KEY POINTS:
The Government's grand plan for lifting economic performance is commendable, but it must commit itself to bolder action to carry it out, says David Skilling of the New Zealand Institute.
Economic Development Minister Trevor Mallard yesterday released papers outlining the Government's economic transformation agenda.
He said the two papers were the first "indicative, detailed action plan around how we can secure New Zealand's future prosperity".
The plan has five themes. The first four are development of globally competitive firms, world-class infra-structure, innovative and productive workplaces and environmental sus-tainability.
The fifth is making Auckland "an internationally competitive city", something Mallard believes will be aided by the 2011 Rugby World Cup.
He said the economic transformation strategy would require require "sustained action over many years".
The Ministry of Economic Development had identified 50 critical issues and said the challenge would be to prioritise these so the economic transformation strategy would be focused.
Mallard said the strategy would have to be flexible, requiring constant adaptation as the global economy changed.
The challenge of lifting economic performance was to a large extent "one for business to seize", with most decisions that would make a difference coming from the boardrooms or the shop floor.
"They are the ones who drive innovation and internationalisation so there is a responsibility that goes both ways on this."
Skilling, chief executive of the New Zealand Institute think tank, said the Government's plan was positive.
"It suggests there is an active debate between ministers and officials and that augurs well."
However, the conversation had been going on for years, at least since the launch of the Growth and Innovation Framework in 2002.
"The $64 million question is what are we actually going to do?
"Are we going to take some bold actions around things like compulsory savings, investment in knowledge and innovation, investment in the tertiary education system and encouraging R&D spending in the private sector?
"There have been some sensible but modest steps, but I don't think they've been of sufficient magnitude to shift the needle in terms of our economic growth rate going forward. We need more than modest but sensible - we need some more ambitious investments and actions."
Business New Zealand chief executive Phil O'Reilly said the papers contained "a lot of nice words" but there was little new in the underlying work programmes.
He suggested other "trans-formational objectives" such as cutting the growth in Government spending, reforming the Resource Management Act and "treating business tax as a key tool for economic com-petitiveness".
Mallard also released the findings of a recent review of business assistance programmes yesterday.
The review found that the programmes were generally helping firms to be more competitive at home and abroad but assistance could be better targeted.
"The effectiveness of the programmes could be improved by better co-ordination of policies and strategies across Government agencies and particularly across New Zealand Trade and Enterprise," the review found.
O'Reilly said the review was likely to lead to somewhat better outcomes for business "but it will still be of marginal benefit to exporters overall".
He added: "In spending so much time and effort on the grants programme, the Government is in danger of not concentrating enough on some of the really good things it could be doing for exporters. These include services that all business can access and increasing grunt in offshore locations where exporters consistently say they want the most assistance."
