Fran on the economy

November 19th, 2008 at 10:40 am by David Farrar

Fran O’Sullivan looks at the recent - agreement. She covers some of the tensions around spending reviews, but notes that is not the big issue. The big issue is:

Where Act has scored is in getting an agreement out of National to make a concrete goal of closing the income gap with Australia by 2025. This will require a sustained lift in New Zealand’s to 3 per cent a year – something that has so far eluded this country.

It is an ambitious target.

To get some focus on this ambition a “high-quality” advisory group will be formed to probe into the real reasons behind New Zealand’s decline in productivity performance, investigate the kind of institutions that Australia sports to drive its superior performance and report annually on progress made towards the 2025 goal.

Frankly, this is the real winner in the National-Act agreement.

The advisory group should move quickly to examine the runs on the board that the Australian has notched up. The commission undertakes exhaustive investigations into various sectors, interviewing the key players before coming up with in-depth recommendations. It has been a powerful force in driving efficiency into Australia’s economy over the past 15 years.

If such a commission is set up here, it would be great to do it in such a way, the Goff led Labour Party would support it. That doesn’t mean that you agree to implement whatever they come up with, but that you don’t undermine and ridicule them if they ever propose something unpopular.

We saw this with the NZ Institute. They were a darling of Labour, and then they dared to suggest we should be a “fast follower” in terms of climate change responses and the wrath of Helengrad descended on them, and they were marginalised.

Both National and Labour need to realise that if they set up a NZ Productivity Commission, it will sometimes recommend stuff they don’t like. And the challenge for them will be to disagree with the message, but not shoot the messenger.

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16 Responses to “Fran on the economy”

  1. Adolf Fiinkensein (2,798 comments) says:

    David, by your very own words have you provided the answer as to why Labour must be left out in the cold. These Labour leopards do not change their spots just because they change their leader.

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  2. dimmocrazy (286 comments) says:

    To some large extent this is in fact the NZI / NZX / Morrison proposal, and it would be a good start to have a look at their suggestions as well.
    Agree with Adolf that Labour/Greens should be left out. Ideologically they are just not suitable to think in the required terms for this type of initiative.

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  3. roger nome (4,067 comments) says:

    “Helengrad”?

    That just makes you look loony DPF. Really, I’m surprised you use that term.

    [DPF: Helengrad was the exact right term as an example of how the Government treated the NZI after they dared to publish a report the Govt disagreed with]

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  4. casual watcher (289 comments) says:

    “Helengrad” is now officially defunct and consigned as a bad and very unfortunate chapter in this country’s history. As to the future – Labour has no part to play in it until they abandon their outdated idealogy and focus themselves on what is good for New Zealanders. Journo’s like Rudman and Trotter are in a similar position.

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  5. What would Hayek say (51 comments) says:

    Cynic here – You already have The Treasury, MED and a variety of other groups including the business round table providing recommendations on improving productivity. Another body is probably not needed. What is needed is a leadership willing to consider their advice (and as you say not undermine it before it is even developed) and then actually take the steps required to improve productivity.

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  6. clintheine (1,563 comments) says:

    Hurrah to ACT for doing exactly what was put to the electorate and push National to implement the policies they know they want to deliver but were too scared to promote them. I am sure Treasury and the Nats are secretly happy that officials will be keeping an eye on the budgets and spending from Govt departments. Key asked for belt tightening and ACTs policies along with Keys financial prudence will see us right.

    This is going to be a very good Government. Good work to all involved so far.

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  7. Turpin (342 comments) says:

    And the challenge for them will be to disagree with the message, but not shoot the messenger.

    and here is the rub.
    Helen couldn’t do this and we will only see with time whether JK and National can.
    I sincerely hope they do as I want them to succeed.

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  8. Turpin (342 comments) says:

    Helengrad could come back if we don’t watch it.
    so it’s not loony to use the term.
    I actually like it for it epitomizes the woman and her mode of operation.
    wake up fellas.

    We’ve just come out of 9 yrs of it.
    Many of the officials both put in place and promoted by the Helen and H2 machine are still in place.
    We are not out of the woods yet.

    I’d rather see your responses to what can we do structurally and legislatively to make sure it doesn’t happen again!

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  9. JC (909 comments) says:

    You can’t leave the Greens and Labour out, because as sure as shit they will be back in power long before we reach parity with most countries above us in the OECD rankings.

    From what I can see of even more socialist countries than NZ with greater wealth and productivity is that their govts of any stripe have a shared commitment to being wealthy and productive.. they only disagree on the degree of wealth sharing. We simply cannot advance through the stop/go measures of Labour/National until they agree on gaining wealth and productivity before sharing it. Nor can we move ahead without a media that can’t distinguish between a shared commitment to getting ahead and the loony tunes mob singing their silly songs of entitlement through envy taxes etc.

    JC

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  10. Turpin (342 comments) says:

    good point JC

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  11. georgebolwing (612 comments) says:

    For those interested, the Productivity Commission has published a history of itself: http://www.pc.gov.au/__data/assets/pdf_file/0019/7237/thirtyyearhistory.pdf

    The Commission can trace its origins to the Tariff Board, established in 1921.

    It really came into its own in the 1980s under the Hawke-Keating Government, and really started to become the powerful analytical force it is today when it was moved to the Treasury portfolio, as the Industry Assistance Commission, in 1988.

    Its success is probably down to a number of things, including:

    a) a national welfare-maximizing framework, in other words it looks at consumers rather than producers. This was a big change from when it was the Tariff Board, when it just looked at the interests of producers and recommended industry assistance that might have made the assisted sectors better off, but made Australia as a whole worse off;

    b) a very strong empirical focus. The Commission employs some of Australia’s best economic modellers, and its reports always try to quantify the impacts of its recommendations;

    c) it’s work programme, in the form of references, come from the Treasurer, not the Minister for Industry (again, as was the case prior to 1988). Treasurers in Australia, especially Keating and Costello, were concerned with improved overall economic efficiency, not narrow issues like individual industries; and

    d) the federal structure in Australia. The Commission is a federal body and much of the regulation is reviews is run by the states. Thus, the federal ministers and public servants are not directly threatened by its work.

    It would be a mistake, I think, to believe that New Zealand could replicate the success of the Australian Commission overnight. But it would not hurt to have a body that was committed to doing good analysis, that was well resourced and was allowed to do good work by New Zealand ministers.

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  12. philu (13,393 comments) says:

    then of course..there are differing opinions on the behaviour of hide..and on that agreement..

    http://whoar.co.nz/2008/the-pretensions-of-rodney-hide/

    phil(whoar.co.nz)

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  13. philu (13,393 comments) says:

    and of course..

    not to mention his behaviour..

    http://whoar.co.nz/2008/rodney-hide-caught-with-his-snout-in-the-trough/

    phil(whoar.co.nz)

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  14. baxter (893 comments) says:

    nd “the challenge for them will be to disagree with the message, but not shoot the messenger”………I thinkthat if they disagree with the message they should give a compelling explanation as to why they won’t accept and which alternative will produce the same desired result.

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  15. Ben Wilson (523 comments) says:

    I can’t see the point of setting our benchmarks for success against where Australia is up to. What if Australia also lifts productivity? Or drops it? Seriously, what’s wrong with just saying “lift growth to 3 percent *because that would be good growth*”, and leave the ozzies out of it?

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  16. OECD rank 22 kiwi (2,812 comments) says:

    Australia is the measure because of the migration sink.

    A future government wants to point at the people migrating to Australia and be able to honestly say they a moving for the weather and not the money. At the moment cash is king and New Zealand doesn’t have any.

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