Wednesday, August 1, 2012
Economic Leadership Lacking
I have written a number of posts expressing concern at the growing wealth of our rich elite and the simultaneous, and probably related, growth in poverty. I want to make it clear that I suffer no envy towards the rich (I am financially comfortable) and don't blame them for the growing income inequities within our society. If I appear to spend an inordinate amount of time perusing the "Rich List" it is only to get a general idea of how our economy operates and where the money tends to settle.
In actual fact I admire the rich, they are hard working, proactive, innovative and generally able to spot opportunities for business where others may not. Many of our richest New Zealanders are philanthropists and invest a good amount of their wealth back into the community. If we ignore a particular group of financiers, our wealthiest people generally work within the law (although many may have undue influence on the construction of those laws) and actively support our country's corruption free status.
What concerns me is the lack of leadership demonstrated by successive New Zealand Governments and most especially our current National led one. The shape and resilience of our economy is dependent on a partnership between our business leaders and the government. The government provides the legal parameters and incentives that businesses work within and while international markets and the world economy has a huge impact on our own, the way we respond to those realities is crucial to our economic survival. When the government limits taxation on capital gains through property investment it is only natural that it will focus investment in that area and there will be less investment in more productive, export focused industries. The fact that about 1/3 of the 50 richest New Zealanders rely on property investment for the bulk of their wealth is a direct result of government policy. It is this same policy that has made home ownership unaffordable for most New Zealanders and overpriced our farms.
This government believes that they have a limited role in creating economic resilience and when Gareth Hughes asked Bill English earlier this year, "What steps, if any, is he taking to reduce New Zealand's economic vulnerability that stems from dependence on oil?" he got an interesting response. English's reply to this question, and a number of related supplementaries, involved explaining that his government was relying on market forces to determine the country's transport future. This constituted an appalling admission that there is no planning or leadership from his government in developing any security or greater level of self sufficiency in the use of energy. With 99% of our transport systems being reliant on oil, it means that we are extremely vulnerable in the event of any rise in oil prices or a restriction of supply.
The lack of planning around future proofing our transport infrastructure is an example of hands off governance that will have a direct impact on our economic resilience. The efficiency of our transport systems are hugely important in making our economy competitive and if our energy companies are sold to overseas interests our electricity supply will also become less secure. Surely it is the government's role to provide incentives for investing in areas that will benefit our economy most and also ensure that core infrastructure such as transport and energy supply are competitively priced and sustainable? It is not the main focus of our business leaders to operate in the best interests of our country as a whole, their focus is on maintaining profit margins for their own business and good returns to their investors. It is is the Government's role to ensure a balance between the long-term economic viability of our country and all its citizens and short-term business profits. While National constantly talks about economic balance, it is clear they have no understanding what this means, our high levels of poverty, environmental degradation and low levels of business innovation and productivity is proof of this.