Government urged to balance growth with social goals

Four out of five of the business leaders polled think the Government needs to balance faster economic growth with social and environmental goals.

Almost all of the rest see faster growth as the Government's main responsibility; only 12 per cent cite social goals.

Their biggest concern about the Government environment is the level and effectiveness of Government spending, with tax rates a close second.

But they think the Government environment is a less important factor in achieving economic growth than a long list of other things: skills and productivity, investment, innovation and entrepreneurship and infrastructure.

Several added immigration and encouraging expatriates to return to that list, as well as improved international relationships especially with Australia and the United States.

One Auckland investment banker said: "We have already missed too many opportunities by not following through on and completing the reforms of the 1980s and 1990s. Today we face the consequences: lowered prosperity, particularly compared with Australia, underperforming lower decile schools, crumbling infrastructure and a tax system that discourages innovation and growth."

An electoral system which prevents bold decisive action does not help either, he added.

"We have got to tackle the disincentives to investment: tax, the Resource Management Act and sub-optimal infrastructure. We need better education and enhanced security in an uncertain world and an increasingly unstable region."

Another said: "New Zealand's manufacturing cost structure is getting less and less competitive. There will be a major correction in this sector," adding a plea for "understanding by officials and policy makers of what it takes to be competitive in the international environment".

It may be off the agenda as far as the election is concerned, but currency union with Australia has strong support among respondents to the mood of the boardroom survey.

The kiwi has been above the historical pain threshold of A90c for almost all of thee past year.

Asked whether New Zealand should seek to adopt a common currency with Australia if there is a net economic benefit to New Zealand, 62 per cent said yes, 31 per cent no and 8 per cent were unsure.

Respondents were split between doing it by adopting the Aussie dollar or having a combined Anzac dollar. Eight per cent held out somewhat quixotically for having the kiwi dollar as the combined currency.

This is stronger support than the 60 per cent backing a common currency in a mid-year poll by Business New Zealand.

Of the political parties, Labour, New Zealand First, the Greens, the Progressives and the Maori Party all oppose currency union.

United Future says yes, but only if the net economic benefit to New Zealand is clear. Act is open to the idea but notes that it would mean giving away having our own monetary policy to manage inflation.

National says it has no firm policy on this but wants the idea explored.

Back when the issue was widely debated in 1999/2000, Don Brash, then Governor of the Reserve bank, was on the unenthusiastic side and equivocal about the idea.

It would reduce transaction costs and reduce uncertainty for companies trading with Australia, but it would not stop the big swings in other exchange rates, he said.

And it would mean interest rates that were chosen for conditions across the Tasman. "It may well be that that would suit us extremely well, but conversely it may be that it would not suit us at all well."

Just over half of the business leaders surveyed favoured the sale of state-owned assets. The rest were almost evenly divided between those opposed and those unsure.

One or more of the state-owned electricity generator/retailers featured most often among those who stated a preference for which assets should go.

Coal miner Solid Energy - a "high risk export business" in the words of one respondent - was cited by several, along with TVNZ, Air New Zealand and Landcorp.

A couple of respondents favoured partial privatisation, along the lines of recently listed electricity and gas distributor Vector.

"There is major shortage of good investment opportunities for New Zealanders in sound, well-run major New Zealand businesses," one said.

"A less than controlling interest in many SOEs could be listed with real benefits to New Zealand - more accountability and transparency of management and governance, price discovery and less possibility of Government intervention."

Two advocated the privatisation of the Accident Compensation Corporation.

Labour, New Zealand First, the Greens, the Progressives and the Maori Party all oppose any asset sales.

National says some Landcorp farms could go and talks of a possible private sector partner for Solid Energy.

Act would review all SOE holdings with a view to sale while United Future would seek to sell minority stakes in some (but not national grid operator Transpower).