John Key and Michael Barnett: Financial values versus lifestyle

John Key and Michael Barnett

Opinion

Business has long pushed for New Zealand to set itself the goal of getting its per capita income into the top half of the OECD. Here, National Party finance spokesman John Key (left) and Auckland Chamber of Commerce chief executive Michael Barnett debate the merits of the objective. 

Dear John,

The goal of getting New Zealand into the top half of the OECD is inappropriate because all it measures is average per capita income.

Certainly we should be a nation that enjoys high and rising incomes, and we do.

But there are other, more appropriate, measures of New Zealand's high-quality lifestyle and attractiveness as a top place to live and work.

They include our pre-eminent "clean, green and safe" outdoor environment with its world-class water, air, beaches, bush and mountains.

An economic vision for a nation like New Zealand based around some obtuse "per capita" statistical measure fails to connect with New Zealanders.

It does not compel a call to action and neither does it arouse the passions.

It is worth noting that the many migrants seeking to settle in New Zealand, and New Zealanders looking to return from countries that are in the top half of the OECD, are attracted here not by our per capita income, but by our relaxed but high-quality lifestyle.

If the OECD measure embraced qualities that relate to a world of changing values, New Zealand would be tops.

It doesn't and, therefore, lacks relevance as a yardstick for measuring the heart and pulse of our nation's success.

Regards, Michael

* * *

Dear Michael,

Getting New Zealand incomes back into the top half of the OECD should not be seen as some grand objective - it should be considered a bare minimum requirement for building a successful, modern society. Of course, income growth is not the full picture - incomes are just the measure of production and there are plenty of other factors of great importance to us all: the environment, the quality of our social institutions, the safety and security of our communities as reflected in the rule of law, a sense of shared values.

There is a terrible defeatism in dismissing our ability to make up the ground lost over the past 50 years.

Yet the recipe is quite simple.

We put up with far too many things which keep New Zealanders poorer than they should be and that is why so many leave.

That some return later to enjoy the environment, having made their money overseas, is no recommendation for the path we are on.

We must be more than a pleasant retirement village and tourist destination.

We keep ourselves poor by over-regulating ourselves, by putting up with absurd planning consent processes that slow investment (roads, factories), and by over-taxing working New Zealanders.

For everything government does, the key question is: will this encourage or slow productivity growth?

Regards, John

* * *

John,

Given we agree that getting New Zealand back into the top half of the OECD is an inappropriate grand economic vision for a nation of our type and character, the ground for the debate shifts to what that goal should be.

Clearly, to dismiss our ability to do a better job in building our nation than we have over the past 50 years would be defeatist, but this has nothing to do with the appropriateness of the OECD goal.

How we achieve our national goal requires that we know what it is.

Another persuasive reason why it is inappropriate to set a goal of getting back into the top half of the OECD, relates to the international numbers game.

As more, relatively poor, countries formed from the break-up of the Soviet Union join the European Union and OECD, it is possible that New Zealand will get back in the top half for reasons that have nothing to do with our own nation's economic performance.

Regards, Michael

* * *

Michael,

Sorry, but your response reeks of defeatism.

And it is burdened with an implicit assumption that rising incomes are somehow incompatible with environmental and civic values - and that is simply wrong.

Wealthier countries can afford to spend more on their environment and they do.

Poorer countries can't afford to and, because they have other pressing priorities, they don't.

Wealthier countries can afford better healthcare, better public and private infrastructure, and better amenities for their communities.

This is not about having a grand economic and social vision - that way of thinking is a throwback to central planning views of the world, and is a hopelessly inadequate way of thinking about the future.

It appeals only to politicians who want to talk the talk and nothing more.

The notion of us catching up, in per capita income terms, with the better performing industrialised countries is a useful shorthand way of providing a measurable target.

Put it this way: when in doubt, follow the footsteps.

We continue to suffer a significant brain drain. A growing number of New Zealanders grow frustrated with living in a low-wage economy - think of all the Kiwi teachers in London.

One million Kiwis no longer call New Zealand home.

It doesn't need to be this way.

Regards, John

* * *

John,

You have agreed that it is inappropriate to set a grand objective of getting New Zealand into the top half of the OECD, but fail to clearly spell out what our nation's ultimate goal should be.

My attempt to articulate the new values of New Zealanders who are seeking a high-quality lifestyle in a quality environment should not be interpreted as defeatism. Quite the opposite.

Our ultimate goal for New Zealand is clearly not just about the income we enjoy, but ensuring we secure a world-class quality of life for all New Zealanders measured in many factors: clean and green environment, growth rates that keep pace with our major trading partners, high literacy and numeric skills, an education system that enables world-class tertiary and trade qualifications, as well as high and rising incomes among developed countries.

Your notion of us just adopting a measure of catching up in per capita income terms with the better performing economies is inadequate and simplistic.

As a goal it fails to capture and measure all the values New Zealanders hold dearly in wanting to build a stronger economy.

In fact, if you take into account the progress we are making to create a "number one" quality of life in the full package of values I have proposed, over time we will improve our low-wage economy status among developed countries - trends confirm it is happening.

Don't confuse the debate by focusing on the consequences of the wrong goal.

Help to identify what the right goal is and its consequences.

Regards, Michael

* * *

Michael,

I think you are missing my point that the idea of a "grand objective" for the nation leaves me cold.

People have objectives, not nations.

Some people want to work hard and retire young; others to pace themselves and engage in other social, sporting or cultural activities consistent with their idea of the good life.

Some are little concerned with a high income and want to live a quiet life creating a rural haven for themselves; plenty of others could think of nothing worse. Some love the city, others the country; some the beach, others the bush.

That we have created a nation that allows us all to pursue these different goals, and to do so with minimal interference, each with the other, is a huge achievement.
Your list of the desirable non-economic things in life is a list nobody could quibble with.

But lists are easy - we may as well add motherhood and apple pie.

But when we look at our performance in delivering adequate paying jobs, a reasonable starting point is how we measure up internationally.

We all need to make a living and work is central to most of our lives. We would rather work for more than less.

When we have caregivers looking after our elderly, getting paid only $9.80 an hour, I make no apology for focusing on what we need to do to lift the market incomes of all New Zealanders.

Regards, John