Dialogue: Risk-taking individuals key to wealth creation

By JENNY SHIPLEY*

New Zealand is in the developed world today because of Kiwi entrepreneurs. They are the people who do the unpredictable, strike out along unexpected paths.

They take risks and expect rewards. In doing so, they employ people who then feel included.

To get out of the doldrums New Zealand finds itself in, we have to reharness that entrepreneurial spirit. That's the only way we will make jobs for New Zealanders.

How well our entrepreneurs fare will determine the living standards your children enjoy 10 and 20 years from now. The performance of our entrepreneurs will determine how much wealth we have to invest in social services.

But a get-ahead entrepreneurial spirit doesn't just happen. It must be created and cultivated.

The key person in the process of wealth creation is the entrepreneur - the individual who has ideas and takes risks to turn them into reality.

Smart economies seek these people and companies out.

Singapore and Ireland, which I visited recently, are two prime examples of this. The economic and cultural climates in those countries welcome entrepreneurs.

People there know that if they have a good idea and put their money on the line to make it work, there's a good chance they will reap the rewards. And in the process, the whole country gains. Today, Ireland is growing at 8.5 per cent and Singapore at 7.5 per cent.

In the 1990s New Zealanders benefited from such an environment. Unemployment dropped from 12 per cent to 6 per cent. In Ireland unemployment has dropped from 17 per cent to 3.5 per cent.

It's no accident that the information technology revolution happened in the United States. It has a more favourable climate than most other countries for innovation and business enterprise. It's all part of the American dream - the idea that lack of inherited wealth need not stop anybody from achieving prosperity through determination and hard work.

Many entrepreneurs fail in the US. But for them there is no disgrace in an honest failure. It is said that the number one hero there is the entrepreneur who succeeds. The number two hero is the entrepreneur who fails, but who has tried.

This attitude helps explain the wealth of Americans and the unrivalled strength of the US economy.

In contrast, it's hard to imagine a New Zealand entrepreneur topping any local opinion poll. We don't celebrate those who succeed. We envy them.

Yet envy has not and will not create one more job or added value to a single new product. Risk-takers and wealth-creators do. We have to rethink our attitude.

How do we know that entrepreneurs add value to the community? Because they must pass a stiff test: they will be successful only if people buy their product.

The goods and services of the entrepreneur must be cheaper than those offered by their competitors, or of higher quality, or in some other way preferable.

Entrepreneurs don't capture all the gains for themselves in the course of creating the new value.

It was through unshackling the entrepreneur that more than 250,000 new jobs were created under the last National Government. That growth lifted all New Zealanders' incomes and closed gaps in education and employment.

It was through unshackling the entrepreneur that National was able to increase spending on health and education while giving two major rounds of income tax cuts.

We should take pride in New Zealand businesses that grow and foot it internationally, just as the Swiss take pride in Nestle and the Finns in Nokia.

Provided a big business faces competition, it will not be able to abuse its market power.

But the present Government has big hang-ups about competition. It wants to bring back the days when competition was strictly rationed and bureaucrats in Wellington knew best.

This is a Government that has no empathy for business. Jim Anderton berates the Business Roundtable. Michael Cullen alternates between roundly abusing business people and sudden, panicked attempts to cuddle up to them.

Labour has abandoned National's third round of personal income tax cuts, and imposed a new envy tax in the form of the 39c top rate. To gain any revenue at all from this tax, the Government is having to introduce complicated new anti-avoidance rules. Complying with fringe benefit tax will be a nightmare.

It is absurd to imagine that Mr Anderton's business initiatives can somehow compensate for the damage created elsewhere by Government policy. The money his schemes hand out to business will come from the pockets of successful competing business.

Sound business policies are not about giving taxpayer money to a few businesses. Good government is about creating a sound economic environment in which businesses can stand on their own feet, create profits, pay tax, reinvest and create new jobs.

We can succeed. We are a nation of small businesses, from our farming communities to the many small enterprises in our cities. Many of these businesses are family operations.

Ordinary New Zealanders in business are the soul and the engine room of our economy. Each and every one of them has a vision of what they want to do with their business.

They all want the pride of standing on their own feet. They want to be contributors. If we can find ways to harness their hunger to get ahead, New Zealand will benefit.

National is working on a package of measures that will re-create an environment where businesses large and small will have confidence again to do what they do best - create wealth and jobs.

That way, all Kiwis will get ahead.

* Jenny Shipley is the Leader of the Opposition.

Herald Online feature: The jobs challenge

We invite your responses to a series of questions such as: what key policies would make it easier for unemployed people to move into and generate jobs?