Brash puts Orewa '06 focus on economy

Don Brash

National leader Don Brash is revising his Orewa speech plans to make the economy a primary focus, amid mounting concern over the economic downturn.

Prime Minister Helen Clark - who chaired the first Cabinet meeting of the year yesterday - meanwhile moved to downplay the significance of 340 job losses and petrol price rises this week.

She acknowledged the long-forecast economic slowdown but called for perspective and said overall she was "very optimistic".

Both she and Finance Minister Michael Cullen said the Government would do all it could to help those who had lost jobs - but the pair came under heavy Opposition fire over their economic stewardship.

Dr Brash gives his annual Orewa address - his fourth - on Tuesday.

National has been wary of overplaying its significance, aware few topics are likely to generate the interest of the last two, which covered race relations and welfare. Dr Brash had intended to give a broadbrush speech highlighting a range of issues National would focus on this year.

But this week's job losses - a result of the high dollar - have boosted National's arsenal and he said yesterday he was considering a change.

His intention was still not to focus on a single issue "but I'm looking at giving a somewhat greater emphasis to the economy than was originally planned".

"The economy was certainly in the story initially, but I'm looking at giving it a somewhat different slant ... given the suddenness with which the companies are finding they have to lay off staff."

Helen Clark has already earmarked economic transformation as the most critical task facing the Government this year.

That's another reason Dr Brash is likely to want to stamp more authority on the debate, lest Labour capture the "economic transition" high ground.

Dr Brash blamed Labour's ideological blinkers for the economic downturn.

"Instead of growing the economy, by promoting increased productivity and high-value exports, Labour has set about redistributing what we already have. This is not a recipe for economic growth."

Hundreds had lost their jobs, more losses were predicted and business confidence was plummeting.

Helen Clark should take responsibility, he said.

Helen Clark said: "It's very important to be maintaining stability and certainty and predictability through what is a dip in the business cycle ... Treasury's forecasts on the current dip are that it would bottom out in the March 2007 year at 1.7 per cent annual growth."

Eight years ago a 1.7 growth rate "would have been grasped at with great gratitude ... but we have become used to growing somewhere upwards of 3.8 per cent over the last six years."

Unemployment was not forecast to return to "anything like it was when we came into government six years ago" and employers were still reporting labour shortages, she said.

"To put it into perspective, we are talking about 300 or so lay-offs in the last few days against a background of 264,000 new jobs created in the economy in the last six years." She was looking at the year ahead as one of those years where you needed to manage your way strategically through a dip in the business cycle "but I remain very optimistic about the longer term and the medium prospects for the economy".

Dr Cullen meanwhile took exception to National finance spokesman John Key's claims that the Finance Minister had poured cold water on hopes for business tax reforms.

Dr Cullen said the Government was "very focused on making meaningful changes to the business tax regime".