Fran O'Sullivan: Keeping NZ competitive Key focus of summit

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John Key capped his first 100 days in office by securing a strong commitment from participants at the Jobs Summit to sign up for his "What you do counts" message. The Key messaging was smart politics and reinforced just why he deserves top marks for his first 100 days as Prime Minister.

By bringing the major economic players ("doers" in Key-speak) together and imploring them to commit to protect and create jobs in New Zealand, he utilised the power of group-think in an uplifting way. Business leaders are under no illusions about the challenges they individually face, nor are union or community leaders.

But their confidence has been strengthened by knowing they are not alone in confronting some difficult issues as the international economic tsunami slams into New Zealand and is reinforced by working together to produce plans to survive the recession.

Pairing Air New Zealand chief executive Rob Fyfe and Council of Trade Unions president Helen Kelly as co-chairs for the critical employment session proved to be a masterstroke.

Well before the summit, Kelly and Fyfe had nutted out a range of policy ideas that are enticingly pragmatic.

Key's decision to appoint Mark Weldon as summit chair also proved inspired, giving the talented NZX chief executive officer the opportunity to provoke other business leaders to be more creative in their thinking.

It is critical for confidence that this fellowship continues beyond yesterday's meeting.

Key's style is very different from Helen Clark's. He believes Clark resorted to window-dressing to disguise the fact her government did not get on with business.

The business luminaries who stacked the previous government's Growth and Innovation Advisory Board have received kiss-off letters as Key opts for direct involvement with commercial leaders.

But what the Government does also counts.

Business participants at the summit were clear that Key must keep his Government focused on what really matters: Ensuring New Zealand comes out of this tough period with policy settings that result in the economy being more internationally competitive - not the reverse.

This means corporate tax rates that incentivise investment to come here rather than chase it away - an issue which will become of increasing importance as Australia embarks on a radical reform of its business taxation platform.

It means getting a stronger focus on the agenda to reform Auckland into a "super city", rationalise its traditional infrastructures and incentivise foreign investment into establishing new infrastructures such as first-class broadband that will provide a platform for talented New Zealanders to run global businesses from home.

It also means ensuring that vital taxpayer dollars do not protect industries and jobs that are not truly competitive, and reclaiming New Zealand's reputation as a fair dealer for foreign investors after the previous government's arbitrary interventions on the Auckland International Airport takeover.

There will inevitably be more hard-nosed debate over the wisdom of borrowing offshore to fund a programme of broad-brush personal tax cuts that may simply result in a transfer of private debt on to the state's books and ultimately the credit-rating downgrade which will raise interest costs across the board.

Since Fyfe broke cover by publicly questioning whether the Government would get the best bang for the taxpayers' buck through personal tax cuts, Key has reinforced his determination to proceed with the April 1 cuts.

But it appears that his Government will now take another look at whether it should go ahead with the 2010 cuts or recast them in light of the straitened times.

In reality, the Government has little choice. It can cut a number of Labour's own expensive prior election bribes, like making student loans interest-free. But it must also protect the tax base. It is simply not credible to run fiscal deficits for 15 years and saddle future generations with a huge debt burden.

There are some upsides amongst the general uncertainty. Fears that New Zealand's major trading partners would go into a protectionist funk and erect shutters against our exporters now seem overblown - the problem is their consumers are not spending.

India has signalled its vast doors will open further to New Zealand exporters with the commencement of free trade negotiations. A free trade deal with Korea will also be launched on Tuesday after a summit between Key and visiting Korean president Lee Myung-bak.

Like Key, Lee is a former businessman. Also a former Mayor of Seoul, he drove ambitious reforms positioning the city as a world leader in e-government.

Lee's insights into how he transformed Seoul will be of immense interest to Key as he contemplates the forthcoming proposal to form Auckland into a "super city".

Korea is not just interested in bilateral trade, its companies also want be among the bidders for the $1.5 billion project to develop New Zealand's broadband.

When foreign companies are prepared to invest their valuable dollars in New Zealand's future, this should be taken as a positive for confidence.

- NZ Herald

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