New Zealanders may be unwilling to accept the difficult social and political changes needed if New Zealand is to get back into the top half of the OECD rankings, Reserve Bank governor Don Brash told the Knowledge Wave conference today.
New Zealand slipped to 20th in the OECD ratings in 1999, down from ninth in 1970.
Mr Brash said New Zealand was not willing to pay the price which Singapore paid to achieve very high growth - a society almost devoid of taxpayer-funded income support.
"But increasingly it is recognised we will not achieve a radical improvement in out economic growth rate while we have to provide income support to more than 350,000 people of working age, to say nothing of the 450,000 people who derive most of their income from superannuation."
He said the huge fiscal costs of those payments, $13 billion or 11 per cent of GDP this year, constrained the Government from devoting more resources to education, research and development.
He also said that the current welfare system, with its largely unrestricted access to benefits of unlimited duration and very high marginal tax rates for those moving into paid employment, may not provide appropriate incentives for people to find work.
Brash says 'radical' changes needed for growth
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