Brash Don: Appropriation (2003/04 Estimates) Bill — Third Reading Imprest Supply Debate 
Brash Don: Appropriation (2003/04 Estimates) Bill — Third Reading Imprest Supply Debate 
[Volume:610;Page:7670] 
Dr DON BRASH (NZ National) 
: 
 We have heard a recital from the Minister suggesting that everything in the garden is rosy and going fine but I want to put the situation in some context. Let me quote a few numbers. Over the last 30 years the New Zealand economy has delivered an increase in per capita income of three-quarters of 1 percent. In the last decade growth has been three times that at 2¼ percent per capita—three times the trend rate of the last 30 years. Why have we achieved that? It is basically because of the reforms that—yes—the previous Labour Government of the 1980s put in place and of those that the National Government of the early 1990s put in place. That delivered a growth rate of three times the trend growth-rate of the last 30 years. 
Now let us look ahead. Two Treasury economists have calculated that for New Zealand to achieve a place in the top half of the OECD in living standards within 10 years it would require a per capita income growth of between 4½ and 7½ percent per annum depending on what assumption one makes about other countries’ growth rates. In other words it will take at least double the growth rate we achieved in the last decade and six times the growth rate we achieved on average over the last 30 years. Even to get to the top half of the OECD in 20 years would require per capita incomes to rise by more than 3 percent—again that is a lot faster than we achieved in the last decade. 
What do we have? We have Treasury projecting that productivity per person will go up at roughly 1½ percent per annum for the next decade. That would deliver an increase in living standards at a significantly slower rate than we had over the last decade and nothing remotely like enough to achieve a place in the top half of the OECD in 10 years 20 years or 30 years. Is it any wonder that this Government has abandoned its objective of getting us into the top half of the OECD in 10 years? It simply cannot be done and on present projections it will not be done in 20 or 30 years either. 
So how does the Government respond to that situation? Let me quote a few things that this Government has done in recent times. First of all it has sanctioned a rather extraordinary attack on high net-worth individuals asking them to supply answers to an extraordinary list of questions about what they have earned what they have given what they have done and what companies they have set up—no matter that many of those have recently been through a clean tax audit. The Government has just sanctioned this extraordinary inquisition into some of our most successful entrepreneurs. 
 There has been almost no media attention given to that except in the business press. Can members imagine the outcry that would have occurred if the Inland Revenue Department had sent a similar request to all those earning below $10000 because it had a suspicion that some of those people might have been evading tax? If the Inland Revenue Department had done that there would have been an absolute outcry; yet when the Government sanctions the Inland Revenue Department doing that to the most successful business people in the country there is not a squeak. How does that measure encourage this country to grow faster? How does it encourage people who can invest to do so? 
Secondly the Government has totally failed to fix Auckland’s traffic problems. The Government has itself acknowledged that traffic congestion in Auckland is costing the economy something like a billion dollars a year. So what has the Government done? Well first of all it has encouraged Auckland to invest in a dopey rail project. At the moment rail carries 0.2 percent of the passenger trips in the Auckland metropolitan area per year. If we spend a billion and a half dollars on upgrading the rail system and provide a hundred million dollars of subsidy annually— 
Dr Wayne Mapp 
: At least. 
Dr DON BRASH 
: —at least we might get that figure to between 2 and 3 percent of total passenger trips in the Auckland region. There is no way that that project can be remotely economically viable. The Government has failed to fix the Resource Management Act problems. The last National Government tried to do that just before the 1999 election and its bill was gutted. We have seen that bill go through the House in the last month or two. What happens? The North Shore busway has taken almost a decade to get the required approvals through and just as the approval process was finished the Government said: “Any project involving the transport sector involving more than $20 million must be subject to central Government review.” 
So not only do we force Auckland into a dopey rail project but we also fail to fix the obstacles that might enable things like the North Shore busway to get on its way. The Government has a Land Transport Management Bill in the works which looks likely to be totally inadequate in dealing with the road problems in Auckland so we will have more obstacles to the economy’s growth. We are not just failing to fix the obstacles that are there; we are erecting more obstacles at almost every turn. 
Let me also talk about the review of the Employment Relations Act that is under way. We have a giant leap backwards in industrial relations law coming down the pike. In the last few months there have been two independent studies done—one by the OECD in Paris and one by the International Monetary Fund in Washington—relating the level of unemployment in an economy to the state of labour market legislation. What did those studies discover? Surprise surprise they discovered that the more rigid and inflexible the labour market laws affecting an economy are the higher the level of unemployment will be. That is totally consistent with the textbooks with our views and with New Zealand’s own experience. 
Those two studies found that labour market reform can drop unemployment by about three percentage points of the workforce—a huge improvement. Is it any wonder that after the Employment Contracts Act was passed in 1991 New Zealand had the highest growth rate of employment in any developed country in the world? What we have now is a steady retreat from that. In the 1990s we saw the Employment Court moving gradually backwards and imposing its own interpretation of the law making it more and more difficult for employers to deal with employment situations. Then in 2000 we had the Employment Relations Act and now we see the prospect of further major changes which employers and employees—and I suspect everybody in this House—know will make it more difficult for employees and potential employees to get or stay in employment. 
We know that because we know that if one makes it more difficult for an employer to dismiss a staff member who is not working an employer simply will not hire anybody whom he or she perceives as risky—which could be anybody whose English is not too good who has a criminal record who is a bit too young or a bit too old. That is what we face if we retreat further from the kind of Employment Relations Act we have got. 
Thanks to the reforms of the late 1980s and early 1990s we have had better growth in the last 10 years than we have had for the previous two or three decades. The sad thing is that what we are looking at now is a gradual slowing-down of that growth to New Zealand’s huge cost and we will all pay for that.