By Rod Oram
Between the lines
Once again New Zealand is at a turning point, economically and politically. There is no great sense of crisis this time compared with 1984. But over the long term, current problems will prove almost as insidious, the repercussions as great and the solutions as difficult as in the previous phase of reforms.
The warning signals were clear on Wednesday at the conference on manufactured exports organised by the Business Herald and the New Zealand Manufacturers Federation.
They were best captured by a graph presented by economist Gareth Morgan. It showed an inexorable slide in New Zealand's standard of living compared with the US over the past 30 years.
More disturbing than the decline itself was the apparent conclusion from it that no policy approach - closed economy in the 1970s or open economy in the last 15 years - had managed to reverse the slide for more than a few years.
Drivers of the last phase of reform, particularly the Business Roundtable, argue that the economy would have kept improving if we had stuck to the reform programme.
Instead, we backed off from goals such as more privatisations, deregulation and reductions in Government spending. Get the programme on track, and the economy will recover, they believe.
Manufacturers at the conference enthusiastically supported that proposition with the exception of a plea from one to retain the last vestige of tariffs.
However, their conviction about the best way to address our continuing economic problems is best expressed as "yes ... and ..." They keenly want further reforms which would make economic life more productive and efficient through lower taxes, reduced regulatory burdens and the like.
But those reforms alone will not do the job, they believe. Manufacturers have many other proposals, as summarised in our conference report on page C2 today.
They believe the country needs these to reap the full benefits of reforms.
Many of those proposals would require the Government to behave in a way which it has shunned over the past 15 years - that is, to be a catalyst by spending some money in a targeted and carefully monitored way to try to lift the performance of corporate New Zealand. Nobody is calling for subsidies. They are asking only for money and help which could be shown to deliver a substantial net benefit to the economy.
The veteran drivers of reform say these proposals are distractions from the real thrust of reform and so irrelevant that the damage from them will be only marginal.
But to dismiss them is to deny two opportunities: first, that they could well work for New Zealand as they have worked for other countries; second, and more importantly, that they would help bring corporate New Zealand and Government together in the sort of constructive strategic partnership we haven't seen for a long time.
