Prescription for NZ: Action, not talk

David Kirk became an Australian citizen in January, a decade after moving across the ditch to hone his management skills on a much bigger business playing field.

He told TV3 at the time "it just seemed like the right time". He reassured rugby fans he would continue to back the All Blacks, not the Wallabies, and stressed that he would hold dual citizenship.

"I grew up in New Zealand. My heart, my emotion, my commitment of course is to New Zealand," he insisted.

But Kirk didn't need much persuading to share his views on what is wrong with this country when Australian think-tank the Centre for Independent Studies invited him to join a panel to discuss "the flight of the Kiwi" in Sydney last week.

After listening to several other Kiwi speakers wring their hands about the widening gap between Australia's economic performance and New Zealand's, and the continuing brain drain, Kirk admitted that "for the first time in a very long time it just about made me mad enough to go back and do something about it".

He is buoyed by the National-led Government's clutch of working groups due to report in the next few weeks, including the Tax Working Group, the 2025 Taskforce and the Regulatory Responsibility Taskforce.

As you would expect from someone who used to be Jim Bolger's chief policy adviser, he acknowledges that public policy is important - but he is also sceptical about Kiwis' tendency to talk rather than walk.

"I think that's one of the big problems, and some of the speakers have brought this out - there's plans for Africa," he told the audience. "I worked for the PM in his office for three or four years and I wrote some of them. None of them have been implemented, which does tend to be the case with political documents."

MMP is partly to blame, he believes, and he would be keen to see New Zealand return to the first-past-the-post electoral system , but perhaps with some kind of Senate providing extra scrutiny.

"I still think that if you elect a Government it has a mandate to make some changes and get on with it. The world changes so quickly, and competition is such that you need to be agile, and MMP is anything but agile."

He also delicately suggests that our immigration policies might be an issue. Australia has benefited enormously from European and Asian migrants, he acknowledges.

"New Zealand has had less of that. I'm not trying to make any judgment on this, but I think New Zealand has had Asian immigration, and from the Pacific Islands, and I think the ethnic make-up of New Zealand is an issue. Whether there needs to be new ways found to create pathways, to educate, and to create an environment where particularly Polynesian people in New Zealand have got a stake in the entrepreneurial future of the country is an interesting question, and is a question that should be open and people should debate it openly."

It also recently struck Kirk that another notable feature of the New Zealand economy is how common it is for assets not to be held in limited liability companies. While Maori incorporation has mostly been a successful way of dealing with the money realised from Treaty settlements, you could argue it makes it difficult to create real wealth for Maori, he says. Likewise with co-operative structures such as Fonterra's, and the enormous assets owned by central and local government.

"You can't point to any one of those and say they're not doing their job properly, but they are examples of a whole lot of structures that are not set up to profit-maximise."

And while he is pleased that entrepreneurship seems to be on the rise, it is going to take a lot more than good ideas to make New Zealand a wealthier country, he muses.

"The growth in entrepreneurship is fine and that's an important fundamental on which to build, but you need really skilful business-building capability grafted on to that. Being an entrepreneur gets your business to a certain stage and friends chip in this and that, but you've got to build businesses to take on the world."

And too many New Zealanders still seem to think wealth is a zero sum game.

"It requires people to lead and to say to people: 'We need to be more ambitious for ourselves and for future generations'. And people have to understand the value of private enterprise. No one else makes money - only companies create money - and as a nation we only make money by selling things to other countries."

Naturally, it is important that those doing the leading are people with credibility, "people who are demonstrably balanced human beings that are not flashy people who just want to make money and rip off other people", he notes. But it concerns him that "wealth" is still a dirty word in New Zealand.

"There is the policy stuff in New Zealand and that has to happen and you have to get electoral support. But in order to cut through this kind of morass of 'it's all too hard' and apathy and disbelief that wealth creation is a good thing to do, it just takes leadership. It takes people out there talking about it, banging away; it takes courses in universities; it takes celebration of entrepreneurs; it does take building of a lot of small businesses; and putting in place good opportunities for capital formation, and a lot of them will fail, and it takes an environment where people say, 'Oh well, it doesn't matter, they had a go' ...

"All this pontificating that we can close the gap with Australia and putting a number on it ... it's just dreaming. There is just no chance of that happening without some utterly radical things. And those radical things can't be structural policy things because there's just not enough leverage in that."

David Kirk on...

MMP:
"The world changes so quickly, and competition is such that you need to be agile, and MMP is anything but agile."

Entrepreneurs:
"The growth in entrepreneurship is fine and that's an important fundamental ... but you need really skilful business-building capability grafted on to that."

Catching Australia:
"All this pontificating that we can close the gap with Australia and putting a number on it ... it's just dreaming. There's just no chance of that happening without some utterly radical things."