By VERNON SMALL, deputy political editor
The Government has floated the prospect of a "social compact" with business and the union movement to boost economic growth.
Finance Minister Michael Cullen surprised the finance and expenditure committee yesterday by revealing he had discussed the possibility at a meeting of the pivotal cabinet business
committee. He said it would be the next key area for Government discussion and action.
His comments evoked memories of the last days of the 1984-90 Government when Labour Prime Minister Mike Moore tried to persuade unions to moderate wage claims in exchange for social policy gains.
But a spokesman later downplayed the significance of Dr Cullen's comments, saying the story "has been given much longer legs than it deserves to show in public".
Council of Trade Union President Ross Wilson and Business New Zealand executive director Anne Knowles said their organisations had had no discussions with the Government on a social compact.
The Government has set itself a goal of lifting sustainable growth from the present 3 per cent to 4 per cent within five years.
Dr Cullen told the committee that countries such as Ireland which had succeeded in lifting sustainable growth had such agreements.
"They have nearly always had at the core of their success in terms of lifting productivity some form of social compact between the key stakeholders: Government, business and organised labour."
His spokesman said a social compact could look at how to help improve the key economic drivers; human capital, new inward investment, exporting, infrastructure and raising productivity.
Other compacts, involving mechanisms such as wage freezes, were struck in a time of economic crisis.
"The context of this one is that we are evolving it at a time of good economic performance, and the aim is to lift economic performance to a higher plane."
New Zealand had very decentralised wage bargaining, so a wage trade-off was unlikely.
But it might be possible to discuss skill development, work practices and linking bargaining much more closely to increased productivity.
He said the Cabinet had held an opening discussion and work would be commissioned from officials.
