When Act supported National’s grab for government it negotiated the creation of a Productivity Commission to look into why New Zealand is getting poorer, especially relative to Australia.
Last week, Don Brash was appointed as its head and he spoke formally about it yesterday at AUT University, where he is an adjutant professor.
Here at Idealog we’re passionate, and hopefully articulate, enthusiasts for productivity–given that ‘getting more from less’ is exactly what the creative economy is all about.
So we’re keen to see what this commission comes up with.
Based on yesterday’s lecture we have mixed feelings.
First what’s right:
The diagnosis is correct. New Zealand is poor and getting poorer. And choosing to benchmark ourselves against Australia makes good sense. We always like competing with those bastards and in the words of Harry Enfield, Aussies are “considerably richer than you”. About 33 percent richer, with the gap growing and expecting to reach 40 per cent in the next decade. Aussies work less for more, and they have greater capital per head.
The result, says Brash, is that our “net indebtedness – the extent to which our gross foreign liabilities exceed our gross foreign assets – is estimated to be some $170 billion, or well over 90% of GDP; roughly $40,000 for every man, woman and child in the country.”
At the event, Brash cast himself as open-minded about the reasons for our relative poverty, including poor savings, RMA and bureaucracy, high taxation and/or high government spending, and our borrow-and-spend culture.
He eliminated some less obvious reasons. Turns out we have more natural resources per head than Australia and we invest less in housing than both Australia and the UK.
Brash is smart and curious; at best he will be evidence-based in his approach.
So far, so good.
What’s not right, is him. The Don is politically divisive and lacks the statesmanship required to make this an initiative from NZ Inc. By contrast, the Australian Productivity Commission, on which ours is loosely based, is supported by the Coalition and the ALP. Even National party enthusiast David Farrar of KiwiBlog fame suggests that Don the Divider is unfit for the role.
In case you hope Brash will wear more generous trousers, when I asked if he’ll be seeking a bi-partisan approach, including the appointments to the commission , he said (and I’m paraphrasing) “it’s a political committee with a political outcome so the appointments will be made by the government”. He did say that he’s asked for a former Labour MP to join. I suspect he’s talking about Richard Prebble or another Labour government c1984 alumnus.
There’s a whiff of predictability about not just leadership of the commission but also the type of questions being asked. No doubt Brash will be evidenced-based in his approach but it all depends on your questions, right? Take a look at his list of possible reasons for our situation and there are some notable exceptions:
- nothing about sustainability, climate change and greening of the economy, all major themes of Australia’s, UK’s and US’ economic initiatives of late
- nothing about the ‘browning’ of our economy and what that means in terms of skills, education, culture and the investments that follow
- nothing about the role that creativity, innovation and R&D play in productivity
- very little about immigration (though he answered positively in the question time)
Let’s hope we’re wrong but I suspect that this commission will be wonkish, biased towards a neo-classical economic view of the world, and all too familiar in its recommendations. As a result it will not be embraced by the opposition parties and half the country will do what they have always done: dismiss the question of our ebbing wealth as simply the obsession of weird people like The Don.