Editorial: Brash on right track for power

The Orewa speech has become the annual opportunity for National Party leaders to set the agenda for the opening of the political year. Two years ago Don Brash used the Orewa Rotary Club's rostrum to stunning effect, tapping underlying resentment of the official deference and dedicated services accorded a colonised minority. Last year he was less successful with an attack on a welfare system that does not insist able-bodied beneficiaries train or work in some way. Last night his target was the faltering economy and the Government's supposed failure of the past six years to make hay while the sun shone.

In Dr Brash's view, Labour has been resting on good fortune when it ought to have been taking steps to improve the economy's capacity and productivity. It is a more sophisticated argument than he has mounted in previous years at Orewa and its prospects of setting the agenda rest on what happens in the economy over the next few months. But with even the Government poised for a slump of some degree, the chances are the country will be receptive to his criticisms.

In fact the Government might very well act on them. Dr Brash was able to cite last night quite a list of National initiatives that have quietly been put into effect. Labour's backpedalling on Maori services two years ago is only one example. The Government has abandoned plans to tax animal flatulence and industry carbon emissions; it is reviewing its overall spending. This month it decided to look at the use of the conservation estate to make up for a decline in coastal camping grounds. A strong opposition party can have a powerful influence on the country's direction without winning the Treasury benches, particularly in matters for which the governing party has no definite programme of its own.

The Prime Minister's response to the economic outlook is to talk again of the need for "transformation", by which she means urging investment into higher-value "knowledge-based" products and services. Dr Brash predicts that it will mean more discussion of the economy by more committees while the Government continues to resist action it could take.

It could reduce personal and company tax rates as National advocated at the election and the Treasury recommended in its post-election briefing. The Resource Management Act procedures could be made less costly. Roading could be advanced, employment laws made less restrictive, welfare could offer better incentives to work. If these sound like National causes that Labour would not consider, so, until very recently, was cancellation of the carbon tax.

But a slump, if it comes this year, will not be relieved by any of these measures, save perhaps tax cuts if they can be done quickly enough. Even then, they would be potentially inflationary and make it less likely that interest rates could be lowered to allow the economy to recover more quickly. Dr Brash does not pretend his proposals can soften the landing. Their purpose, he says, is to stop our incomes falling further behind those of Australia and most other developed countries. The difference in real incomes measures not just pay packets but the standards of healthcare, education, housing and other services. He invites us to compare the range of subsidised medicines here with that in Australia.

Higher living standards, he warns, will lure away our young. It makes little sense, then, to restrict immigration in the way he flagged vaguely last night. Short-sighted populist policies have helped bring National out of the doldrums. Dr Brash's task now is to prepare the party for power. Immigration aside, last night's presentation was on the right track.