Dialogue: Don't blame business for our social problems

RALPH NORRIS* responds to criticism from the Deputy Prime Minister that the Business Roundtable is out of touch with most New Zealanders.

Some of us in business don't need lessons from Jim Anderton about understanding the poor and the real world. I grew up in a state house and have spent my working life in the real world.

Self-serving comments about businesspeople driving Mercedes and BMWs are a little hard to take coming from a politician with access to ministerial limousines and an expensive ministerial house, and who has spent much of his life living off the taxpayer.

Moreover, they do nothing to advance intelligent public debate. It is pure humbug to blame the Business Roundtable for Government policies.

We were critical of the 1980s Labour Government's failure to reform the labour market and to curb Government spending. But it is shallow to imagine there was any way of restructuring a debt-ridden and highly distorted economy painlessly.

We have spent the past six to seven years pointing out that the Bolger-led National Government largely sat on its hands while other countries were improving their economies, and that the National-New Zealand First Coalition was killing the goose that laid the golden eggs with its $5 billion spending package.

The upshot has been economic underperformance. No groups have enjoyed the sustained gains seen in successful countries in the past decade.

If our views had any influence, we are happy to share credit for New Zealand's performance in the early to mid-1990s when a better economic framework saw five years of solid economic growth, employment growth that was among the fastest in the OECD, a fall in the unemployment rate from 11 to 6 per cent, a low balance of payments deficit and a falling external debt ratio, an upgrade in New Zealand's credit rating, a net inflow of people and worldwide interest in New Zealand as a place to invest and do business.

We share Mr Anderton's concerns about poverty and welfare dependency but we differ about the solutions. The United States has been the standout country in the past decade in achieving near-full employment and cutting welfare dependency through flexible labour markets, welfare reforms and other policies that are in line with our thinking. The OECD's advice to New Zealand has been similar.

With few exceptions, OECD countries are continuing to reduce the scope of government in their economies and are not pursuing hands-on policies. Ireland, a country mentioned by Mr Anderton, is a remarkable example. It has reduced Government spending from about 50 per cent of GDP to a projected 27.5 per cent next year (compared with 40 per cent in New Zealand today), and has rocketed up the indexes of economic freedom.

I know of no other OECD country that is increasing its top tax rates, renationalising workers' compensation, reregulating its labour market, halting privatisation, freezing tariffs, reducing choice and competition in health and education, and making welfare policies less restrictive. The thrust of the Government's programme is out of line with general international directions.

Mr Anderton's professed compassion for the poor rings hollow when his Government's policies are taking dollars that could be given to the poor and giving them instead to better-off people (for example, university students and wealthy superannuitants) and denying work opportunities to many unemployed people with the job-destroying Employment Relations Bill. Such policies score poorly on grounds of fairness.

Mr Anderton sings the praises of MMP, yet as a senior member of the Labour Party he strongly opposed proportional representation. Is this principle or expediency? A test of his respect for democracy will be whether he supports the Herald's editorial call for the public to be given another say on MMP after the parliamentary review.

The business community has been telling the Government that its policies are damaging the business environment and putting the economy at risk again. It has been pointing to weak business confidence, the loss of investment interest in New Zealand and the outflow of talented people.

The economy is being held up by buoyant world demand and a weak currency that is largely due to bad policies. That is no basis for sustainable growth.

The Deputy Prime Minister's remarks to a group of people whose organisations employ one in 10 New Zealanders confirm the Government is not listening. Businesses and investors will take note of a speech that was more offensive than charm.

Mr Anderton's outdated thinking also sends a clear message to bright young people who are comparing their opportunities in New Zealand with those in other countries that are serious about raising incomes.

Ultimately, the costs of economic mismanagement don't fall on businesses and investors, who have opportunities elsewhere: they fall on ordinary New Zealanders who are dependent on business enterprise here.

Twenty years ago, most political parties supported Alliance-type policies. Today, most people recognise that they offer no positive prescription, and support for the Alliance is at an all-time low.

If Mr Anderton doesn't want to listen to business, perhaps he will listen to what ordinary New Zealanders are saying.

* Ralph Norris is chairman of the Business Roundtable.