Boosting the economy

One of the continuing frustrations of National and Labour governments is that both parties are guilty of incessantly arguing over how to divide up the tax pie. Yet neither party seems to think about how to grow that pie.

My view of New Zealand economics is therefore perhaps not so much left-wing or right-wing as it is about a third way type of response. In explaining this, two assumptions need to be made. The first is we assume that a conservative response is to loosen regulations on things such as the environment (Resource Management Act), employ laws that businesses might be complaining about and cutting government expenditure on social issues to fund tax cuts. The second is that a socialist response is the reverse – tighten up these laws, increase expenditure on social issues and raise tax to pay for this.

I take a third view. New Zealand has long prided itself on its “No. 8 wire ingenuity”, which is great, but along with that perception of resourcefulness and creativity, there has been a systemic and on going underfunding of research, technology and science. That needs to stop. Our percentage of G.D.P. spent on such research is at the lower end of the spectrum for O.E.C.D. nations.

Also, how the money that is available for research is spread too thinly and across too many fields. New Zealand is trying to dabble in everything instead of building up a few based on our strengths. Instead of putting small sums of money into a dozen or more fields, we need to be building up not more than say four or five main strands of research that get say 80% of all funding. If expenditure needs to increase on anything it is on Research Science and Technology. The 1.1% we spend on this is roughly half of what some nations at the top end of the investment spectrum are putting into this field. The word investment is used to signify an understanding that R.T.S. cannot grow without sustained financial input.

If New Zealand wants to be a country that moves its median income per hour from around $23/hr to $35-40/hr or more, then we need to start taking science and mathematics more seriously at school. I have described in prior posts an undeclared war on science that was started during the government of former Prime Minister Helen Clark, but waged by the National Government of Prime Minister John Key, where because science does not care for political agenda’s it was derided and distrusted.

What I have described above will grow the pie so that when future arguments happen about how to divvy up the tax pie, whilst there will be a cost to the coffers or to the taxpayer, it might not be the heavy blow that it would have been on a lower income.

It is not just investment in science that we can improve on. Too little is being done to improve the base range of export products we send to other nations. Farming, forestry, horticulture, mining, fishing and forestry are our major industries. With the exception of mining, all are at risk from biological organisms. One only needs to see the damage caused in Britain in 2001 when Mad Cow Disease forced the massive scale slaughter of millions of livestock, which crippled Britain’s dairy industry. Another risk is a full blown varroa bee mite outbreak, which would be disastrous for horticulture and potentially damaging to other industries as well given the reliance on bees for pollenation.

We have shown in many emerging fields that New Zealand has the know how to contribute. For example a company specializing in the extraction of rare elements from electronic waste called Mint potentially has a way of removing rare elements whose role in electrical components and gadgets would otherwise require substantial mining.

The knowledge and the means to do something useful with our economy that does not necessarily involve raising or lowering taxes is there. But are the politicians willing to put their personal and party agenda’s aside for New Zealand’s sake and come to the party?

The jury is out on that count.


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