Free Press: ACT’s regular bulletin
Free Press
ACT’s regular bulletin
Jennings for PM
Expat Kiwi
billionaire Stephen Jennings made $5 billion as the only
non-Russian oligarch in post-Soviet Russia. Now he has a
more ambitious plan to transform Africa as an urban
developer, creating modern satellite cities for 70,000
people outside major African conurbations. When he spoke in
New Zealand last week, the most popular question was, when
are you running for PM?
Homecoming
He gave New Zealand
politics a lovely jolt last week. Building on last week’s
Free Press, which argued that domestic politics has
been a little backward looking, this week we build on
Jennings’ argument that New Zealand is sleepwalking
against serious global trends.
See for
Yourself
If you were not at Jennings’ sell-out
New Zealand Initiative dinner and didn’t see him
interviewed on Q&A Sunday morning, you missed a treat. It
is worth watching the video or reading the interview transcript at your own
pace.
What he Said in a
Nutshell?
Third world workers haven’t finished
entering the global labour force, or putting downward
pressure on low-skilled wages in the west. As Chinese and
Vietnamese factory workers enter the middle class, there are
hundreds of millions more waiting in Bangladesh and Africa.
Meanwhile New Zealand has poor productivity growth, and
shares it unequally due to dysfunctional education and
housing markets. We are on course for a very rough time as
more and more get left behind and turn to the Donald Trumps
of the world, unless we reform underperforming
institutions.
Who Needs
SOEs?
The Government continues to own a post
office, a bank, a railway, a number of electricity assets,
and a lot of farms among many other businesses. They
typically underperform, and in some cases absorb large
subsidies. The Government continues to hold them because
the political class who understand this are too timid to
stand up to emotional arguments.
Fonterra
Failure
Fonterra was supposed to be the saviour
of New Zealand Dairy, building brands and adding value. In
15 years most of the growth has been volume based. Put it
another way: imagine if the Government had legislated over
normal competition law to create one big wine selling
cooperative and the New Zealand wine industry sold generic
wine as a commodity? A bit unfair on Fonterra, but Jennings
has a point.
That R&D
Problem
One of New Zealand’s great laments is
not enough expenditure on Research and Development. As
Jennings points out, most of New Zealand’s largest
companies are either subsidiaries of offshore companies,
co-operatives, or SOEs, none of which are typically big R&D
investors. A better way to boost R&D would be to address the
structural features that the Government can control.
Capital Gains Tax
Nobody is perfect,
as proved by Jennings’ advocacy of a Capital Gains tax.
He is right that New Zealanders have got a little
overexcited with housing investment, but so have people
overseas despite paying CGT. The real problem, as Free
Press readers are no doubt tired of hearing, is housing
supply.
Jennings on Housing
Supply…
“These issues are made to sound
complicated but they are actually very simple.” As
Free Press readers have heard before, land use
planning regulations are the reason for short housing
supply. Jennings points out that affording a house would
significantly cushion workers under pressure from global
competition.
…and Education
We
have one of the most unequal education systems in the
developed world, and it’s not going to get better while
avoiding the wrath of teacher unions is the major
preoccupation of education policy. Again, “these things
are made to be complicated but they are actually very
simple…” Unions or kids?
The
Upshot
The New Zealand project is about creating
a wealthy equalitarian society in the South Pacific but as
has been the case too many times in our history, a
“she’ll be right” approach to policy is slowly eroding
the project. What’s lost is the belief that anyone can
make it with enough effort. The project will slowly die if
populist political soothsayers are allowed to carry the
day.
And ACT?
ACT’s DNA is in
the reforming Fourth Labour Government, which looked into
the country’s future and boldly confronted its challenges.
ACT remains New Zealand’s only reforming party, for
example Partnership Schools are the beginning of a more
flexible education model that helps disadvantaged kids the
most. Next year ACT will be the choice for voters who want
proactive reform instead of constant avoidance and political
pragmatism.
ends