Jim Eagles: NZ Barina cruises in third as others flash by

What can be said about the Budget unveiled by Finance Minister Michael Cullen that hasn't been said twice before? Not much.

Like its predecessors, it is, as Cullen promised, commendably "responsible but boring".

There are no policy surprises to upset business planning, no cavalier pre-election spend-ups to set financial markets fluttering and no lurches into socialist dreamtime to put the economy into reverse.

It is a Budget which will keep our Holden Barina economy rolling reliably down the motorway at a nice comfortable speed that won't frighten any of the passengers.

The problem is that most of our friends and neighbours have upgraded to bigger, faster Jaguars, BMWs, Renaults and Ferraris. The Americans are nearly airborne in their new model Mustang. Even the Australians have got a Commodore.

They all overtook us some time ago and most of them are now so far ahead they're almost out of sight.

That's fine if we choose to opt for a quieter, gentler economic ride. But it does mean we can't expect the same standard of living, or the same social services, as those who are travelling faster and going further.

The Government knows this. Once again the Budget talks enthusiastically about transforming our economy into a high-performance model able to achieve annual economic growth of about 4 per cent.

But, again, it offers little beyond rhetoric as to how that can be achieved. Indeed, its underlying economic assumptions have growth slowing over time to just 2 per cent.

Certainly there are some positives - besides the responsible dullness - but they are sadly few and mostly feeble.

One encouraging sign is the emphasis being placed on building a more skilled workforce. The various programmes to improve our forecasting of skill requirements, make tertiary institutions more responsive to the needs of the economy, boost science, provide more apprenticeships and improve workplace learning, definitely represent a big step in the right direction.

Another positive is the decision to make a more serious effort to attract foreign investment. But the revamped Investment New Zealand, with its initial Budget of $15 million, will still be a long way behind the $50 million Invest Australia now has to work with. That sum of $50 million is, as it happens, what a report commissioned by our Government recommended we should spend.

Unfortunately the main thrust of economic transformation policy still seems to involve giving Deputy Prime Minister Jim Anderton a bit more largesse to scatter round the countryside on projects which catch his eye.

The most whimsical proposal this time is the $2 million to employ case managers to help selected firms make sense of the plethora of assistance Anderton keeps trying to foist on a confused business community.

The possibility that there might be too many programmes or that they are not what business actually wants has obviously not occurred to anyone in the Beehive. They still fondly believe that, with a bit more spending on websites, brochures, conferences, speeches, exhibitions and now case managers, business will get the message.

The fact that business has consistently said it would prefer fewer impediments in the form of taxes, rates and compliance costs seems to have largely gone unnoticed.

Most New Zealanders now recognise that if we want a higher standard of living we have to create more wealth.

A survey conducted for Business New Zealand last month asked what was "the best way to deliver more quality jobs, better health care, education and other social services". An impressive 86 per cent opted for "growing the economy so there is more money available". Only 6 per cent called for "raising taxes so the Government can spend and invest more".

All this begs two obvious questions. First, why does the Government keep talking about economic transformation and doing little concrete about it? Presumably because talk is cheap and helps voters to feel good, but actions cost money and may upset Labour-friendly special interest groups.

Second, how much longer can the Government get away with this sharp divergence between what it says and what it does on the economic front? Presumably until the favourable economic tailwind we've been enjoying dies away and we find ourselves falling even further behind.

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