Posts Tagged ‘Alan Bollard’

If Ireland can do it…

Catching Australia’s levels of income by 2025 is a toughie, but it can be done.

As the New Zealand Institute points out in a statement out today, Ireland has managed to get the levels of growth required.

But some like Reserve Bank Governor Alan Bollard have flagged it away as too hard.

The New Zealand Institute believes we are not going to get there on our present course – “the opportunities being floated are not bold enough.”

Ireland, the Institute points out “succeeded by the bold step of cutting corporate tax rates to 12.5% overall and 10% in some instances to attract foreign investment in technology based businesses”.

I think they also got a bit of European Union money, but basically when the country realised it was in the shit, it got its act together.

The former ‘beggar of Europe’s’ economic miracle was based on a number of interconnected measures, including consensus building and radical (or at least not business as usual) policies.

Anyone seen these around here.

Ireland’s Social Partnership was kicked off by a public finance crisis and I’m not sure that most New Zealanders see their country currently facing a crisis.

As well as cutting corporate taxes and public spending, Ireland invested heavily in ensuring the country became and remained internationally competitive.

So through a combination of planning, good timing and geographical good luck Ireland, in little more than a decade, went on to become one of Europe’s richest countries.

Though the country has become a bit unstuck by the Global Finnancial Crisis, it  is still cracking the whip. In its latest National Development Plan, Ireland plans to spend Euro184 billion (NZ$360 billion) between 2007 and 2013 on economic and social infrastructure.

Yeah, they also have a plan.

BTW – Ireland’s population is 4.5 million.

The New Zealand Institute’s solution for New Zealand is to focus on our savings and productivity gaps with Australia.

“Our initial estimates indicate that a substantial portion, around 40%, of the GDP per capita gap [between New Zealand and Australia] can be explained by two factors: differences in the capital intensity of the productive economy, and differences in innovation and business sophistication.”

New Zealand also lags Australia because:
• Australia has vigorous policies to promote savings
• Innovation has been systematically encouraged in Australia for around 30 years; here for only about 10 years.

“Surely the most promising way to close the gap is to go after opportunities like these,” the Institute says.

“Alan Bollard will be proved correct if we do not take the right bold steps soon. If Government is serious about closing the gap it needs to identify the policy changes that will make a big difference and tell a compelling story so they will be supported and adopted. Incremental change may be easier to sell and implement, but it will not be enough.”

Amen.