have access to information on some of these important issues. perhaps it is appropriate to end with a quotation from a speech given just last week by mr kerry mcdonald, managing director of comalco new zealand and of course for a number of years director of the new zealand institute of economic research. in that speech4 he observed : “ it seems that there simply isn ’ t a decisive constituency in new zealand for increased growth and living standards. no one is demonstrating for it, and few are fussed by the lack of it. many want the fruits ; they want the cargo to arrive, but not the hard effort of creating the economic wealth in the first place. ” as a fifth generation new zealander, i badly want kerry mcdonald to be wrong. i suspect he wants to be wrong himself. i know that, when i threw my hat into the political arena in 1980, what motivated me was a fear that, unless we could arrest our relative economic decline, my kids would leave new zealand as soon as they were old enough to choose, and the country which i love would gradually sink into the sand. i think that we have as a country made some real progress in recent years at arresting that decline. the last 15 years have certainly not been in vain. but in part because of the failure of the economics profession, the public seem to imagine that half a century of relative decline can be arrested by just a few years of reform. it can ’ t be. there is still much to be done. economists can assist sensible public discussion of the issues, and if we fail to do that, we may yet, like the good people of hamlyn, see our children disappearing over the horizon. 4 “ is a high performance business environment possible in new zealand? ”, speech to the nz institute of management, canterbury division, 9 august 1999.

beach - side section, an industrial property, a commercial building, perhaps a forest block, anything which, the best - selling books and advertisements constantly tell us, will protect us against inflation. protect us against inflation? but we ’ ve hardly had any inflation for the last six years and, despite the biggest change in new zealand ’ s constitutional arrangements this century, we have just had the new coalition government re - affirm the strong commitment to price stability. true, but we ’ ve certainly had two decades of high inflation in the memory of all adult new zealanders and we all know of people who lost most of their life ’ s savings over that period by ‘ making the mistake ’ of investing in ‘ secure ’ fixed - interest investments. i ’ ve told the true story of my uncle so many times that i am almost embarrassed to tell it again, but in my view it contains the explanation of much of the current approach to saving in new zealand, so i will tell it again. after a life - time of orcharding in the nelson area, he sold his orchard in 1971 and invested the sale proceeds ‘ safely ’ to provide income and security for his retirement. to be absolutely safe, he invested the entire proceeds in 18 - year government stock, at the then - interest rate of 5. 4 percent. perhaps fortunately, he did not live until those bonds matured in 1989, but if he had done the $ 30, 000 he received from selling his orchard in 1971 and which matured in 1989 would have bought him by that time just one toyota corolla car ( with a little change ). in 1971, $ 30, 000 would have bought him 11 toyota corollas. in the space of just 18 years, he had lost some 90 percent of his retirement nest egg, all by making the mistake of assuming that inflation would stay at the relatively low level of 1971. as i say, most adult new zealanders know stories similar to that one. or they know stories which tell the same message in another way. stories about people who bought a property with borrowed money in the early 1970s and watched the price of the house increase perhaps eight - or tenfold over the next 20 years, with the value of the equity actually invested in the house ( after allowing for the money borrowed to help finance the purchase ) increasing perhaps 30 times. perhaps we have had an experience like that ourselves. even if we have not, we are assailed by books and advertisements on all sides which assure