What worries me about New Zealand

1 August 2004

Just over two years ago, I resigned from the Reserve Bank of New Zealand after almost 14 years as Governor, with the specific intention of standing for Parliament in the general election a few months later.

And what drove me at that point was a concern that, if New Zealand continued on the track it was then on, the gap in living standards between Australia and New Zealand which had emerged over the previous three decades would continue to widen, with the serious risk that New Zealand would simply not be able to survive as a viable society.  Why not?  Because with Australian per capita incomes already being some 30% above those in New Zealand – equivalent to some A$180 per week per person – an increasing number of our brightest and best would choose to make Australia home, with this outflow of skill and enterprise making it cumulatively more difficult to arrest the widening gap.

Down the track, this created the risk that New Zealand would become just another Pacific Island state – larger than most to be sure, but potentially suffering some of the same kinds of problem.

The Labour Government had been incredibly lucky, inheriting an economy which was performing very much better than in the seventies and eighties, thanks largely to the policies put in place by Labour in the late eighties and by National in the early nineties.  And they had been the beneficiary of further buoyancy as a result of the  steep decline in the exchange rate from early 1997 till late 2000.

But they were doing nothing significant to build on that advantage, with the Treasury projecting growth to be slower over the next 10 years than over the last 10.

Two years on, I am even more worried about what the Labour Government is doing, and what it is not doing.

It is, for example, failing to fix the serious problems in the Resource Management Act, problems which lead to extraordinarily long and costly delays in gaining consents to build roads, power stations, or industrial plants.  Last month, the New Zealand Forest Industry Council noted that there are 21 major wood-processing plants under construction in Australia at the present time; there are none under construction in New Zealand.  And the Council laid much of the blame for this situation at the door of the Resource Management Act.

Among the Government’s many sins of commission are the recently passed Holidays Act, and the soon-to-be-passed Employment Relations Law Reform Bill.  The former has sharply increased the cost of employing staff on statutory holidays and absenteeism due to “sickness”.  Among other things, the latter will go a long way to re-introducing compulsory unionism by making it a breach of good faith for an employer to employ non-union staff on the same terms and conditions as union staff.

Since entering Parliament, I’ve realised that there are several other things which threaten our future apart from the narrowly economic issues.

In New Zealand we have some excellent schools and universities, but close to a quarter of children come out of school with seriously inadequate literacy and numeracy.

While the economy is currently buoyant and unemployment is lower than for many years (thanks in large part to the economic buoyancy and to the deregulation of the labour market in the early nineties), the number of working age adults dependent on a benefit is some eight times the level it was 30 years ago.

We have a country where relations between Maori and non-Maori have traditionally been good, with a high degree of inter-marriage extending back for more than 150 years.  But successive governments have created a dangerous situation by creating the impression that Maori New Zealanders have rights and privileges not available to other New Zealanders, and the current Labour Government has been extending that impression in a way which risks serious resentment and discontent.

And in an increasingly dangerous world environment, we continue to make no attempt to rebuild our relationship with the United States, damaged some 20 years ago, with the consequence that our relationship with Australia is also more distant than it should be.

New Zealand and Australia should be close allies in every field except sport – and even in sport we should be friends.

It is to help fix some of these problems that I am in politics today.  And I am in New Zealand’s largest centre-right political party because I am convinced that the solutions to the problems we face lie in policies which flow from the values and principles of the centre-right – personal responsibility, limits on the power of the state, respect for those who “have a go” in every field of human endeavour.

If, as now seems possible, the National Party is able to form a Government after the next election, those are the principles that will drive our policies.

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Copyright © 2024 Don Brash.