In Robert Frost's poem, taking 'the road less travelled' made all the difference, and so it is with the economic choices we face as a country. Will it be growth for growth's sake, or a more sustainable growth?
You might call it the tale of two growths. When the 2025 Taskforce published its second report last week on how we can close the income gap with Australia in the next 15 years, the language was urgent and “growth” was the word used time and again.
In a statement accompanying the report, chair Dr Don Brash said:
“The starting point has to be an unwavering focus on growth-promoting policies, aiming to match or exceed best practice world-wide. Unless this happens, those of us who remain in New Zealand will spend increasingly more of our time and money visiting children and grandchildren overseas”.
And how do we apply this unwavering focus on growth? With more foreign investment encouraged by treating investors the same as locals; making the RMA more permissive; re-instating the youth minimum wage and making the labour market more “flexible”. Taxes should be cut and health services privatised… on it went, a list of new right policies that were at the heart of our economic policies in the 1980s and 90s when the income gap between New Zealand and Australia grew at its most rapid rate.
It was a document as forward-looking as a rear-view mirror, repeating the same old mantra in praise of small government and business that’s free to do as it pleases. Quite apart from the obvious criticism, that an utterly free business focused purely on short-term growth tends to desire low wages, high returns off low investment and the freedom to, say, move to Sydney at the drop of a hat, it’s simply stale thinking at a time when new, disruptive ideas are needed.
Then on Q+A on Sunday we spoke to Jeremy Moon, the chief executive of New Zealand clothing company Icebreaker and a man who was briefly part of the taskforce, but who stood aside a year ago.
Icebreaker is a New Zealand success story, a company that has doubled its global revenues in the past three years even during a recession and has a turnover of $120 million and growing. When we asked him about the race to catch Australia, he said:
“For me it’s actually a red herring because I’m not interested in catching Australia… really it’s about quality of life. However, you’ve gotta balance that against ‘how do we create high-paying jobs here?’. Because if there is a brain drain, it’s about people going offshore to chase opportunities”
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