Monday, June 30, 2008

Why New Zealand is failing


Offer any critique on why the New Zealand economy is failing, and the left will accuse you of having a "New Zealand sucks" mentality and somehow you are unpatriotic for even daring to raise the issue.
The harsh truth is that their leftist policies are failing New Zealand and this truly would be a land of plenty if we had the right policies to make New Zealand more prosperous again. It's just their way of shutting down debate, one they'd lose
The Dominion-Post today notes the views of leading businessman Kerry McDonald that our productivity record is a "national disaster." The full paper is here.
His views follow Brian Gaynor in the Weekend Herald lamenting our lack of vision, noting Kiwis are now poorer than the Greeks.
In the excellent article by James Weir, McDonald says the Labour Government's climate-change policies are also "a very high risk to the economy".
Productivity was "disastrously low" and growing only slowly, limiting household incomes, international competitiveness and living standards, McDonald said in a paper, outlining his "personal views".
Handicapped by "ineffective economic policies", New Zealand's economic performance was unacceptably weak and it was being marginalised by a globalising, rapidly developing world.
There was a link between rising tax and government regulation since 2000 and poor productivity, he said.
The tax system was "deteriorating" as the rest of the world steadily cut tax rates, he said.
McDonald continues:
Government policy had been "politically-oriented, rather than strategic", reflecting a mistrust of markets, a lack of understanding of business, and a "strong preference for regulation and bureaucratic intervention".
For example, Working For Families payments were used to compensate for low productivity, incomes and living standards, rather than dealing with the fundamental problems, he said.
Government policy risk was now a "major disincentive" for business investment.
And he added
Low productivity undermined competitiveness and limited incomes and the capacity to do things in other areas, such as defence, environmental protection, health and education.
"New Zealand's increase in tax and regulation since 2000 strongly correlates with poor productivity," he said.
In his article, Brian Gaynor presents another worthy read, noting how tax policies have fueled consumption, rather than investment, and that is one reason why we are failing. The other is that the country has no idea as to which direction it wants to go.
Thus, while McDonald rightly lambasts Liarbour over its failing policies costing New Zealand dearly, Gaynor seems to let them off the hook a little, as National seem to lack vision too.
Indeed, only ACT has vision with its 20 point plan, while National may be swallowing too many 'dead rats' to get elected, which has the effect of preventing the change of direction New Zaland needs. But at least National's policy in terms of getting elected is working and will at least stop the situation getting much worse.
Hat tip: The Hive
Update: Bryan Spondre has discovered some nice charts here.

4 comments:

Bryan Spondre said...

Here are four charts illustrating some of the points made in the Stuff article quoting Kerry McDonald.

Anonymous said...

A fine post there.
Just shows what happens when we have a government more concerned with dividing up the cake rather than making it bigger; spending wealth, rather than creating it.

pdq

FAIRFACTS MEDIA said...

Thanks Bryan, these charts are much appreciated.

Bryan Spondre said...

they don't get such favorable comment at "The Standard" :-)