O'Sullivan: PM must listen, then act

By FRAN O'SULLIVAN

When the Prime Minister invites some of the world's cream to advise New Zealand on how it should catch the knowledge wave, she must first listen - then act.

Helen Clark is a strong Prime Minister. Her many years leading the Labour Party from the Opposition benches and rebuilding its parliamentary wing through periods of internecine, ideological party warfare - including a botched attempt to remove her as leader - led her to develop a highly controlling personal style.

This was necessary just to keep the knives out of her back and stay in the leadership business. But Clark's great strengths are also her great weaknesses.

As her performance at last week's Knowledge Wave conference illustrates, she has yet to make the full shift from the Opposition leader playing to her own party's constituency to that of a Prime Minister governing in the interests of all New Zealand's economic players.

She needs to have an eye on the long-term strategies that will build this country's economic wealth and have the courage to execute them - even if that means some changes in Government policies - as well as the focus on short-term sectoral plays.

She needs to be a Prime Minister who will also take on board controversial suggestions from her advisory boards - such as Rick Christie's Science and Innovation Advisory Council (Siac) with its push for a "competitive tax treatment" to attract talented expatriates and foreigners to come and work in New Zealand - rather than dismissing them out of hand.

Clark's flat declaration right at the outset of the conference that there was no economic crisis and that the Government had its own strategy and would not waver on central planks like taxation is a case in point.

The Government does indeed have a set of economic policies, but nowhere is there a sense that these have been developed as a coherent strategy to take this country to the next platform. Nor is there the required urgency to introduce policies which will increase economic growth.

Yes, Clark endorsed the conference call for a "talent hunt" for skilled migrants (it is already under way), the "overriding importance" of education (yes, we are doing that) and the need to underpin economic growth by spreading the benefits to places such as Gisborne. But other initiatives involving Government leadership passed by.

In its draft innovation strategy, Christie's council called for a national movement, led by the Prime Minister, to "signal to New Zealanders everywhere the gravity of the problem we face".

The Government, it said, should ensure that New Zealand's tax, finance and bankruptcy regimes did not punish calculated risk-taking and to "modify them where necessary to support entrepreneurialism".

But ever the academic, Clark did not see New Zealand's situation from the same viewpoint as her business advisers or even London School of Economics professor Robert Wade, who thought the country was on course to lose its First-World OECD membership.

Focusing on the near-term, Clark said New Zealand was "not a basket case" and the economy had actually performed better in the past few months than recession-bound Singapore or Taiwan.

Clark embraced globalisation as an opportunity for this small trading nation.

But she did not face up to direct messages such as Professor Michael Porter's widely endorsed call for New Zealand to commit itself to a national economic strategy.

The New Zealand scorecard outlined first in the Herald was a good first step to ensuring greater performance. Porter's action agenda included increased specialisation of universities and research institutions, increased incentives for research and development and a focused approach to attracting foreign investment. That latter point is being addressed by a taskforce reporting directly to Clark. But the repeated message that lower taxes were essential - particularly to attract foreign investment - was not heard.

Clark's core constituency includes lower-paid workers and beneficiaries but unless the national cake is increased New Zealand's ability to pay welfare transfers will come under pressure, as Reserve Bank Governor Don Brash reminded us.

There are plenty of mechanisms to achieve a shift in strategy without dancing on the head of a proverbial political pin.

British Prime Minister Tony Blair executed some fancy footwork of his own at this year's election when he framed some of the political issues confronting Britain as challenges which would have to be analysed and addressed by the formation of specific pragmatic policies once the Government was returned.

There is a sense about New Zealand Labour that its long nine years in Opposition have left many of its members stuck in a timewarp - using their present time in Government to unpick the Rogernomics policies of the 1980s rather than embracing the opportunity to move forward.

British Labour spent longer on the Opposition benches than New Zealand Labour before the Blair Government was first elected. But the world moves on.

Blair's decision to award his Government some room to make pragmatic responses is a mechanism that Clark could also usefully adopt. In this vein, the Prime Minister would gain points if she indicated now that she was prepared to take on board the recommendations of her advisory groups - including business tax - rather than giving a rote negative response.

Like any conference, this one had its weaknesses. The need to lift Maori under-achievement was repeatedly addressed - but Maori themselves were under-represented. The conference would have benefited from a higher number of women speakers.

There were also some discordant notes. McKinsey's Dick Foster, whose address on creative destruction had some tough messages for business managers, was a source of alarm to trade unionists who took his words as presaging a restructuring tsunami which could threaten New Zealand workers' livelihoods.

So, too, Brash's comments, which were quickly internalised on a "left-right" paradigm.

Some of the international speakers - notably Singapore Trade Minister Brigadier-General George Yeo and Sean Dorgan, chief executive of Ireland's Industrial Development Agency, demonstrated useful examples of how their nations ran inclusive programmes which harnessed the trade unions' input.

But the conference would have benefited from the presence of a speaker giving a direct trade union perspective on just how such policies had worked to assist the transformation of their members to knowledge workers.

The unions provide a core for Labour's political constituency and have a powerful role to play in facilitating a national mission to become a first-rate knowledge economy.

Key player and Council of Trade Unions chief Ross Wilson applauded the networking opportunity and Michael Porter's focus on education. The unions shared the objective for New Zealand to become a knowledge player, but the means of getting there was a "matter of discussion".

That avenue will be open to Wilson if the Prime Minister adopts the suggestion to form a national economic council to focus on the issues confronting New Zealand.

Business is sufficiently enthused to make things happen. The call by Deutsche Bank NZ chief executive Scott Perkins for wealthy New Zealanders to make investment capital available will be answered.

But Clark has to show she is prepared to pick up the tempo if Robert Wade's forecast is to be proven wrong.