Agree with your view. Also, can't help but think (probably paranoia) that there is some ulterior motive behind the desire which will ultimately deprive NZ Inc to the benefit of a few privileged.

10-@-10's late again, Hickey. See me after class.

Bernard,
A good overview, but:

John Key should stop looking for magic bullets and just do the hard work. He could do it.

John Key is never going to do the hard work - it is just not in him. Neither is doing the hard work why he became leader of the National Party, or why they won the last election.

I think its a risky strategy, for the reasons highlighted in the main article above.

I'm also not sure I'd want every third person I talked to working in or servicing the finance sector. Geez that'd be boring.

Brien

How about Singapore? They want to be the Swiss of the Pacific, in terms of banking at least.

I think the idea has some merit, but we dont want NZ Inc to become a nation of paper shufflers.

@ David
"There are lots of IT companies in Christchurch that do back office functions for UK companies now and quite successfully.
I am surprised you dont appear to support these sort of initiatives."

I assume that's because these Chch IT companies are cheaper, more efficient, or perhaps better? Not because they have a tax loop hole to exploit.

Hmm, haven't heard this turn of phrase, " ... than focus on the money changers." since watching 'Money Masters' and 'The Secret of Oz' Did you get the DVDs for Xmas too Bernard?

I think if someone told me X years from now, "New Zealand has become an Asia-Pacific Funds Hub, because of the tax reforms that Key and English implemented delivering a cleaner, simpler, broader and flatter tax system, that allowed productive enterprise to emerge without further government assistance and flourish." - Then no problem, because we would also probably be hearing stories of similar ilk about, maybe, the emergence of 'Green light industries' (Walter!) and owt else that emerged to stand on it own two feet and hence be sustainable. However, if this, as it sounds, is about trying to 'pick winners' (yet again) and bending what crap systems we have yet further - then get ready with the tissues - because it will likely end in tears, yet again, like most 'centrally planned' economic miracles NZ has desperately tried to grasp. (Nettles, it's the nettles, that should be grapsed JK/BE.)

FAB, Les.

(Check new website I'm supporting for a while.)

A financial services hub for New Zealand? Just when the financial services industry has just about finished turning the worlds financial markets into the financial equivalent of the Sahara desert? Brilliant! Why don't we just introduce foot and mouth disease and whatever that beetle is that's killing all the forests in North America and then there is of course charging Northern Hemisphere Companies to dumping their toxic waste in our coastal waters, the list of great ideas is endless.

But whatever happens lets NOT invest in anything useful or productive. Lets NOT leverage our plentiful rainfall, fertile soils and mild climate or our clean coastal waters for anything useful or sustainable. Why do that when we could try to compete with Dubai in the cheap office space market for the financial services industry?

@Alex. They take advantage of the time difference, you finish your days work in the UK send through whatever needs updating, it gets done and you start the following day ready to go. There is a firm here that will do your legal research for the UK overnight for them so the lawyer is ready to go in the morning. Pays very well and is a stimulating job that is in effect an export.
The tax changes the PM was refering too was not taxing the overseas pension funds that base themselves here for the admin side that was all. Easy change to make and loophole proof.

NZ Asia - Pacific fund hub zh,zh..another "Ding Dong" idea from the government, creating more paper tigers and bureaucrats.

Why not lift the profile for New Zealand : "The Pacific Cuckoo Clock Distribution Centre" (TPCCDC) or "Brownlee's Fat-Gussler Mining Company" and "Giant Cubical Giraffe Farming in Gisborne".
All very exciting with long-term prospect for success and benefits for NZ - he ! It seems the world is waiting for us "“ dream on.
Walter

PS Don't read and understand this in a context with my many other articles.

"All he has to do is blame Labour for the economic, taxation and spending distortions now evident and convince New Zealanders they are better off in the long run with a cleaner, simpler, broader and flatter tax system."

But no WFF, etc?

Many are too high on the 'electoral opium' pushed by Clark and Cullen to even comprehend how the 'cold turkey' might be worthwhile. And Key and English seem only to pleased to keep pushing, rather than do the sensible thing and take away. I wonder why?

Maybe John Key can add currency trading to his Hub -- thats his area or expertise

http://www.bloomberg.com/apps/news?pid=20601039&sid=aXOz8SejRo0w

"Rugby hub of the South Terrific"

What worries me about this is that rather than fostering small to medium businesses that produce and export, the PM's genius plan is to find a way to clip the ticket of financial operatives around the world.

We don't need 3-5000 white collar jobs, we need 50,000 real productive jobs earning genuine export dollars.

Did the average Nat voter at the last election realise that their party had moved from being pro-business to just being pro-big-business?

I am struggling to write anything without being deeply cynical here. If I think of anything constructive to say about this idea I'll come back to you. Don't hold your breath.

RC said:

"I think the idea has some merit, but we dont want NZ Inc to become a nation of paper shufflers."

I had to LOL at that comment given the size of NZ's public sector.

We should be creating jobs where we have a comparitive advantage, not where there is a tax advantage.
As those people point out above. Being in a total oppposite timezone to the UK is a comparitive advantage. We have no comparitive advantage in being a hub.

As Bernard says, we need a step change.
We'll never break out of this low wage funk unless we do.
We need some one to lead us out of the envy politics that pervades NZ with vision and policy to provide real growth.

Unfortunately I'm coming to the conclusion that the average NZer is happy with the status quo.
Get rich on property; either through residential investment or farming.
High wages from high productivity, why bother with that when we can make tax free capital gains.
Certainly farmers aren't interested in making value added products by getting external investment into Fonterra.
Most people want to retire on the government, with additional income coming from that most productive of enterprises property renting.

I don't think the problem will ever be solved as most people can't see past their own noses.
We'll slip further down the OECD rankings to sit beside Turkey in 10-20 years and take what comes with that.

I am amazed at the number of uninformed comments on this thread. Key is not proposing any tax loophole, but simply proposing that any fund that bases it's back office here while investing their own money outside of NZ will not pay NZ tax on any gains made. There is no way in the world that any International player would set up admin operations here if they were subject to NZ tax on their offshore investments made on behalf of their offshore clients. However any admin functions created here would create tax paying jobs, lease premises, pay NZ gst on all the local costs and provide a boost to the local economy. Is it feasible? I don't know but I read that the worlds largest backroom administrator PNB Paribas has expressed interest. Anything that creates jobs which source their income from offshore has to be to the long term benefit of the country.

@NA Probably best to ask Craig Stobo these questions. Nothing I have read to date indicates that there will be any film industry type tax breaks.

A show of hands please , anyone prepared to admit in public that they voted for this idiotic National government ? As appalling as Clark & Cullen's Labour government were , these bozos are on a rip & a tear to out-pace them in the stupidity race .

And for a balanced view from someone who actually agrees with Bernard , Rod Oram has a lash too , on his conversation with Katherine Ryan ( Radio National ) yesterday .

@ Roger

I haven't voted since the MacGillicuddy Serious Party went out of business....remember the p[lan to build a moat around Hamilton? Giddy up.

As for Mr key's plan today, it reminds me of when we lost the Rugby World Cup hosting to the Aussies a decade ago from being tot tricky. I'm not saying it's impossible to pull things such as this off, but the fact of the matter is that while the west has seen their economies become imbalanced with financial services, china has roared ahead (as did german and japan before them) by making stuff that people want to buy. Nothing wrong with bells and whistles, but you need a good strong locomotive to hang it on.

Problem with tax breaks or exemptions is that the type of businesses it attracts bugger off as soon as someone makes them a better offer. John Key should know that that is the Irish experience. Okay if you just accept it will just be for a couple of years and make hay while the sun shines. They'd also have to sort out the currency volatility or tax break or no tax break. as per the film industry, its the same price with less hassle to stay at home.

From what many of you say, maybe this might well be a 'no-brainer' - as in, an idea hatched without using one that well. Surely the message has to be, "JK/BE - stop clutching at such straws and grasp the nettles - it's what we are paying you for."

The Fabians website home page starts off:

"Economic orthodoxy continues to fail New Zealand. This failure is systemic, not cyclical. Despite this, prevailing political and economic orthodoxy has become almost immune from scrutiny. It seems that policymakers have yet to comprehend that the status quo will inevitably lead to economic collapse."

This kind of tinkering with 'pet projects' in pet areas won't help, will it?

I'll be surprised if it does.

Cheers, Les.

My suspicion is that John Key has become just like his predecessor Helen Clark , too smart for commonsense . Pity that they spend their time listening to high paid advisors . If they wandered into the malls and factories of this fair land , girt-by-sea , they'd get some real answers to the problems besetting us .

Back to picking winners , the financial hub . John Key is gonna succeed , where decades of politicians before him have failed , utterly ?

Some hard work , as BH says , is needed . Create the level playing field . Simplify rules . Remove unnecessary bureaucracy . Undo the bollocking mess that Cullen did to the tax system .............And old firms will flourish ..... New ones will be created .

Commonsense beats Smart , any day .

I think the idea of a financial hub is an idea worth pursuing. It may not generate the high paying jobs similar to the funds management side of the business but, beggars can't be choosers. And with unemployment over 7% and projected to remain relatively high over the next few years (at best), any job is a good job whether it may be white-collar or paper-shuffling, especially when it's an export job. You could say that banking is all numbers, paper-shuffling, dull and unproductive yet it generates significant wealth in the London and New York region and attracts the best and brightest from all over the world. Before you say that banking/financial innovation may have caused this crisis, banking is the backbone of commerce and will always have a place in the world economy.

I think people read too much into the comparative advantage theory as if companies such as BMW, Toyota, IBM, Oracle, Google were dug up from the ground or gifted by God. We may not have the cheapest labour or the most highly educated workforce but does that excuse us to do nothing like John Key? Instead of waiting for NZ-based, money-generating, global companies to rise from market forces in NZ - which may never happen, NZ should proactively nuture industries which are already developing and/or have strong chance of succeeding in the international stage. And if this involves tax breaks amongst other things, why shouldn't we offer it? It may be risky for the government to effectively pick 'winners' but as long as there is a strong business case, a transparent process, some degree of business/public consensus and the industry choice is sensible, I would be happy to go with it. I'm sure we can all cite good and bad examples of this approach overseas but just because one country failed with this approach it doesn't mean we should write it off. To date, the NZ govt seems tp adopt a zero-risk, safe and conservative approach to everything it does - perhaps this is a reflection of the NZ population and their small appetite for risk. Sometimes, I don't blame the Govt for doing nothing. It is unconsciously demanded by the people. It seems that we're all waiting for someone to come up with a risk-free winning solution. Success always comes with risk, why are we always so afraid to take a leap?

Anyone know what has happened to the planned cycle way?????

After Dick Hubbards success, maybe we could become the cereal capital of the world. We could specialiise and make 1001 different kinds of muesli......

Key must be insane.To create a Capital market hub out of the third most indebted country in the OECD would be the work of a Genius which I dont think he is.
Instead of addressing monetary policy(Yes the the exchange rate is still overvalued ) fiscal policy (so far chairs on the Titanic ) and output or labour market ( where salaries and wages are still increasing despite falling productivity . Up 1.8% this year ) Key is and wants to increase subsidies to our fnancial sector. This is the same sector who with its greed derivatives and unrestrained credit growth almost decoupled the worlds finances last year.
And I have not even mentioned the spending spree the Government has indulged in. Productivity has been forgotten
This Government is puttng New Zealands very soveriegnty at risk but who cares if they remain in power.
I guess I do.
Rose

http://www.interest.co.nz/ratesblog/index.php/2010/02/17/top-10-at-10-to...

Lets get that fast broadband in quick so we can set up our credit money skimming platforms, of course we promise to chuck a few scraps to the local serfs, we will create a booming leasure economy where they can shine our shoes, carry our golf clubs etc etc, for competitive international slave rates of course. Just when many are beginning to appreciate that the corrupt financial sector caused civilisations equivalant of the Cuban missile crisis, we want to ask them to move the sylos down under

There are many more basic reforms needed for our economy before running off to become some pension fund's backroom bitches. These are creations of statute not of any real substance and can be disappeared tomorrow. John has squandered the gift of a lifetime when the world was first heading for a meltdown ,to crack open our handout society. What he will do on the next lurch down the deleveraging highway to pretend we can carry on regardless we can only guess - but taking in financial laundry seems a poor substitute for genuine wealth creation borne of out relentless private self interest.

Financial Hub of the South pacific..eh.... Now that's a great headline....pity the journo looking for the meat in the story.
How bout this............ Key sends warning to farms and exporters in general

Find a new career....!

Geesus Cripes if that don't ring the bell.....hello..heeeeelloooo..!!

We can't fix the exchange rate...... but we could sit back take it on the clicks and watch the $ roll in....oh glory be could we really do that John..?

Nicholas A.....Spotted.

We could be the clean green Cook Islands.........I'd like to see the K man's telephone accounts for calls to Geneva ...i'm starting to smell a Mercurian Rat in all of this.

Yes I meant "Mercurian" go figure..!

Why would the world's financial services industry flock to NZ? The road infrastructure was built for the population in 1950. The electrical grid is unreliable and our internet provision is at the bottom of OECD nations. The only thing that would make NZ attractive is the creation of a tax-free zone that is allowed to operate outside of any domestic regulatory authority.
The only way I can see this work is to take an undeveloped part of the country... perhaps like Queenstown, and construct a world class stand-alone power and communications centre. Ideally, it would have a port, and an international airport with a super secure facility for storing precious assets. Such a city-state within NZ is possible, so long as the rest of us surrender any future sovereignty over its affairs.