Fran O’Sullivan has some interesting gossip about the governments much promised but as yet non-existent advisory group on how to close the income gap with Australia:
Hide’s people now say the chair of the advisory group may be announced next week when the Act leader gets back from holiday. A couple of names have been under consideration.
Political sources suggest they are former National leader and Reserve Bank Governor Don Brash and former Treasury secretary Graham Scott.
The political drum goes that Hide had all but secured support for Brash to chair the group – right down to suggesting who else should be among the membership. But Bill English – who has employed Scott as his “purchase adviser” – preferred his former Treasury boss (the Finance Minister was a Treasury analyst before entering politics) over his former party leader.
Whoever it turns out to be, it would be nice if the group reported back that Australia has a very different economy to ours, that they are mineral rich, have a much larger population, are much closer to their export markets and that it’s silly for us to benchmark ourselves against another country just because it happens to be kind of near to us geographically.
Or maybe Brash would recommend that the government introduce a higher tax bracket – like Australia’s – or a capital gains tax for secondary homes. Or a compulsory 10% employer super contribution like theirs. That would be pretty awesome.
the only way to close the gap would be to federate. It’s like to see that but it’s very very unlikely.
since they can ship large pieces of Oz off to China indefinitely there’s not much we can do.
But perhaps target their markets more effectivley and maybe build a fresh water pipeline from Fiordland across the Tasmin, or convert some oil tankers.
Targeting their markets makes the most sense. Windfall profits from mining and oil are often quiet distorting to economies. Find out what they want to spend their money on.
Comment by Neil — July 8, 2009 @ 9:30 am
What, you mean come up with intelligent solutions rather than headline making rhetoric. I hope you are ashamed with yourself for making such indecent and outrageous claims…
Comment by Sam — July 8, 2009 @ 9:45 am
My heart sank when I read that the two candidates were Don Brash and former Treasury secretary Graham Scott. I know New Zealand is a parochial society with a limited talent pool, but why do we constantly recycle the same people? Ask yourself – Both Brash and Scott are relatively old men. We’ve had plenty of experience of their advise now. Will they come out with any startling new or innovative ideas, or will they simply regurgitate the same rigid neo-liberal shibboleths that they’ve spouted for more probably three decades now? Why bother paying them to be on an advisory group when you can go and read any number of papers and reports from these two which lay out the ideological round solution they want to bash any economic question regardless of it’s shape? It seems to me if one really wishes for fresh ideas and new thinking one shouldn’t reach into the past for people who haven’t had an original since they left university in the 1950’s or 1960’s.
Economics is essentially a technocratic profession. Economists don’t have many ideas as such, and when they do they usually turn out to be a disaster. If you must appoint a economist, at least make it someone with a broader view, and it needn’t be a member of intellectually wasteland that is New Zealand’s incestuous and claustrophobic business elite – it needn’t be a Kiwi, how about someone like Will Hutton, for example?
Or even better – why not do what the Spanish might do, and appoint a committee with a historian to chair it, a philosopher as its secretary?
Comment by Tom Semmens — July 8, 2009 @ 10:03 am
A nice idea, Tom, but that historian would inevitably be Michael Bassett, which would be like Don Brash to the power of ten.
Comment by Jake — July 8, 2009 @ 10:16 am
My only hope is that the terms of reference are to improve our economy, attempting to make it as strong as (or stronger than) Australia’s. If so, then the first thing they’ll do is note “that Australia has a very different economy to ours”, and not simply assume that their job is to figure out how to copy them (as you appear to imply)
Comment by Mark Wright — July 8, 2009 @ 10:22 am
The sarcasm in my post was a little abstract – Brash always used to argue that to be as rich as Australia our tax regime needed to be exactly like theirs in some respects – ie lower rates at lower brackets while other parts of their tax system was to be avoided at all costs, ie a fourth bracket and capital gains tax. The trope that we should be just like Australia except very very different was just a stalking horse for Brash’s religious conviction that rich people shouldn’t have to pay much tax.
Asking ourselves how we can achieve parity with Australia is still totally arbitrary – we might as well ask how we can achieve parity with South Korea, or Sweden or Canada. As a very small, incredibly isolated country we just aren’t that similar to any other successful economies on Earth so comparative studies aren’t really that useful.
Comment by danylmc — July 8, 2009 @ 11:05 am
“Asking ourselves how we can achieve parity with Australia is still totally arbitrary”.
I disagree. Using as a benchmark, our nearest neighbour who has a similar legal, cultural & linguistic background and against whom we have been steadily slipping over several decades is less arbitrary than most possible choices.
Comment by Mark Wright — July 8, 2009 @ 11:12 am
You can appoint whoever you want, but you’ll get the same answers from any half decent group.
Australia might have minerals, but we have rain and an agribusiness which is still the main driver of the export business for the last 150 years or so.
We spend more than we earn.
Govt is too big for our economy.
And the killer.. we don’t really want to be as rich as Aussie or any of the other 21 OECD nations ahead of us.. it would mean we have to stop moaning and bludging off each other.
JC
Comment by JC — July 8, 2009 @ 11:17 am
Perhaps he’d recommend strong unions and compulsory wage arbitration. Perhaps I need to put it in caps, because nobody in the seems to have heard that Australia has COMPULSORY WAGE ARBITRATION.
There are reasons why Australia has the highest manufacturing wages in the world, and they don’t all relate to iron and coal mining. They’ve had a completely different wage system for the last 20 years, and nobody seems to want to even acknowledge that.
Comment by George D — July 8, 2009 @ 1:22 pm
Wouldn’t Brash just look at Australia and then at NZ and note the biggest difference was that we had Maoris? Then advocate the removal of said Maoris resulting in less bludgers meaning TAX CUTS = we’ll be richer than Australia in no time.
Comment by david c — July 8, 2009 @ 1:34 pm
Using as a benchmark, our nearest neighbour…
… who has more in common with America than with us is frankly ridiculous.
Thank god someone’s finally said it.
Comment by Zoo Neeland — July 8, 2009 @ 1:39 pm
“Economists don’t have many ideas as such”
I always say economists are to business what film critics are to film.
Comment by Clunking Fist — July 8, 2009 @ 2:18 pm
“who has more in common with America than with us ”
Well, that’s now true, what with all that intervention in the US auto industry…
An economist once calculated the deadweight cost to the australian economy of every protected auto industry job as $500,000. This helps explain why they can be so rich, yet often have higher rates of unemployment than us.
Other than the state and feredaral gummint thing, what do Aus and the States have in common? An economist once estimated that 50% of the worlds manufacturing occurs in the United States (obviously not toys, clothing or much consumer electronics), whereas Aus is a miner and a farmer.
Comment by Clunking Fist — July 8, 2009 @ 2:24 pm
A-flipping-men
Comment by Clunking Fist — July 8, 2009 @ 2:25 pm
“There are reasons why Australia has the highest manufacturing wages in the world,”
May have something to do with protectionism..?
Comment by Clunking Fist — July 8, 2009 @ 2:27 pm
**BAN** TEH BLUDGERZZ$$!!
Comment by StephenR — July 8, 2009 @ 2:43 pm
Well, I thought that was pretty damn obvious, actually. So obvious that I didn’t mention it.
If we want to close the wage gap, then perhaps we should consider tariffs and other forms of protection for domestic industry too.
Comment by George D — July 8, 2009 @ 3:25 pm
Oh dear. Maybe you should leave the satire to Danyl.
Comment by nfpsheppard — July 8, 2009 @ 3:46 pm
Actually, the biggest difference is that New Zealand has got Brash !
Comment by vibenna — July 8, 2009 @ 11:53 pm
Brash, and Ambitious.
Comment by George D — July 9, 2009 @ 12:44 am
no
Comment by chris — July 9, 2009 @ 10:04 am
I can see the campaign slogan now:
“Tarrifs; because New Zealand was so much better under Muldoon”
Comment by Phil (not Goff) — July 9, 2009 @ 12:35 pm
Yeah, it’s the consensus that tariffs impose costs onto the economy.
But if you’re going to look at why Australia has higher wages, surely it’s intellectually rigorous to consider ALL relevant factors, not just the ones you’ve already decided you like?
Comment by George D — July 9, 2009 @ 3:46 pm
I know of an economist who will have all the time in the world to research and come up with solutions and who has a very big public profile and who will cost nothing, well next to nothing, to produce this work: Clayton Weatherstone.
Comment by Nick — July 11, 2009 @ 11:25 am
Cheap? Nah, he’ll need at least two guards to accompany him whenever he has to visist the university library or the national archives.
Comment by Clunking Fist — July 13, 2009 @ 9:18 am
And so Brash gets the job.
Christ Almighty.
Comment by Gareth W — July 21, 2009 @ 2:52 pm