Dialogue: First effort just a pale, tentative hint of what might have been

JOHN ROUGHAN says Labour has missed its moment in history. Michael Cullen's statement was more words than actions and seems to have lost the 'third way.'

This Government could so easily be exactly the one New Zealand needs at this point in its economic predicament. Unfortunately, the Government seems not to know it.

The country has followed two economic prescriptions during the 30 years or so since it faced the loss of the security of a single colonial market for almost all its produce.

From the late 1960s to 1984 it used all the devices of the state - from industry planning conferences to think big projects, and every tax subsidy in between - in the search for new marketable products.

Since 1984 the state has neutralised its influence in the hope that the judgments of private investors would succeed where the state had failed. Nobody needed news of the worst balance of payments figure in 14 years yesterday to know private investors need a spur.

Labour knew it years ago, when it also knew it was coming back to power at the millennium. It had time to think, time to study and design the spur the economy needs.

And it did think for while about a "third way." It even studied in the way that social theorists do - embracing warm, broad principles that beg far more questions than they answer. But it could not come up with a solid new idea. And its first Budget is a pale, tentative hint of what might have been.

It could have been a document as bold and refreshing as those that came from new governments in 1984 and 1991. It could have been a clarion call for entrepreneurial drive not to "business" but to everyone.

Based on the principles of social participation, and built with this Government's influence in education, we could have seen a set of programmes to encourage people into genuine private enterprise and to give them easy access to practical knowledge and skills. It would have been an idea right for the time.

Instead we got mere words. Industry New Zealand, the body that is supposed to turn Labour's hopes into practical economic plans, seems no closer to existence than it was in the election manifesto.

The Government, or at least the Labour portion of it, remains rightly wary of picking economic winners. "We don't want to regulate, subsidise or compel," said Michael Cullen yesterday. "We do want to help businesses find new markets and become winners ..."

Yet there was less about business "incubators" or schemes to enrich the level playing field than we heard at the election.

There was not much in the Budget either about the superannuation fund that promises at least to provide a pool of domestic savings for investment. Every reference to "details yet to be finalised" carried a hint of dissension within the coalition on this one.

If the Finance Minister gets his way the fund will absorb most of the Budget surpluses of the next few years. He warned his colleagues that the next two years' spending could not be as generous as this year. We'll see.

Dr Cullen makes much of his fiscal conservatism but good expenditure control lies less in the balance sheet than in the evaluation of what is bought. There was not much in the Budget to encourage confidence on that score.

"More work needs to be done," says Dr Cullen, "to get full value for the public dollar."

This is a Government that boasts as though it believes that to spend on a problem is to solve it. Precisely what will see for the extra $257 million in mental health? Or $18 million this year for a biodiversity strategy.

In the private sector, people want to see solid, practical projects before they put money into them. Governments allocate millions on the sketchiest of schemes.

It was a Budget of indecision. Besides Industry New Zealand and its still equally chimerical network of sectoral planning agencies and local body partnerships, we have been offered mostly more meetings.

For Maori educational advancement the Budget offers a hui, and $21 million for something called "the development of Maori social employment services."

To "close the gaps" $114 million over the next four years is intended "to build the capacity of Maori and Pacific peoples to design and deliver their own initiatives." This is plain lazy government.

The poor, who might have expected to be at the head of the queue after the pleas of the past nine years, are mentioned eight pages into the Budget. Their long-awaited income-related state rents will not start until December.

Welfare for the well-off came first - the superannuation rise, tertiary student subsidies and elective surgery. It makes a mockery of the minister's concluding comments:

"There is something in this Budget for everyone, but because capacity to engage in social life is uneven, improving that capacity will require more to be spent on those who have been excluded."

And that's it - nothing new unless you count an "e-commerce summit." On line, presumably. The Government has just missed its moment in history.

* John Roughan is assistant editor of the Herald.