not an energetic, developmental state, would produce a far superior result. The report was quietly shelved. And forgotten.

We drew the short straw.

New Zealand will only prosper by becoming an export powerhouse. All the tiny, high-income nations are super-exporters. There is no short cut to rich-nation status. And so we have come full circle. We must think big and plug into the world.

John Gascoigne lives in Cambridge