Bill English is running scared of big bang reforms in this year's Budget, fearful of voter backlash. But what about some big ideas that have broad public support?
It's a month until the Budget and you can almost hear the alliterators warming up. Will it be a bitter budget or a bleak budget, beleaguered or simply businesslike? We know there's not a lot to look forward to – just $1.1 billion in new spending, of which something like half will go to healthcare. Many public sector budgets will be cut. The talk will be of more tough times to come.
The credit crisis and recession left a sense of woe and worry, which the government has tilled and nurtured to its own purposes. More than else, this National administration are pragmatic incrementalists, small c conservatives whose greatest electoral fear is to look too radical.
Don't get me wrong, they're willing to toy with some radical ideas (regulatory reform, whanau ora, three strikes) and even push ahead with some of them. But most of those are driven by coalition partners; in Cabinet the overall tone seems to be one of caution.
So the grim fatalism amongst the recession-wary electorate has suited them. They've moaned about how bad the economy was hit to justify cuts, whined about those on welfare to justify limits and now they're using the 'tough times' line again to trim at least the edges off interest-free student loans.
Things aren't nearly as bad as they've been made out to be in any of those areas, but pretending they are has kept public expectations low and laid the groundwork for a second term. The most disappointing thing about that is the opportunity cost; the things not done that could be making such a difference.
Back in February Bill English gave his 'state of the economy' speech, a miserable affair that highlighted the worst statistics he could find (export sector hasn't grown since 2002, another six years of fiscal deficits predicted, and so on).
He spoke of the governments six main policy drivers – "a growth enhancing tax system (translation: income tax cuts, mostly for the rich); better public services (smaller, cheaper public services); support for science, innovation and trade (did we mention the tax cuts?); better regulation (more around the markets, less everywhere else); investment in productive infrastructure (which requires stripping Canterbury of its democracy and schedule 4 lands of their protection); and improved education and skills (national standards – yawn).
The most telling line – both acutely defensive and determinedly true to his beliefs – was that a "one-off package of big bang reforms" would be "futile" and would spark "an overwhelming public backlash". Instead, he said, "we're embarking on a consistent programme of considered, broad-based reform, year after year".
There's a lot I admire about that approach. Not least the implied promise that he's not Ruth Richardson in a swandri. We want careful consideration, not ideologically-driven experiments. But what about the big bang reforms that wouldn't provoke an overwhelming backlash? What about some reforms that have widespread support?
Given how many people I speak to these days on all fronts of the political debate, I'm intrigued to find that there seems to broad agreement on a few key economic reforms. We need more capital in the productive sector and less in property; more money invested in research, development and innovation; a more regulated market; a focus on higher wages; to export or die.
You might have some others... toss them into the comments below. But on the basis of that, here are some significant reforms, in no particular order, that would do wonders for this country:
- Fast-track most of the Capital Markets Taskforce recommendations, by far the best of the many, many reviews this government has undertaken.
- Using those recommendations and others, tighten market regulation, especially managed funds, making New Zealand a safe place to take risks.
- Spend up large on the tertiary and science sector. Stop talking about being an ideas-driven knowledge economy and start paying for it. One small example, follow Canada, where they have spent big money on attracting a few elite researchers/thinkers to the country... they bring entourages, share ideas, create new products...
- Increase the minimum wage to $15/hour. (Less universally supported, I guess, but essential).
- Go further than expected on creating a disincentive around property buying by going back to the proposed land tax instead of fiddling with GST.
- Re-start contributions to the Cullen Fund. Indeed, get some other funds going... look hard at making Kiwisaver compulsory and other ways to encourage saving, get on with the bond bank for local government, get serious about making New Zealand money available to invest in New Zealand assets and businesses.
I think I've forgotten a few I was going to add... I'd also advise some leadership in the green economy, but a) that's more contentious than the ideas above and b) where the government is dabbling, with the Global Research Alliance, it's doing well.
Perhaps you can help me out with some other suggestions.
The goal, to move New Zealand forward economically. I suspect, however, that in a months time we'll see more tinkering than transformation. But here's hoping.