Current government policies show no sign of delivering the growth rates New Zealand needs to close the large income gap with Australia, according to the second report of the 2025 Taskforce.Like someone needed to be told this? The NBR article continues,
The broad recommendations - in what is a very in depth and detailed document – are:The NBR reports Don Brash as saying,
• Cutting both government spending and tax rates
• Government withdrawal from most commercial activity to allow the private sector to drive value for money and innovation in those areas – including health and education services
• Proper cost-benefit analyses of government infrastructure projects
• More focused research and development in the public and private sector, including better governance of research and development in tertiary institutions and full contestability for government research and development funding
• Better quality regulation - more “fundamental review” of the Resource Management Act, restoration of the youth minimum wage, and a less restrictive hazardous substances and new organisms regime.
• More openness to foreign investment
• Better processes for scrutiny of regulations along the lines of the Regulatory Responsibility Bill.
"We were criticised last year for saying that smaller government was essential to closing the gap, but we stand by that statement. International evidence provides no reason to believe we can close the gap without significantly reducing the share of government spending in the economy, allowing tax rates to be lowered further. The state should withdraw from commercial activity to allow the private sector wider scope to generate the high levels of growth that are needed"That isn't saying much, I think most economists would basically agree that the government is involved in areas where it shouldn't be and reducing the government's business footprint and size in general would help simulate growth. The other points noted above also don't look all that radical. But the government will nevertheless ignore the report.
The 2025 Taskforce report is available here.