All regulation should achieve a clearly defined purpose without imposing unnecessary costs and unintended consequences on businesses and consumers. More than lip service is needed to make sure we get regulation right. In a country and economy the size of New Zealand we can’t afford to get it wrong.
The last few years have been extremely challenging for New Zealand – the Canterbury
earthquakes, a recession, and the global financial crisis. Given these challenges the need to
focus on building a more competitive and productive economy is greater than ever before.
The stark reality is that our economy needs to be put on a more competitive footing if Kiwi
businesses and families are to continue to grow and prosper, and our most vulnerable are
protected. For too long the competitiveness of the New Zealand economy has suffered as
successive governments have heaped costs on business without imposing adequate
discipline on their own spending.
For this reason the New Zealand banking industry welcomed the government’s commitment
at the beginning of this electoral term to a business growth agenda aimed at helping
companies grow and building a more competitive economy. The business growth plan
identifies six key areas that the government will focus on in an effort to achieve these goals.
The six areas are capital markets, innovation and ideas, skilled workplaces, natural
resources, infrastructure, and export markets. Real progress in these areas from the
government is critical if we are to have any hope of achieving the economic progress that we
so badly need.
So three years in how is the government’s business growth agenda going from an industry
perspective? Given the challenging conditions, good progress has been made in a number
of areas and we applaud the government for this, although more work is still needed.
After a period of sluggish post-recession growth our economy is starting to flourish. Growth
at around three per cent is higher than most other developed countries. We’re seeing the
best terms of trade since 1973. After tax wages are up, a comprehensive tax reform
programme has been carried out, and progress has been made in cutting red tape and
reforming the labour market.
There are also promising signs in the innovation and infrastructure space with both public
and private sector investment increasing, and a renewed commitment from the government
to prioritise these areas.
So overall the government is doing a good job of nurturing the green shoots of recovery and
working to create the conditions necessary to make our economy more competitive, and our
businesses – big and small – growing strongly.
However, from a banking industry perspective there are some areas where the government’s
actions have not quite matched the rhetoric of the business growth agenda.
There is still a concerning amount of regulation being produced by the bureaucracy that
places unnecessary and substantial compliance costs on businesses. Far too often officials
don’t seem to think through the negative impacts that badly drafted legislation and excessive
red-tape can have on business growth.
Business often hears from government about ‘better regulation, less regulation’ but all too
often this message does not seem to make it through to officials. That’s not to say we
oppose all regulation. On the contrary, we strongly support quality regulation that is welltargeted
and enforced. All regulation should achieve a clearly defined purpose without
imposing unnecessary costs and unintended consequences on businesses and consumers.
More than lip service is needed to make sure we get regulation right. In a country and
economy the size of New Zealand we can’t afford to get it wrong.
More work is also needed on savings policy. Arguably developing an effective retirement
income and savings policy is one of the most pressing public policy challenges facing
New Zealand, yet successive governments have failed to address it. The stark reality is if we
don’t take substantial steps to address this then there is little doubt that future generations
will be significantly worse off financially.
It is important that in making progress in this area the government is not distracted by a low
level political debate around the age of eligibility. Rather, politicians need to focus on moving
towards a return to a compulsory savings scheme, reassessing the universal nature of New
Zealand Superannuation, and working to reform our tax system to better encourage and
incentivise savings and investment.
There is no doubt that the government has made a good start to implementing aspects of the
business growth agenda. However, the real challenge for the government now is to make
progress in tackling the more challenging and fundamental aspects of the policy. The hard
stuff if you like. This will not be an easy task, but it is one that is vital for the future strength of
the New Zealand economy, and it is one with which the banking industry and the wider
business community stand ready to assist.