Monday, December 8, 2008

New Zealand's "Decade of Missed Opportunities" - Speech From Throne

In the Speech from the Throne delivered by Governor-General Anand Satyanand following the opening of Parliament, New Zealand's incoming Prime Minister John Key portrayed the past decade as one of "missed opportunities" in which the country's productivity and economic growth had languished.

Against the backdrop of the global economic recession, the National government will introduce a series of personal income tax cuts in 2010 and 2011 that will result in 80 percent of taxpayers only paying 20c on each additional dollar of income earned, according to Mr Key. The government will also accelerate investment in infrastructure including a school building programme to "21st century" standards. Educational standards will be strengthened and apprenticeship and other youth training programmes expanded.

In two policy areas the new National government looks likely to dredge up some old political memories. The government, following its election policy, will change the Resource Management Act to "streamline" and give priority to projects deemed of national (or National?) importance. Those with long memories, or a good knowledge of political history, will note the parallels to the Muldoon goverment's "fast tracking" of projects asserted to be of national importance in the late 1970s and early 1980s.

And in a second, historically jarring chord, the new National government will direct that at least 40 percent of New Zealand's superannuation fund is to be invested in New Zealand-based assets. In the 1975 general election campaign the same political party funded a TV ad that implied such a policy was favoured by the Labour government (incorrectly) and that the consequence would be Soviet-style communism - with cartoon Cossacks dancing across the screen. (Politicians have never been interested in historical truth - the Cossacks were staunch opponents of the Bolsheviks).

You can see the Dancing Cossacks here.

Now National appears to have come full circle and are prepared to socialize a large part of New Zealand's economy over time with the Money Manager State Capitalism of the Superannuation Fund. Die-hard, free market National supporters should be concerned about it as their forebears were in 1975. For those to the left of center, National is setting up a useful policy tool for the state to guide asset management and investment in 3 years time.

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