Do we envisage a country where innovation thrives, where our children can receive world-class opportunities and are looked after by first-world education and social security systems? Do we imagine a nation where quality healthcare is universally accessible, where we have the means to invest in improved environmental outcomes and are resilient to climate change?
If so, then we must seriously consider the PM’s “going for growth” message because the simple fact is that wealthier nations consistently achieve better results in all these areas than poorer ones.
For example, high-income countries typically spend significantly more per capita on healthcare. In 2020, the average healthcare expenditure per capita in high-income countries was around $8800, compared to just $230 in low-income countries. This disparity translates into real outcomes. Life expectancy in high-income countries averages 18 years longer than in poor ones.
Education tells a similar story. Wealthy nations can afford to invest heavily in their education systems, resulting in higher achievement rates and better access to tertiary education. For instance, Finland and South Korea, which consistently rank towards the top of the global education indices are also two of the strongest and most robust economies.
Social services similarly benefit from economic prosperity. High-income countries can provide more comprehensive safety nets for their most vulnerable. In Denmark, public social spending accounts for nearly 30% of GDP, compared to less than 2% in many developing countries.
Wealthier nations are better positioned to address environmental challenges too. They can afford to invest in renewable energy, enforce stricter environmental regulations and compliance, set land aside for national parks and marine reserves, and fund conservation efforts.
New Zealand’s problem is that our comparative economic performance now significantly lags behind other developed nations. This is particularly true in terms of productivity.
Between 1996 and 2023, New Zealand’s labour productivity grew at an average annual rate of 1.2%, compared to Australia’s 1.8%. Maybe 0.6% does not seem much, but year-on-year this has created a huge gap.
In 1996 Australia’s GDP per capita was about 19% higher than New Zealand’s. Fast forward to 2023 and it is 34% higher. Quite simply, this means that Australia and its people can afford to build things and invest in the kinds of services that we cannot.
If we are to turn this around and lift New Zealand’s economic performance then the development of modern, 21st century infrastructure will be at the heart of it.
Infrastructure is the foundation upon which industries are built, businesses expanded and communities linked. Whether it be transportation networks that connect regions, energy systems that power industries, or education infrastructure that supports our children’s learning, these investments are essential for creating a competitive and productive economy.
The work the current Government has done to recalibrate our infrastructure system is an important step forward, but it needs to be supported by a broader understanding of where our country is heading, or at least, where we want it to head.
A country that offers us a useful model is Ireland. Over the past three decades, Ireland has transformed itself from an economic backwater into a dynamic, high-growth economy. Central to this transformation has been its ability, through a range of incentives, to attract foreign investment and develop the transport, energy and digital infrastructure to support sustained economic growth.
By fostering economic growth, Ireland has been able to fund significant improvements in state-provided services such as healthcare and education.
This brings me to the other significant idea floated by the Prime Minister – asset recycling – and the forlorn hope that we don’t let the debate around this descend into the usual ideological squabble.
If New Zealand is to get the most from its public sector assets, then it is perfectly reasonable to ask what the right mix of public assets is when we consider where we want New Zealand to be in 2050.
Are there some things the private sector could own and operate better or that the public and private sectors can partner in to provide a better service? If we were to sell some assets, where could we reinvest or recycle that money to get better outcomes for our country and its people?
All these questions hang off the need for us to define what kind of country we wish to become, what our population should be, and an accepted vision about the direction New Zealand is heading.
The PM’s “going for growth” message can superficially be categorised as being all about the economy, but that would be a narrow interpretation that doesn’t do it justice. It’s actually about how we afford the things that we as a society value. The challenge for New Zealanders now is to decide if we are serious about acting on this over the years and decades ahead.
