KEY POINTS:
Former United States President George Bush snr, when told to turn his focus from short-term campaign objectives to the long-term view for his country retorted: "Oh, the vision thing."
To survive, politicians everywhere must engage in constant tactical battles with opponents which leave little room for the vision
thing. But sometimes opportunities arise for visionary leadership.
On Thursday May 22, the Minister of Finance, Michael Cullen, will deliver his ninth Budget. Budgets translate strategic priorities into specific funding decisions.
With an election looming, voters want to know what the political parties stand for.
The Budget debate in Parliament is a chance for party leaders to offer their visions for New Zealand. It's their opportunity to tell us how Government policy under their direction would move us closer to being a great country.
Nobody has a monopoly on good ideas. Views on policy priorities differ a lot from party to party. That is one of the great things about representative democracy. We need many suggestions for how to achieve good economic and social outcomes.
But to realise our dreams, we need money. Lots of it.
Among other things, protecting the environment, getting better health care, giving young people a great start in life, and ensuring dignity for the elderly all come with hefty price tags. So the more wealth we can amass, the better able we will be to hold high aspirations and realise them.
When people offer their visions for New Zealand, listen closely to how they plan to get there. Putting aside ideologies and policy preferences, it is useful to reflect on a few key topics. The better we attend to these, the more able we will be to produce wealth. And that wealth will open more choices for the future.
TAXES
To be a competitive economy, attractive to businesses and individuals who can generate high wealth, we must keep business and personal taxes at levels equal to or below those of similar economies. Australia is an obvious benchmark.
Lower taxes give businesses, households, and individuals more discretion over how they use their earnings. Of course we need taxes to pay for a variety of public services, and economic development brings new problems calling for new forms of Government action. Yet we need to be assured that tax revenues are being used effectively by the Government.
Relatively high taxes will fill the Government's coffers in the short term. But high marginal tax rates can drive away some of the businesses and individuals who make up the revenue base. That can make it all the harder to sustain quality Government programmes.
INVESTMENT
Visions for the future must be accompanied by investment plans. New Zealand has a patchy record on both private and public investment.
The more we can encourage people to adopt long-term thinking, the better off we will be. We need more individuals, families, and firms to acquire an investment mindset.
For example, student loans are often criticised because they result in graduates holding big debts. However, if more families were to anticipate the needs of their children to cover fees, they could set money aside for the future, easing the need for students to borrow in the first place. That kind of thinking is much more common in some countries than it is in New Zealand. Public policies can encourage it.
Sometimes individuals, families, and firms need incentives to invest. Good policies to promote an investment society can do a lot to secure our long-term future as a wealthy, high-performance nation.
INFRASTRUCTURE
New Zealand's infrastructure needs more attention - the state of the roads and the rail systems leaves no doubt.
It is useful to think of infrastructure as all the systems that facilitate a thriving economy and society. We should be broad in our notions of what makes effective infrastructure.
Among other things, secure electricity supply, fast communication systems, and regulatory frameworks that are light but effective are crucial for economic and social development. Lack of investment in the short term might have few obvious effects.
But, longer term, lack of attention to smart infrastructural investments can erode our economic performance and competitive-ness. That spells less wealth to be spread around. And that is bad news for those who would like to see our options for the future expanding rather than contracting.
INNOVATION
We pride ourselves on being a nation of innovators, making the most of limited resources. It is true that innovative thinking has fuelled advances in agriculture, manufacturing, and service delivery.
But we need to do more to encourage and celebrate innovative thinking and entre-preneurship across all sectors of society. Finding ways to promote innovation and entrepreneurship in business and in the tertiary education sector is essential.
Likewise, efforts to improve Government service delivery and increase cost-effectiveness should be continuous. If we don't innovate to keep ahead of the game, we will be forced to change by competitive pressures from abroad.
EDUCATION AND TRAINING
Globalisation creates more cross-border linkages in the production of goods and services. Global competition for labour has brought down the cost of many consumer products.
Free trade agreements accelerate the process. All of this is good news when you are in the driver's seat.
In this environment, countries like New Zealand that have enjoyed historically high levels of wealth face big risks. If we cannot contribute knowledge into the supply chain of globally produced goods and services, our standard of living will quickly erode.
Many countries are making massive investments in education and training. New Zealand's investments in this area have been growing, but we have miles of catching up to do. We need to be smart about how we engage with the global economy, and how we see ourselves adding value. A focus on upskilling the workforce and retaining talent is vital.
The months ahead offer a chance for all New Zealanders to reflect on where we are heading as a nation.
We need to be thinking about how to create a society that is both ambitious and caring. And we need to be retaining our brightest and hardest working, not seeing them off at the airport.
Come May 22, Dr Cullen has a free shot at setting the terms of this debate. Hopefully, current MPs and those aspiring to win seats will weigh in with ideas of their own.
But we shouldn't cede all the ground to politicians. Our visions for New Zealand must be informed by broad discussion. So long as thoughtful citizens, business leaders, journalists, and public intellectuals keep raising tough questions, the tone of the public debate will rise.
The vision thing matters. A period of invigorating discussion would serve us well.
* Michael Mintrom is an Associate Professor of Political Studies at Auckland University and a former Treasury economist.
