Isaac Davison

Isaac Davison is a NZ Herald political reporter.

Steady hand up against a wider vision

Nats want to stay on present path but opponents say it's too narrow.

Duncan McLean says the Government has focused on high-flyers. Photo / Mark Mitchell
Duncan McLean says the Government has focused on high-flyers. Photo / Mark Mitchell

New Zealand's economic recovery is tentatively under way, albeit with a few wobbles.

The path out of recession has been built largely on commodity exports and the rebuild of Christchurch in the wake of its earthquakes.

In its six years in charge, the National-led Government has championed dairy and aimed to encourage newer industries such as oil and gas and information and communications technology (ICT).

The result has been slight growth in the past two years, and a 25 per cent increase in exports under National's watch.

New Zealand has one of the faster-growing economies in the OECD and the jobless rate is the lowest since 2009.

National wants to sustain this growth by nailing down international trade agreements, encouraging more innovation, and rolling out ultra-fast broadband in the regions to make sure all of New Zealand is on the path to recovery.

Economic Development Minister Steven Joyce said: "The job is by no means done. But the signs in the last year or so are good. Then the challenge becomes turning one or two years into a much longer growth story, because that's how you boost incomes and close that gap with Australia."

But there are serious questions about the way New Zealand's economy is growing, whether it can be sustained, and at what cost.

Skilled workers are in short supply, wages are relatively low, and funding for innovation and high-tech remains below international benchmarks.

Meanwhile, the environmental toll of New Zealand's dairy boom is increasing.

In the next month, National will position itself as the steady hand which can be trusted to manage the economy and keep it growing.

In contrast, Opposition parties will point out the current Government's narrow dependence on commodities and Christchurch and promise a more diverse, sustainable alternative.

Labour will emphasise a shift "from volume to value", driven by sectors such as information technology, wood processing and high-tech manufacturing.

With the Greens, they will also push for a more cautious approach on industries which affect the environment.

The knock-on effect of National's dairy-centric economy has come into sharper focus in the latest parliamentary term, as public discontent about the health of New Zealand waterways continues to grow.

Parliamentary Commissioner for the Environment Jan Wright recently revealed the alarming rate at which this country's traditional sheep and forestry areas were being converted into dairy farms, increasing the amount of polluted runoff into rivers and streams.

"It is almost inevitable that without significantly more intervention, we will continue to see an ongoing deterioration in water quality in many catchments across the country, particularly in Canterbury and Southland," Dr Wright said.

Ministry of Environment records show more than a quarter of the country's rivers were deteriorating when it came to nitrate pollution.

National has introduced bottom lines for water quality for the first time, and councils have been tasked with improving their waterways.

But those minimum standards are considered too weak by conservationists because they only require water to be clean enough to wade in.

Labour and Greens say this standard is not good enough, and they have both promised a long-term goal of swimmable rivers across the country.

National's economic vision is also partly dependent on major changes to consenting rules, which have faltered because its coalition partners say they are a step too far.

It wants to change the environmental principles at the heart of the Resource Management Act (RMA) to give more recognition to economic development. That would allow long-delayed multimillion-dollar projects such as a new coal mine on the South Island's West Coast to be approved more quickly instead of being mired in endless court battles.

Labour, the Greens and others see those environmental principles as sacred. The Act Party, on the other hand, is going further than any political party by saying it wants to completely scrap the RMA.

Labour would demand stronger regulation of oil and gas exploration and the Greens want to ban deep-sea drilling altogether.

Mr Joyce says these policies amount to an "anti-jobs" agenda.

Moving towards a high-wage economy will depend on more skilled workers, and a greater investment in innovation.

New Zealand is lagging in both these areas. Nearly 60 per cent of businesses say they are struggling to find skilled staff.

National has funded more places for the "stem" skills - maths, science, engineering and computer science - but Mr Joyce says too few science-minded people are coming out of high schools. If re-elected he plans to focus on bridging this gap.

The Greens would also fund more places in these subjects.

The Labour Party's economic development spokesman, Grant Robertson, supports this plan but says it is important to remember that innovative ideas often come from graduates in humanities and design.

All parties are promising more R&D money. But they differ on how it should be distributed. National favours direct grants to companies which fit certain criteria. Labour wants an R&D tax credit which would give more certainty to scientists and innovators.

Research and development spending is about 1.3 per cent of GDP, well below the OECD average of 2.4 per cent. Mr Joyce says under National, Kiwi firms were increasingly investing in the "weird", niche parts of the IT and tech industry emphasised by the late entrepreneur Sir Paul Callaghan.

The Greens are the only party so far to single out a specific high-tech industry for support, saying they would encourage growth in the 3D printing sector.

Another criticism of the economic recovery is that it is uneven and not benefiting all of New Zealand.

On paper, most of New Zealand's regions are growing.

Local government leaders told Mr Joyce a different story this month, of desperate skills shortages and "zombie towns".

National is promising infrastructure upgrades including roading and ultra-fast broadband while Labour would create growth plans for every region and fund crucial projects such as rail links. Mr Robertson says National has relied on "silver bullets" such as oil and gas to rescue the regions but more comprehensive, long-term planning was needed.

- NZ Herald

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