Consensus needed for N.Z. progress

Press, 18 March 1982, Page 22

Consensus needed for N.Z. progress

PA Wellington • Lack of consensus within New Zealand about a national development strategy is a major stumbling block to economic progress, the general manager of the Development Finance Corporation (Mr J. M. Hunn) said this week. Addressing a meeting of the Hutt Valley Chamber of' Commerce, Mr Hunn compared this country adversely with Ireland. “It pains me to reflect that ‘even’ the Irish, the frequent butt of our derisive wit, have embarked on a 25-year economic strategy, the major planks of which have been committed to by both major political parties.” This offered an underlying certainty and stability which was essential to the investment process. Mr Hunn said he did not envy the economies of Japan, Singapore, Taiwan ' and Korea. Without major natural resources they live on their entrepreneurial wits. “I do envy this basic level of agreement amongst the Irish to get an economic strategy going.” He said New Zealand was number three in the world in material living standards in 1973. It is now 23rd.

“How far are we going to fall before we get a commitment like the Irish to the basic thrust of our economic strategy?” He said he believed it possible to reach a mature economy early in the 1990 s if New Zealand adopted the right strategies. By a mature economy, he said, he meant a diversified economy not over-reliant on any one sector. It should offer employment and advancement in living standards and not. be reliant on the Government for its wellbeing. A mature economy should live internationally within its means and contribute actively to improvement of living. Mr Hunn said to achieve

these economic objectives, a measure of political accommodation is needed between the different socio-economic groups. “We are clearly a long way from such an accommodation. After five years of no growth; it amazes me that we have not got a commitment from all groups to a growth economy which would open up jobs for all and improve standards of living.” - ' Year-round sun and rain would continue to be the resources around which landbased industries would continue to provide the thrust of the economy.

But traditional farming and farm processing must get away from the production orientation of the industry, he said. Until 1973 the farming sector could afford to adopt a production-oriented attitude because all primary produce could be disposed of. Since Britain joined the Common Market all that had changed. “The emergence in the 1970 s of the Dairy Board as New Zealand’s first great trading house is an indication of the kind of marketing and financial thrust that is needed to keep growth and profitability in farming operations,” said Mr Hunn. The forest industries, because of a plateau in wood supply, cannot embark on a major expansion until the 19905. But from 1995 to 2015 •forest products will move to an export level seven times that achievable during the 80s. Marketing strategies and products need to be developed to move the wood. Turning to energy, he said his view is that New Zealand should proceed with all viable projects but over a longer term than the present plan so other sectors of the economy are not crowded out in competition for resources.

Tourism was a “dream” industry for sparsely populated countries like New Zea-

land. It will facilitate not only considerable employment but it will be largely for unskilled and semi-skilled people. He expects the industry to grow at 4 per cent a year through the 80s. To achieve a mature economy meant that an expected 320,000 jobs have to be found this decade, a 20 per cent increase in the workforce; and 150,000 next decade, a 7 per cent increase. “I am quite unconvinced that either political party has the strategy to achieve that target this decade despite a lot of sabre-rattling on the subject in the recent: election campaign.” Yet it required a growth in GNP of only 3.3 per cent until 1990.

“In my view the biggest hindrance to achieving such a modest growth target are the actions of successive governments. “The base line of the welfare safety net put into place in the 1930 s where the State ensured a minimum level of dignity for all citizens has been raised. “Politicians have outbid each other so that we are now miles away from that philosophy of the welfare net.” This had caused economic problems through the Government deficit. It had also brought a change of attitudes from a spirit of independence to a spirit of dependence. “This dependence on the State is now affecting our whole institutional framework and economic viability,” he said. Total savings are down to 18 per cent from 25 per cent some years ago so investment is suffering. That means less development and less job creation.

“We are clearly living beyond our means by applying savings to present consumption and by the Government paying up to 40 per cent interest for its, borrowings, crowding out investment in commercial assets — the job creators,” said Mr Hunn.