On the morning of the government’s “Jobs Summit”, Libertarianz leader Richard McGrath released his party’s suggestions on how the New Zealand economy could create more jobs, not just this year, but on a permanent basis.
“The best possible thing that could be done for the New Zealand economy would be to adopt all of our policies,” said Dr McGrath. These policies are set out on the party website at www.lp.org.nz. “However our statement is somewhat less ambitious, in that it focuses on setting out a small set of initiatives which Libertarianz believes could obtain wide cross-party support, even amongst those who do not agree with our underlying philosophy.”
These initiatives are presented in support of a guiding principle: “New Zealand – Open For Business”.
New Zealand has the following advantages which need to be capitalised on:
- The most beautiful country in the world
- Temperate climate
- Educated population
- Early adopters of new technology
- Very low levels of corruption
- Abundant fresh water
- Natural beauty
- Clean, green image
- Many recreational opportunities readily accessible to the population
The current world financial crisis creates an opportunity for New Zealand to benefit from these advantages and to position itself as a haven for innovation and entrepreneurship. We need to differentiate ourselves from the rest of the world as a place which is open to do business.
The economy, not government, needs to create businesses that can stand alone long term, rather than being propped up by a government stimulus package. All actions resulting from the summit should pass this test of long term economic sustainability.
The worst thing to do in a recession is to borrow and spend like crazy when all you are doing is to putting obligations on taxpayers when they can least afford it. This sucks resources out of the current economy, incurring debt to be paid by future taxpayers. Any short term jobs gain is more than outweighed by the long term negative consequences of increased debt and taxation.
New Zealand should be attracting high value, high skilled, wealthy, creative, and entrepreneurial people.
In recent times there has been an abundant supply of junk products, and easy credit has encouraged consumption. A market correction was overdue and is not something that can be avoided. The economy should be allowed to contract and prices should be allowed to drop down to a realistic level. Genuine competition will lead New Zealand out of the recession faster. The more government stimulus packages are put up, the harder it will be for companies to know that their products are genuinely in demand and to plan for the future. Corporate management effort should be focussed on providing better products for customers, rather than on lobbying for a greater share of government largesse.
There should be managed reductions in the size of the public sector because it diverts resources away from private sector. More jobs are destroyed in the private sector through regulations and taxes than the number of bureaucrats given jobs. The focus should be on an economy sustainable in the long term, not one reliant on stealing from future generations to fund artificial make-work.
The labour market needs to have more flexibility so it becomes easier for employers to take on more employees. The recently-implemented trial period for new employees is a very good policy initiative. However there are still a number of structural problems, in particular the minimum wage. This is making it harder for marginal workers to enter the workforce in order to obtain the work skills to advance to higher paying jobs as they gain experience.
The government should be providing tax breaks for businesses taking on apprentices. These employees are going to be the hardest to sustain during an economic downturn, but will be needed when the economy starts to recover. In many cases the alternative is to pay these people the unemployment benefit so it is better that they be doing some thing useful.
The Overseas Investment Commission is one body whose activities should be urgently reviewed. It stifles foreign investment at the time we need it the most. This is policy driven by xenophobia, a luxury we can no longer afford. The OIC should be suspended at least until the financial crisis is over.
New Zealand should position itself to become the Switzerland of the South Pacific given relative strength of our banking system. New Zealand is well resourced, and not that reliant on imports to run. This policy would require very tight controls on the government’s ability to print money so as to inspire confidence in the New Zealand currency. We should implement tougher sanctions on financial fraudsters. We need international confidence in New Zealand’s financial sector so transactions can be channelled through New Zealand. We should then put some effort into promotion of New Zealand’s image as a financially sound place to do business.
New Zealand needs to increase the certainty of regulatory actions so as to create a more stable environment for investment. For example of review of the Commerce Commission should be conducted at the same time as the announced review of the Electricity Commission. At the very least there should be a Merits Review process put in place for both of them.
The government should provide tax breaks for self-provision of health and education. This would encourage the creation of private sector jobs and reduce the current stresses on these parts of the public sector.
If University fees have to be free (with student loans which don’t have to be repaid if the graduate stays in NZ), then there should be very strict limits on the time that concession is available for. Differential funding between university study and trades training has created an over-supply of French Literature, Art History, and Classics graduates and an under-supply of tradespeople.
The government should encourage greater private sector input into university course design to ensure that courses are producing graduates with the skills employers want. However we should not have the private sector receiving government funding to provide courses – we run the risk of creating the wrong incentives. The private sector running its own courses without government funding would, of course, be welcomed.
Dr McGrath reiterated the Libertarianz Party’s belief that the best jobs are those which are market-driven, are not part of some short term quick-fix solution and that don’t burden generations to come with debt.
For more information contact:
Dr Richard McGrath
Phone: 027 322 2907
Email: [email protected]
Libertarianz: More Freedom, Less Government