Editorial: Government has missed the wave

Tthe Government came to power more than two years ago looking for a new approach to an old economic problem. The free market, it said, had failed to generate investment in the high-value exports the country needed in order to have a first-class living standard. Labour would not return to the prescriptive policies of pre-1984 or to the microeconomic neutrality that followed. It believed in "smart intervention" in partnership with business, not exactly picking winners but broadly helping the sectors that gave most promise.

The theory always looked likely to fall between two stools, and so it is proving. The Government is entering its third year and on the evidence of the Prime Minister's presentation to Parliament yesterday it is no closer to a coherent strategy than it has ever been. Releasing the results of interminable studies on economic transformation, she had little to announced that did not amount to further studies.

The "growth and innovation framework" she outlined began with a good, difficult, measurable target - to raise New Zealanders per capita incomes into the top half of the OECD table. But it avoided a commitment to do so within a stated time. Without that, it is practically worthless.

When it came to ideas for enhancing innovation, there was little beyond the modest improvement already made to taxation of company research and development, some inconclusive strategies for tertiary education, and the sort of low-budget corporate advice and assistance programmes that never entirely disappeared under previous Governments. Beyond that, "new initiatives will be developed", the Prime Minister said.

Likewise, "more work will be done," she said, to increase the country's attraction to foreign investment, improve its branding and promote its exports. Had it not been for Trade New Zealand's proposal to establish premises "beachheads" for exporters to use in foreign markets, yesterday's presentation would have been devoid of a concrete new idea.

The gap between the Government's rhetoric and reality is becoming clearer by the year. "Smart intervention" is turning out to mean the kind of non-selective, general seeding policies that are no more than the state's rightful role.

The Government had four agencies independently thinking about which activities to support and all came to a similar conclusion: the state should chose activities that have an impact on others across the board.

So, the Prime Minister said, the Government had decided to focus on three key areas: biotechnology, information and communications technology and creative industries.

Didn't we hear that two years ago? And hasn't an advisory council of public and private sector representatives been meeting in Premier House frequently since to put some practical flesh on those bones? Apparently not, because now "the Government will be moving to establish joint public-private sector task- forces to identify the strategic opportunities in these areas ... "

Besides those committees, a new advisory board is to be set up consisting mainly of trade union and private-sector appointees to monitor progress and suggest initiatives. That is about the extent of progress reported yesterday. All Governments are prone to use committees as a substitute for action but this one seems to positively relish them. Its leading members are accustomed to academic lecture rooms and seminars. They are turning out to be talkers, not doers.

Except when it comes to the Council of Trade Unions' agenda. The Government has been moved to action on everything from accident compensation and industrial relations legislation to employers' liability for stress and holiday penal rates. It has set its face against lower tax rates, streamlining resource management procedures and much else that it might do to genuinely improve prospects for growth.

Each time a growth strategy is to appear it turns out to be another discussion group. At a time the country needs clear economic direction, the Government is letting it down.

Read the full reports:

Government of New Zealand

Growing an innovative New Zealand

Part 2

Herald features

Catching the knowledge wave

Global Kiwis

Proud to be a Kiwi

Our turn

The jobs challenge