WWWakeakeake UpUpUp NewNew ZealandZealand ª NEW ZEALAND BUSINESS ROUNDTABLE OCTOBER 1999 The New Zealand Business Roundtable is an organisation of chief executives of major New Zealand businesses. The purpose of the organisation is to contribute to the development of sound public policies that reflect overall New Zealand interests. First published in 1999 by New Zealand Business Roundtable, PO Box 10–147, The Terrace, Wellington, New Zealand http://www.nzbr.org.nz ISBN 1–877148–54–7 © 1999 edition: New Zealand Business Roundtable © Text: as acknowledged Production by Daphne Brasell Associates Ltd, Wellington Printed by Astra Print Ltd, Wellington FOREWORD This collection of speeches, submissions and articles is the fifteenth in a series produced by the New Zealand Business Roundtable (NZBR). The previous volumes in the series were Economic and Social Policy (1989), Sustaining Economic Reform (1990), Building a Competitive Economy (1991), From Recession to Recovery (1992), Towards an Enterprise Culture (1993), The Old New Zealand and the New (1994), The Next Decade of Change (1994), Growing Pains (1995), Why Not Simply the Best? (1996), MMP Must Mean Much More Progress (1996), Credibility Promises (1997), The Trouble with Teabreaks, (1998) Excellence Isn't Optional (1998) and Turning Gain into Pain (1999). The material in this volume is organised in six sections: economic directions; the public sector; industry policy and regulation; education and the labour market; social policy; and miscellaneous. It includes an article by David Henderson, consultant to the NZBR. A full list of NZBR publications is also included. R L Kerr EXECUTIVE DIRECTOR CONTRIBUTORS Michael Irwin Policy Analyst New Zealand Business Roundtable Wellington Roger Kerr Executive Director New Zealand Business Roundtable Wellington Douglas Myers Member New Zealand Business Roundtable Auckland Sir Ronald Trotter Member New Zealand Business Roundtable Wellington David Henderson Independent Author and Consultant Former Senior OECD Official London CONTENTS ECONOMIC DIRECTIONS 1 1 WAKE UP NEW ZEALAND 3 Speech by Douglas Myers to the Tauranga Chamber of Commerce August, 1999. 2 IS NEW ZEALAND ON THE RIGHT TRACK OR THE WRONG TRACK? 11 Speech by Roger Kerr to the University of Waikato 60+ Continuing Education Group, July 1999. 3 THE RETAIL SECTOR AND THE ECONOMY 19 Speech by Roger Kerr to the 1999 Major and Multi Stores Conference, May 1999. 4 WHY IS NEW ZEALAND NOT DOING BETTER? 27 Speech by Roger Kerr to the Whangarei Business and Professional Community, May 1999. 5 WHO CARES? 35 Speech by Douglas Myers to the Auckland Regional Chamber of Commerce and Industry, May 1999. FISCAL POLICY AND THE PUBLIC SECTOR 43 6 THE PITFALLS OF BACKYARD TAX POLICY 45 Speech by Roger Kerr to the Franchise Association of New Zealand, July 1999. 7 SUBMISSION ON THE CHRISTCHURCH CITY COUNCIL'S 1999 DRAFT PLAN 53 Submission by the New Zealand Business Roundtable, June 1999. 8 TOWARD MORE EFFICIENT AND DEMOCRATIC LOCAL GOVERNMENT 63 Speech by Roger Kerr to The Business Network, May 1999. INDUSTRY POLICY AND REGULATION 71 9 SUBMISSION ON THE DAIRY INDUSTRY RESTRUCTURING BILL 73 Submission by the New Zealand Business Roundtable August 1999. 10 COMMENT ON LABOUR'S DISCUSSION PAPER IMPROVING CONFIDENCE IN THE SHAREMARKET: TOWARDS A BETTER COMPLIANCE REGIME 89 Submission by the New Zealand Business Roundtable, July 1999. 11 SUBMISSION ON THE MINISTRY FOR THE ENVIRONMENT'S CLIMATE CHANGE: DOMESTIC POLICY OPTIONS STATEMENT 107 Submission by the New Zealand Business Roundtable, April 1999. 12 TRADE, INTERNATIONAL COMPETITIVENESS AND THE NEW ZEALAND TRANSPORT INDUSTRY 121 Paper by Roger Kerr to the AIC Land Transport Conference, March, 1999. 13 IS THE LAW A PROFESSION OR A BUSINESS: 133 Speech by Roger Kerr to the New Zealand Bar Association Conference, March 1999. 14 WATER REFORM IMPERATIVES 141 Paper by Roger Kerr to the AIC 7th NZ Water Summit, March 1999. EDUCATION AND THE LABOUR MARKET 153 15 SCIENCE AND THE KNOWLEDGE ECONOMY 155 Speech by Roger Kerr to the Port Nicholson Rotary Club, August 1999. 16 THE CURRICULAR REFORMS – ARE THEY TAKING US FORWARDS OR BACKWARDS? 163 Paper by Michael Irwin to a course on Contemporary Education Policy in New Zealand, Master of Education Programme, Victoria University of Wellington, July 1999. 17 THE EMPLOYMENT CONTRACTS ACT AND THE 1999 ELECTION 177 Speech by Roger Kerr to the Wellington Regional Chamber of Commerce, July 1999. 18 WHAT PARENTS SHOULD KNOW ABOUT EDUCATION 185 Speech by Roger Kerr to the Plimmerton Rotary Club, June 1999. SOCIAL POLICY 193 19 EQUALISING INCOMES OR REDUCING POVERTY: WHICH BASIS FOR WELFARE POLICIES? 195 Speech by Roger Kerr to the Taupo Chamber of Commerce, June 1999. 20 THE PARADOX OF WELFARE 203 Article by Roger Kerr for the ACT New Zealand website, April 1999. MISCELLANEOUS 207 21 POLITICS, MARKETS AND VOLUNTARY ACTION: DIFFERENT MECHANISMS, DIFFERENT ROLES 209 Speech by Roger Kerr to the ACT New Zealand Otago/Southland Regional Conference, August 1999. 22 ECONOMIC REFORM: PAST PRESENT AND FUTURE 217 Article by David Henderson for The Evening Post, 6 April 1999. 23 THE NEW ZEALAND BUSINESS ROUNDTABLE AND WHAT IT STANDS FOR 221 Speech by Sir Ronald Trotter to the Harbour City Rotary Club, March 1999. 24 THE THIRD WAY: NEW PACKAGING, OLD PRODUCT? 227 Speech by Roger Kerr to the ACT Hamilton Electorate, March 1999. 25 'LEFT' AND 'RIGHT': STARS TO STEER BY OR BLACK HOLES? 239 Speech by Roger Kerr to the Mount Victoria Rotary Club, March 1999. 26 List of New Zealand Business Roundtable Publications 247 ECONOMIC DIRECTIONS TAURANGA CHAMBER OF COMMERCE WAKE UP NEW ZEALAND DOUGLAS MYERS CHAIRMAN LION NATHAN MEMBER TAURANGA NEW ZEALAND BUSINESS ROUNDTABLE 11 AUGUST 1999 WAKE UP NEW ZEALAND Recently a newspaper column by former Metro editor Warwick Roger made me sit up and think. It was a kindly reflection on the late Bruce Jesson, a fellow journalist and non-stop critic of most of New Zealand's economic changes in the past 15 years. Warwick Roger wrote that, to the best of his knowledge, Bruce Jesson had spent the whole of his career in New Zealand – not once had he left the country. If Warwick Roger is right, it may explain a lot about Bruce Jesson's writing and much of the ongoing political debate in this country. People speak of the tyranny of distance, by which they mean New Zealand's remote location, far from major world markets for exports and imports. That is something of a handicap, but even at a time when transport and communications were far slower and more costly than they are today, it did not prevent us being a high income country. Much more important in my view, as Bruce Jesson's writing demonstrates, is the tyranny of insularity, bred of decades of fortress New Zealand policies and an intellectual climate cut off from developments abroad. This continues to make it extremely difficult for many New Zealanders to come to terms with trends and thinking in the world around us. When I look back, I reflect on how many of my own formative experiences came from the time I spent living or working in other countries, absorbing lessons about those countries through reading, and trying to understand New Zealand, its problems and its opportunities in relation to the rest of the world. In my own business, the liquor industry, for example, I was struck decades ago by the more civilised approach to drinking in European countries whose legislative regimes were far more liberal than New Zealand's. Parliament deserves credit for its recent decision to abandon another element of New Zealand's repressive past and lower the drinking age from 20 to 18 years of age. But it has taken New Zealand years to catch up, and despite the evidence from abroad – and at home since the Sale of Liquor legislation was relaxed in the late 1980s – many people in our universities and elsewhere still fail to see the link between greater freedom and more responsible behaviour, and the need for properly targeted rather than blanket sanctions. Take, as another example, the decades of public dissatisfaction with outcomes in health, education, welfare and the Accident Rehabilitation and Compensation Insurance Corporation (ACC). In all these areas government ownership, provision, regulation and funding dominate. Some, like Jim Anderton and Sandra Coney, spend much of their careers attacking the outcomes produced by big government. But extraordinarily, despite the size of government and the high tax burden in this country, it is an article of faith to Mr Anderton and Ms Coney that big government can be made smarter and that we would do better with even bigger government. They seem to have learned nothing from the collapse of the centrally planned economies and the failure of the welfare states of Europe. To anyone remotely familiar with the rest of the world, the economic changes in New Zealand over the past 15 years should have come as no surprise. No Western country had carried state intervention in the economy and cradle-to-grave welfare anywhere near as far as New Zealand. Over the past 20 years, every country in the Organisation for Economic Cooperation and Development (OECD) without exception, and many others besides, have been moving in the direction of deregulation, privatisation and generally greater economic freedom. Anyone who has spent time in Australia, the United States, Britain, Asia and even Europe has seen these developments with their own eyes. Recently there have been a number of articles in newspapers reflecting on 15 years of economic change in New Zealand since July 1984. Some commentators have tried to persuade us that the reforms have failed. They play games like lumping in the years of 5 6 restructuring in the 1980s, when the economy barely grew, with the subsequent period of expansion during the 1990s and telling us that the average growth rate over the period has not been much better than in earlier years.