What NZ can learn from Scandinavia's success

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Eminent New Zealand physicist Professor Kate McGrath
Eminent New Zealand physicist Professor Kate McGrath

When we were the world's third wealthiest country in 1953 I was a sport-obsessed adolescent fourth-generation New Zealander living in a virtual paradise.

Now back home for 11 years in retirement, after working for 31 years in the southeast of England and for 15 months in Paris, I find my country has changed markedly.

Three OECD economists have concluded our economy is a Productivity Paradox. Why? Because our wealth is 27 per cent below the average developed nation's wealth.

Yet we have a treasure trove of natural resources on land and in our exclusive economic zone, the sixth largest in the world, that in all probability match Norway's abundant rich natural resources.

According to these OECD economists our wealth should be 25 per cent above the average. That Norway's GDP in 2013 was three times ours is a stark reminder of what is required to reverse our socioeconomic decline.

Realising the benefits of our treasure trove is beset however by daunting problems. Concerned about our low wages and low productivity, the late world-renowned nuclear physicist and 2011 New Zealander of the Year Sir Paul Callaghan astutely stated: "We are trapped in a myth of our own making."

Due mainly to the absence of an effective capital gains tax and the inordinate strength of our currency, our property and land investments are about nine times what we invest in our export-led high technology and intellectual property enterprises. Consequently we fail to compete in the sophisticated, highly competitive global marketplace.

Although many well-informed New Zealanders are concerned by our country's 30-year-plus socioeconomic decline, successive governments have failed to provide the leadership to address this issue. The private sector has been no better as shown by the sale of numerous successful NZ-founded enterprises to overseas-based owners.

The highly successful science, technology and intellectual property-based economies of Norway, Denmark and Finland, with similar sized populations, have important lessons for us.

Foremost are their high trust levels and social cohesion that ensure their politicians, state agencies, private sectors and trade unions reach agreement on nearly all important matters. The high taxes they pay for their quality near-universal education, healthcare, social welfare and substantial pensions are considered worthwhile exemplified by what they believe about education: "If you think education is expensive, try ignorance."

The Finnish education system leads the world and underpins their most successful export-led high technology sector. Besides its very high standard of living, Norway promotes sophisticated environmental sustainable policies.

In 2012 Denmark's high value-added primary produce export earnings were similar to our primary produce earnings. The export earnings of her shipping, oil, manufacturing and intellectual property sector totalled 10 times our non-primary produce export earnings.

Eminent New Zealand physicist Professor Kate McGrath is a passionate promoter of the role the sciences and engineering play in achieving a prosperous knowledge-based economy. Despairingly, she longs for the day when: "New Zealand kids dream of being scientists."

Many of our intelligent youngsters succumb to the allure of fame, no matter how fleeting, and a fortune, no matter how remote, in international sports.

These virtual fulltime sportspeople spend 10,000 hours on average preparing for and competing in their respective sports. Very few gain a high grade trade apprenticeship or a quality university qualification especially in the sciences, engineering and mathematics.

Admirably, despite the dearth of top quality tradespersons, engineers and scientists, the remarkable NZ scientist Dr Mary Quinn, chief executive of Callaghan Innovation, is determined to increase the numbers and quality of our sorely neglected export-led high technology and intellectual property enterprises.

Our assets need to be owned mainly by people committed to our long-term prosperity; not footloose owners who take their enterprises wherever in the world they find the richest pickings. Otherwise our enterprises, equipment, money, technologies and skilled people will continue to go abroad to the detriment of our socioeconomic wellbeing.

We need the same high-quality leadership, financial and long-term commitment for our export-led enterprises, education, healthcare and social welfare that we have so successfully achieved in many international sports.

By emulating Norway, Denmark and Finland in nurturing the skills, insights and capacities of all our people our enviable paradise would be in reach of nearly everyone.

Without immense cultural changes, however, our socioeconomic decline will probably continue with the gulf widening between our rich minority and our burgeoning and marginalised underclass.

- NZ Herald

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