New Zealand's been in economic decline for decades…
… but never mind, we’re good at rugby and it’s a great place to bring up kids.
It’s a good point, except that hundreds of thousands of those kids are brought up in Australia.
New Zealand’s economic goose has been gradually cooked by half a century of poor political decisions and short-sighted economic policies. Sadly, like the proverbial frog in the slowly heating pot, most New Zealanders aren’t yet aware of the seriousness of the problem.
We’re teetering on the brink of third world status.
Consider:
- In 1900 we had the highest per capita income in the world. By the 1950s we were still in the top 4 or 5. We’re now about 45th and we’re still sinking.
- On current trends we’ll be overtaken by Botswana and Kazakhstan by 2025.
- 20% of New Zealanders—1,000,000 Kiwis—live in other countries. So tens of thousands of Kiwi grandparents never see their grand-children. Most families have sons and daughters, brothers and sisters, living in Australia and elsewhere. They’re there because that’s where they’re richer.
- Each person in Luxembourg produces 2.5 times more wealth than each New Zealander, despite the fact that we work longer hours. They’re far less well endowed with natural and human resources than we are.
- Many communities in New Zealand can no longer attract medical staff. Those that can, have to accept doctors for whom English is a second language. We accept the payment of multi-million dollar packages to the heads of Telecom and Westpac but we simply don’t have enough in the kitty to pay doctors, nurses, teachers, engineers and tradesmen the salaries they expect from a First World economy.
- Since the 2008 election we have fallen further behind Australia. By a lot.
- So far, nothing has been done to halt the decline.
- Our parliamentary democracy has turned into a 3-yearly bidding war. The winner is the party or coalition that offers the biggest bribe to an ill-informed and short-sighted electorate. Unfortunately, we don’t have the money to pay for those bribes so student loans must be paid out from funds that should go to health, education, defence and R&D.
- Our education budget is funding our best and brightest to build Australia, leaving an ever-dwindling proportion of productive people to generate the wealth to pay the piper.
The good news?
There isn’t much of it.
- We could fix this problem—perhaps within 5 or 6 years—if we got stuck in.
- We have the natural resources and the talent required.
- We know what needs to be done to halt and to eventually reverse the decline.
We’re not doing any of that.
The leaders of the current government and the previous government are fully aware of the mess we’re in. They choose to turn a blind eye. They’re doing alright. Even without their subsidized jet-setting, as long as they con us into giving them three terms in Parliament they retire on a very nice package. (I remember an occasion many years ago when they increased their own retirement benefits within weeks of reducing mine.)
Prominent people in the media and business are aware of the problem but most of them are doing little to spread the message. It’s easier to move your business overseas than it is to stay here and deal with a broken system.
One exception is Professor Paul Callaghan, a world-renowned scientist, a top academic and a high tech entrepreneur. He’s worked to spread the message but it’s not being heeded. Please set aside an hour to watch his presentation here. It will disturb you and if it motivates you to demand change it could change your life.
“So what?” I hear you cry,
“New Zealand is still a great place to live, and what’s more we’re near the top of the rankings in the Great Happiness Index.”
Depends upon whom you ask. Nigeria, Nepal and Vanuatu have come top of various such indices I’ve seen. The average New Zealander wouldn’t find life in any of those countries totally appealing. New Zealand is still a good place to live, but relative to other countries that compete for our people we’ve fallen behind and the decline continues unabated. If it continues for much longer, we won’t remain at the top of any list for long—except perhaps the list of countries in steepest decline.
Next we’ll consider the direct tangible effects of our poor performance on your health and happiness.
{ 13 comments… read them below or add one }
Thank you for posting the link to the video by Professor Callaghan. It was very very good.
So, can you offer any solutions to the problems posed?
Good question Zac. If you read the pages following this one you’ll find some indication of the direction we need to follow but so far I haven’t proposed any specific solutions. I haven’t been able to arouse much outrage, even amongst my own family, about our disgraceful performance so I’ve had this project on hold while I get on with life. My house needs painting.
The solutions are in our hands. We need government which will address our problems rather than pandering to factional interests in a perpetual cycle of 3-year election bribes. We need to worry about what’s right and wrong instead of what’s right and left. We need politicians with courage. I fear that our party political system has run its course and that we should be looking for a form of direct representation. This applies across the Western World. Look at what’s happening in Europe, look at the U-turn Obama has made – from “Yes we can” he’s resorted to reversing most of his pledges and restoring the thieves of Wall Street to even higher levels of usury and pillage.
We’re on the verge of economic meltdown (not to mention environmental collapse) and everyone’s pretending that it’s business as usual.
Anyone with any knowledge of economics, accounting or even basic arithmetic can work out that what the present parties are offering is self-serving, short-term thinking and utter nonsense. We need to raise the retirement age, we need to introduce capital gains tax, we need to fix education, encourage R&D and high tech industry. We need a means of training entrepreneurs in marketing, we need to fix the student loans and Working for Families mess.
We need to teach economics and theory of government to our Secondary Schoolchildren.
I’m working on it.
Watch this space.
Good question Zac. If you read the pages following this one you’ll find some indication of the direction we need to follow but so far I haven’t proposed any specific solutions. I haven’t been able to arouse much outrage, even amongst my own family, about our disgraceful performance so I’ve had this project on hold while I get on with life. My house needs painting.
The solutions are in our hands. We need government which will address our problems rather than pandering to factional interests in a perpetual cycle of 3-year election bribes. We need to worry about what’s right and wrong instead of what’s right and left. We need politicians with courage. I fear that our party political system has run its course and that we should be looking for a form of direct representation. This applies across the Western World. Look at what’s happening in Europe, look at the U-turn Obama has made – from “Yes we can” he’s resorted to reversing most of his pledges and restoring the thieves of Wall Street to even higher levels of usury and pillage.
We’re on the verge of economic meltdown (not to mention environmental collapse) and everyone’s pretending that it’s business as usual.
Anyone with any knowledge of economics, accounting or even basic arithmetic can work out that what the present parties are offering is self-serving, short-term thinking and utter nonsense. We need to raise the retirement age, we need to introduce capital gains tax, we need to fix education, encourage R&D and high tech industry. We need a means of training entrepreneurs in marketing, we need to fix the student loans and Working for Families mess.
We need to teach economics and theory of government to our Secondary Schoolchildren.
I’m working on it.
Watch this space.
well, I see that situation is getting worth (I think you meant worse: Ed) but NZ manages to stay in the list of the best countries to live!
There’s no doubt that it is one of the best places to live—maybe the best—and it gets better over time, but other countries are continually catching up and passing us so our best and brightest move on to greener pastures. We spend hard-earned dollars educating our young people to build Australia.
There’s no doubt that it is one of the best places to live—maybe the best—and it gets better over time, but other countries are continually catching up and passing us so our best and brightest move on to greener pastures. We spend hard-earned dollars educating our young people to build Australia.
On current trends we’ll be overtaken by Botswana and Kazakhstan by 2025.
Pretty bold statement to make and not backup with any statistics….
You’re correct James, I should have provided a source: Paul Newfield from Morrison & Co. did the sums. See my post here.
I am from Australia. And you are dead on the money with regards to the brain drain issue.
Many resident Kiwis that I talk to – and yes, they are everywhere – tell me that New Zealand is a great place. I don’t disagree with them. But I do wonder: why, then, are you living in Australia?
Unfortunately, New Zealand *is* training up their best and brightest to then come over and build Australia, leaving you guys with nothing but an over-representation of ghettos (I’m told). I don’t mean this in a “ha ha, we’re better than you” kind of way; I don’t really think it’s right.
It’s a complex problem. In an age where cheap flights are abundant and you could virtually day-trip to the other country, it’s somewhat unavoidable that NZ is stuck in Australia’s shadow. It’s not unique to our situation – smaller countries always seem to struggle to keep up with the economies of their larger neighbours, and then as a gap develops people “chase the money” which just makes the problem worse over time. You can’t change the geography, however you can try and stop it becoming (more of) a problem. I would suggest more careful economic regulation, however that seems to be a dirty word in NZ.
Actually, I think the best thing that can be done for NZ’s future (as an outsider) is to change visa arrangements. Most of the brain drain is to Australia. And this is made easy, even encouraged, by the reciprocal arrangements that mean you can come and go from either country whenever you like, for however long you like, for whatever reason you like. As long as you have a passport and haven’t been locked up for years, the two are literally interchangeable – it’s that easy.
This sounds great to me – just by being a citizen of Australia I am also (in a roundabout way) a permanent resident of New Zealand! Awesome.
However, this was a poor outcome for NZ as it completely removed any barrier to work and live across the Tasman. As soon as Kiwis can make more money here, they will come and things can only really go downhill from there. It would happen if things were the other way around, too, but the larger economy tends to be at an advantage in these kinds of arrangements and whoever allowed it on the NZ side (not sure exactly when this happened) must’ve known they were getting a raw deal. Grossly short-sighted, and grossly in need of repealing (or at least modifying) to ensure prosperity remains in NZ. Despite our rivalries, we don’t really want to see you guys turn into a third world country…
Thanks for that Michael. I don’t believe that legislating to stop people buggering off is going to solve anything. For nearly 200 years there’s been a constant ebb and flow of people across the Tasman both ways. For much of that time it was in New Zealand’s favour. Only in the last 30 years or so has it become a big problem for New Zealand and that’s happened because we’ve allowed ourselves to become a low wage economy. You can’t flourish economically when your biggest earners are agriculture and tourism, neither of which produce high wage jobs.
We’ve allowed our per capita GDP to fall from #1 in the world to about #40 and falling (see this page). There are many examples of small countries doing very well even though they’re dwarfed by their neighbours: Denmark, Singapore, Liechtenstein and Luxembourg for example.
We have lost the plot. Successive governments and political parties have cynically indulged in short-term thinking and bribing ill-informed voters with destructive policies. I believe that the answer lies in educating the public so that they have a far greater understanding of economics and can see why most political promises are abject nonsense.
Unfortunately, that raising of public awareness is unlikely to happen, the 1% have control of the media and they’re doing OK with the status quo. John Key has convinced the ignorant voters that he’s on the ball when in fact he has no vision. His plan is “JK for PM” and nothing more. The other crowd are no better.
The lack of understanding of where we are and where we’re going was highlighted in a “Campbell Live” poll where 60% of respondents said we didn’t need to raise the retirement age. It’s mind-boggling.
Excellent material, Alan. And yes, I concur with you 101% aboutan ill-informed, short-sighted electorate (commonly referred to as Low Information Voters).
Isn’t it ironic that NZ once had school milk, stated i n 1937, and then abandoned in 1967 – it was no longer needed. Society was relatively affluent. The state provided free education, healthcare, and housing, and we paid our way in the world.
School milk is now a comeback.
And Bryan Bruce’s excellent doco on child poverty sheeted home the reality of New Zealand in 2011AD.
If our grandparents fifty years ago had foreseen our current state, they would be apalled and angry. All there hard work – down the gurglar.
I agree that politicians have been abysmal at working for the benefit of this country. And worse still, the voters have allowed them to get away with it.
One of the very first instances of voters’ short-sighted decision-making was voting for Muldoon in 1975, who promptly dismantled the previous Labour govvernment’s superannuation savings scheme.
Had that scheme been allowed to run it’s course, we would probably be wealthier than our Aussie cuzzies by now (who started their scheme around 1991/92.) We would be self-reliant in investment capital, rather than having to borrow from overseas banks.
We wouldn’t be selling our assets to pay for maintenance on our schools and hospitals.
And New Zealanders could afford to buy their own farms.
But instead, we voted against a savings scheme; we have poor funds for investment; we borrow heavily for speculative activities like rental properties; we don’t invest in R&D and industry; we gave ourselves six tax-cuts since 1986; and we introduced Teriary fees in 1992, because cutting taxes meant we couldn’t afford free education anymore.
Did New Zealanders vote to stop any of this? No. We voted for more of the same; tax cuts and vague promises from New Right ideologues on “trickle down” of wealth. There’s been a “trickle down” alright – but it ain’t wealth.
Just recently, a Capital Gains Tax was proposed. The pundits all agreed that it was an idea whose time had come. But NZers voted against it. It seems they’d rather have a government that continues to borrow $380 million a week instead.
New Zealanders said they didn’t want our state assets sold. I think most people understand that the share will simply end up in the hands of the wealthiest. Ordinary mums & dads struggle to pay their power bills – much less buy part of their local electricity supplier.
So did voters vote against the Party that offered asset sales? No, one million people voted for it. So much for opposing asset sales.
Funny thing… no one is doing this to us. We’re doing it to ourselves. Whether it’s massive borrwing from overseas because we want a First World society but don’t want to pay for it – or lumping User Pays and higher house prices on succeeding generations – no wonder our children are leaving for Australia.
The “social contract” between generations was well and truly broken in the mid 1980s, and we’ve done very little to reinstate it. As a result, we have growing poverty for the poorest; stagnating incomes for the rest of us; and the top 10% increasing their wealth.
No wonder, indeed, that 100 New Zealanders each week have had enough and are leaving for Aussie.
There are things that can be done to fix this. But it seems that many people are so afraid of having to “lose” something in the process, that it’s too much of a challenge.
This is worth looking at: http://fmacskasy.wordpress.com/2012/01/28/richard-wilkinson-how-economic-inequality-harms-societies/
Note where New Zealand is placed on all the demographic charts. Not very positive, is it?
And for those who haven’t watched Bryan Bruce’s doco on Child Poverty in this country, it is must-see TV: http://www.facebook.com/InsideChildPoverty (It’s currently being shown OnDemand TV.)
“John Key has convinced the ignorant voters that he’s on the ball when in fact he has no vision. His plan is “JK for PM” and nothing more…”
Funny – even the Business Community commented on that: http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10763014
Until New Zealanders start to take more of an interest in what is happening in their own country, they will continue to get the government they deserve; a disinterested government for a disinterested populace.
Obviously all the intelligent kiwi voters are in Australia – leaving a population of uneducated and unemployable in the home land – I wish the educated good fortune in Australia
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