Key urges NZ to follow Singapore's example

National finance spokesman John Key said today New Zealand should look to Singapore for examples of economic transformation.

In a speech to his party's northern regional conference, he said New Zealand did not spend enough time looking at, and comparing itself with, countries outside the OECD.

New Zealand's economy shrunk in the last quarter of 2005 by 0.1 per cent whereas Singapore's economy grew 3.1 per cent during the same period.

Singapore, Hong Kong and Taiwan were among a handful of non-OECD countries that were now ahead of New Zealand on the international rankings of GDP per capita.

Some of Singapore's policies were not suitable for New Zealand, Mr Key said.

"But in my view there is much to admire."

Singapore had reduced its company tax rate to 20 per cent in its 2004 budget.

It had heavily invested in research and development.

Singapore ran its economy like a business, "even to the extent that they pay bonus dividends such as a company would to its shareholders in a good year".

Billions of dollars were returned via special bonus payments, sometimes as cash, and sometimes into the individual retirement accounts held by each citizen, Mr Key said.

It invested in infrastructure. It also placed significant emphasis on savings.

"They have, in 30 years, turned a current account deficit similar to the one we have today into a surplus from which significant assets at home and abroad have been funded."

New Zealand's "consumption binge" could not last forever, Mr Key said.

"At some stage kiwis will awaken to the fact that, on average, they may work for 40 years but they will be retired for more than 20. That's a long time to spend living off meagre savings or being totally reliant on New Zealand Superannuation."

Mr Key said it was important to examine what could be done to improve the ability of people to save and prepare kiwis for their retirement years.

No country was perfect but there were things to admire in the way Singapore had developed in the past and was continuing to grow in the future, he said.

"Put simply, if we want to have any chance of hitching our waka to their rickshaw we need to become more nimble, more flexible, more competitive, more focused, more determined. And we need to do it before it's too late."

- NZPA