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Welcome Back! Let's start with "The National Party’s Obsolete Policy Vision"

It's good to have you back for this new year. As the NZ mainstream media becomes more insistent on pushing certain "narratives", its ownership becomes more heavily concentrated and its reliance on public funding rises, the need for independent commentary would seem more pressing than ever.


Yesterday the National Business Review featured my monthly column, which has now become one of their most popular and heavily commented articles. You can read it here, https://www.nbr.co.nz/node/233051, or below. Interestingly, although one may expect Business Review readers to be prickly about a column that argues it's hard to know what on the earth the Nats stand for, the comments have been hugely positive. Seems even the Nats own supporters find its' vision for the future dated and stale!


The National Party’s Obsolete Policy Vision

OPINION: Chris Luxon should start marketing an ‘inclusive prosperity’ for wider appeal. Upon being elected leader of the National Party, Chris Luxon said he wanted to put the focus onto improving productivity. He told the NBR how Kiwis are among some of the hardest working people in the world, “yet we don’t have high levels of income”. Luxon added that “we need to work much smarter”.

The Productivity Commission concurs. It also believes Kiwis need to work “smarter not harder”. Ironically, these views lie starkly at odds with the National Party’s own official ‘policy vision’ that seeks to “empower you to work hard”. What a mess.

The issue of productivity growth is all the more embarrassing for National since it averaged close to zero during the eight years of former Prime Minister John Key’s reign. In those times, GDP was driven by piling in more backpacker tourists, huge increases in immigration, and ballooning construction led by the Nats' faltering efforts to rebuild Christchurch. That’s not my view, but comes from a Reserve Bank analysis presented in speeches by former Governor Graeme Wheeler.

One can't let the experts, academics and think-tanks of this world off the hook either. Both here and abroad most of these types have been unable to provide us with a clear explanation as to why productivity growth is so low in NZ, nor why it has been slowing in many Western countries. National's ‘need to work smarter’ is just a slogan, not a solution.

Worse still, productivity is a word that doesn’t much resonate with the public. It’s impersonal. Who wants to get into definitions of ‘labour productivity’ and ‘total factor productivity’ aside from techy economists? By contrast, ‘wellbeing’, which is often used to describe the government’s agenda, is top of people’s concerns. It’s a word to which we all can relate. Each of us has expert knowledge about our own experience of wellbeing since feelings are intensely personal.

‘Productivity’ not a positive word to workers To most workers, a productivity drive by the boss usually means redundancies are likely, stoking fear and trepidation. These days, speeches on productivity open one up to being branded cold, unkind, neo-liberal, a capitalist, and a free-market zealot determined to ratchet up production without caring about human, social and environmental consequences. Who needs these labels? Why give away the moral high ground?

As a consequence, a reversion by National Party MPs to the same kinds of speeches as presented by the old Business Roundtable executive director Roger Kerr, delivered decades ago, is likely to be a mistake in the run-up to our next election. The present leader of National has already risked the headline: “Luxon Laments Productivity”, a photocopy of the headline, “Kerr Laments Productivity” from times gone by.

What’s more, many nations, including the UK and US, have seen large increases in material living standards over the past several decades without experiencing increases in self-reported measures of wellbeing, such as satisfaction with one’s life. Most striking of all, the spectacular four-fold rise in consumption per capita in China during its 1990 to 2010 growth boom was accompanied by falling levels of happiness. These findings are known as the Easterlin Paradox.

One reason may be that non-material aspects of people’s lives matter immensely. And when it comes to valuing things such as lifestyle, work-life balance, the great outdoors, whanau, and social cohesion, Kiwis are near top of the cultural charts.

These comments are not meant to diminish concern for New Zealand’s abysmal productivity performance going back to the early 1970s. Countries with higher GDP per capita can buy a wider variety of goods and services with all of their accompanying conveniences and pleasures.

Why high productivity is important But it doesn’t end there. Richer countries have more resources to devote to healthcare and nutrition. For these kinds of reasons, they tend to have better health indicators than poorer countries. Their citizens can enjoy less physically demanding and more interesting work, higher levels of education and a galaxy of opportunities denied to many of those in countries with low levels of GDP per capita. As a result, economists believe that high productivity is important.

So, in terms of a political vision for the right in New Zealand, where does this leave us? Wellbeing is a worthy goal for a nation. It has helped Labour pitch its policies. The Nats should concede that such a goal has merit, rather than belittling it, as they have been doing. A better focus would be on how Labour appears to have neither the competency nor ideological flexibility to develop policies that deliver higher wellbeing.

But more is needed. In order to re-take the moral high ground, opposition parties need to define their own overriding economic and social objective, since they can’t simply steal their competitor’s highly successful ‘wellbeing’ catch-phrase. High productivity does not qualify as such an objective. It is only a means to an end, not an end in itself.

On this note, a vision such as ‘inclusive prosperity’ may now be more advisable for a party such as National, at least compared with its present one of a “strong and growing economy” that enables the people “to work hard”. That sounds more like something that would have got Queen Victoria excited in 1850 during the industrial revolution.

Certainly, Labour has not achieved inclusive prosperity. It has sowed division. Wealth inequality has soared. Non-homeowners have been left behind. Others have over-paid for their homes due to the Reserve Bank’s quantitative easing programme. They’re about to see steep rises in mortgage rates. That programme has introduced a stealth tax called inflation. The cost of living is exploding.

Even the leftist Guardian newspaper in the UK reports: “NZ’s pandemic policies pushed 18,000 children into poverty”. A high-risk one-size-fits-all model of health service provision, which disregards diversity, rules the roost. An ideologically driven education system has become intolerant to alternative views.

Take ownership So, the time has come for the opposition to take ownership of issues such as inequality, mental health, and sustainable development under its own banner. It’s practically a requirement given how this government has now revealed itself to be a one trick (Covid) pony.

Nevertheless, Labour – with its sophisticated PR, comms, and marketing machine – has still managed to outdo its political competitors, aided by cleverly crafted appeals to ‘wellbeing’, quietly guided by the likes of Nobel Laureate Jo Stiglitz.

The opposition’s need to formally adopt its own freshly-worded, contemporary objective may seem like a trivial exercise in semantics, but it is not. It sets the tone. It is important. The contenders to replace our PM in 2023 could start by dumping old-style speeches about ‘productivity’. Outlining new ways of delivering an ‘inclusive prosperity’, in which we can all equally participate, has far wider appeal.