Interesting that they acknowledge in one breath that although we have been at the forefront of adopting neoliberal market prescriptions in our regulatory environment, we still rank in the bottom of the OECD for productivity, due to "... many natural and hence unavoidable causes, such as the economy's small size and geographical isolation."

In other words, we did all the right things regards opening up the regulatory environment to market competition - but becuase of our population (size) and out-of-the-way location (geographic isolation) - not enough players came to the party and our productivity wained.

So, doesn't that kind of contradict the suggestion that we "should sell off some state-owned assets in the drive to increase public sector efficiency."

I mean, if private sector competition hasn't so far served our productivity stats well - due largely to our size and geographic isolation - is the same ol same ol prescription just tranferring more natural monopolies/duopolies to equally unproductive private ownership?

But I agree with your question about flogging assets into private ownership who are going to screw the domestic customers and ship profit offshore a la Telecom.

A bit more competition would be great as would be ownership by domestic players including retail investors.

Hmm what would the same sensation seekers say when they look at the NZ perspective of the economy and discover we are winnig the battle,surprising they have not looked at our recent and current export figures.

Expat, private investors chose to invest in property....they chose to invest in hedge funds...this is a common failing throughout the developed world and not unique to NZ and not Labour's fault....Real businesses have not been returning the huge amounts gambling in other areas has seen, but also the losses...this isnt a tax issue....its a greed issue of ppl believing they can make lots of money without really producing anything.....

regards

They also state

"Steep declines in global commodity prices, potentially amplified by a revival of export subsidies in other countries, are hurting farm incomes and reducing the overvaluation of farm properties. Unlike most previous recessions, which tended to start in the business sector, this one is dominated by a drop in household demand. Balance-sheet adjustments imply reduced consumption for as long as it takes to unwind excessive leverage. A second stage of the cycle is now beginning, reinforced by the downturn in global trade."

Wow that sounds contradictory to Tony Alexanders and his employers spin on land values.

"for as long as it takes to unwind excessive leverage"

Are they talking about the dairy farmers in my community several who are paying over $30,000 a week in interest,yes its not a typo, $30,000 a WEEK.Apparently our banks dont believe they have excess leverage,then who the hell has, there are worse out there?

Its like your car has been hit by a high speed train and we are arguing over the best way to fix it up,new headlights bit of polish. Step back, its been totally destroyed.Time to get another.

The report is almost identical to treasury recomendations highlighting the need to shift our tax base away from our transient and ageing work force and more towards consumption and housing. This means an effective capital gains tax and estate tax is on its way.Reducing our reliance on foreign funding is common sense we need to end our reliance on overseas credit that artificially inflates our house and farm prices.

Our biggest problem is our international competitiveness when it comes to income, this is where we are sadly lacking and need massive improvement. Removing trade barriers and encouraging free trade with China is only going to take us down the same path as them- a Low income, Low Consumption country slaves to High income High consumption countries.

We should be learning from Norway, they are similiar to us in size and resourses but have the second highest level of GDP/capita in the world with very high levels of capital investment and government ownership of industry which proves going down the private ownership path isn't the answer.

Many of NZs economic problems are historically based. NZ never seized the opportunity like our neighbour did when a massive pool of qualified Europeans wanted to emigrate at the end of WWII.

Historically Britain in the 1800s expected NZ to have a population of around 10 million by mid to late 20th century.

Instead we have a small population that has infrastructure problems throughout the nation and a miserably small domestic market that stifles much economic growth.
While it's nice to live in a clean/green environment...we need more bums on seats to create economic wealth and I think we missed the boat.

Kieran
If only we had the similar resources of Norway.
They have a current account surplus of USD83 billion due to sitting on Europes biggest oil reserves. This raises their GDP / capital a bit.

I think you are confusing Norway with Finland and Nokia

Kate:

".....I mean, if private sector competition hasn't so far served our productivity stats well - due largely to our size and geographic isolation - is the same ol same ol prescription just tranferring more natural monopolies/duopolies to equally unproductive private ownership?..."

WRONG. Private ownership is not "equally unproductive". It may be under considerable government policy-induced unfair disadvantages, but it is never as unproductive as governmment.

steven Says:
April 17th, 2009 at 8:12 am

"Expat, private investors chose to invest in property"¦.they chose to invest in hedge funds"¦this is a common failing throughout the developed world and not unique to NZ and not Labour's fault"¦.Real businesses have not been returning the huge amounts gambling in other areas has seen, but also the losses"¦this isnt a tax issue"¦.its a greed issue of ppl believing they can make lots of money without really producing anything"¦.."

Steven, it is the fault of governments everywhere it happened.

That doesn't make Labour right.

Had Don Brash got to run NZ in 2005, NZ would have been one of the few countries that actually might have avoided the worst of this folly.

Kieran/Neville

This from Wiki on Norway;

Norway is the world's fourth largest oil exporter[8] and the petroleum industry accounts for around a quarter of GDP.[9]

Norway also has rich resources of gas fields, hydropower, fish, forests, and minerals. Norway was the second largest exporter of seafood (in value, after China) in 2006.[10] Other main industries include food processing, shipbuilding, metals, chemicals, mining, fishing and pulp and paper products. Norway has a Scandinavian welfare model and the largest capital reserve per capita of any nation.

Norway was ranked highest of all countries in human development from 2001 to 2006.

Wow - 2nd largest exporter of seafood and fourth largest in oil. Point is - we most likely have a larger EEZ than they do - we just haven't patrolled it, explored it and managed it as well, I suspect.

Neville we have potentially massive amounts of oil and gas reserves in our oceans as well maybe even bigger, but unfortunatly we don't have a state owned oil company exploring and extracting it like Norway does. They invested massive amounts of money in the 1960's and are now reaping the rewards of that investment. I guess it was similiar to our 'think big' oil projects except they didn't abandon it like we did. Look at how well the projects we did stick with are doing-marsden point refinery, the aluminium smelter, Cluthas hydro power etc.. maybe we need a few more think big projects.

Kieran Says:
"I guess it was similiar to our "˜think big' oil projects except they didn't abandon it like we did. Look at how well the projects we did stick with are doing-marsden point refinery, the aluminium smelter, Cluthas hydro power etc.. maybe we need a few more think big projects"

You are on to it.

One of the things that helped in the 30s...REAL infrastructure building...but we have RMA that cost damn near more in legal fees than the end project...IF it EVER manges to get through...NZ is strangled by bureaucratic BS, PC fringe groups with more influence than should have and a higher education system that wastes millions on some 60% failing to even complete yr 1 of a degree....
The latter, tighten entrance requirements, then take that money and subsidise student loans on completion of the degree based on A or B passes...Those top 'brains' and those who work hard have nil or small student loans...And if a degree/qualification is not completed ...the loan has interest added.
We live in a society that rewards the mediocre, promotes the Average, and fails to reward excellence. Get this right regardless if private enterprise or Government owned, and NZ will be productive.
The OCED is stuck on band-aids rather than fixing the source of the problem.

I gotta say I thought this was the most amusing bit:

"New Zealand is paradoxically at the forefront of the OECD in adopting policies in many areas that have been shown to lead to high per capita income, and yet it still ranks toward the bottom end of the OECD's productivity league."

Why do you think that is?

No, not me being amused, but NZ not getting the 'formula' to work?

Let's take the, "such as the economy's small size and geographical isolation." as a given and think beyond that - otherwise let's all move to Auz which is only 3 hours closer to half the world than us, only 5 times bigger, while we are the same size as Singapore, and only second behind Saudi Arabia in terms of natural resources per capita.

Why?

We can do how later.

expat - As you are UK based I was interested to read your recent comments about kiwi expats and potential returns to NZ given that some economists are talking up this factor here
Just out of interest roughly what percentage of your kiwi friends / contacts are looking to return to NZ shortly as a result of the economic crisis?
From what you were saying the % sounded pretty low

Australian Commentator Alan Kohler makes a few comments about NZ in his segment on the ABC news. About half way through this two minute or so YouTube clip

http://www.youtube.com/watch?v=uw6JCRtxfZ0&feature=channel_page

I have always found Milton Friedman's case for governments simply being unable to do anything efficiently, to be convincing. There are a few things we let them do because they are the only ones who should do it, efficiently or not. $400 toilet seats for the military or the Police, is one result. But $400 toilet seats for a State owned transport operator, say, would be an inexcusable burden for the taxpayer.

There is absolutely no doubt that state owned enterprises run just as efficiently and effectively as private enterprises, The big difference is that public good can be taken into account as well and not just profit.
The success of the economy depends on using our resources (including money) for the benefit of New Zealanders. The private sector is not investing at the moment so the public sector has to. Private banks in NZ are heavily biased towards housing and are happy to pump massive amounts of overseas funding into it, how has this helped New Zealanders? Our economic uderperformance is because we have invested far too much in housing and not enough in productive assets. Its got nothing to do with private versus public ownership.
We will only turn things around by changing our financial systems so that investment money flows into business assets (public or private) rather than housing. Until we do this we will keep dropping down the OECD ladder.
We have been in recession for almost 2 years now what has the government done? absolutely nothing!! what infrastucture projects are we building? Are we building a cycle lane yet? Are we putting in fibre optic cables? Any new electricity generators lately? are we planting forestry? new oil rigs? Meat, milk or timber processing plants? Railways? nothing is happening and nothing has changed we are still putting all our money into overvalued houses. The Government is sitting on its backside doing nothing hoping it will all blow over. What have they done exactly? Tax cuts that were going to happen anyway and a talk fest now proven to be just that.

Good comments on those threads Les. Banks treat mortgage lending as less risky than business lending yet all the 'toxic assets' and bad debt are mortgages. I know from personal experience it's almost impossible to get a business loan from the bank, the only way is borrowing against the equity on a house. We need a 'Kiwi Business Bank' and a complete overhaul of our tax, education, legal and financial systems to be pro business. We also need to start building more infrastructure, the lack of any progress or action by National is very dissapointing.

The Neo-Cons who have all the clout at the top OECD like they do every other international institute and most governments bureaucracies are saying to NZ become a colony of the borderless banking empire or suffer economic sanctions that will send you back to the dark ages. The problem being the adhering to their blackmail sends a majority of our citizens there anyway.
In standing up to these slaveminded mongrels there is a lot to fear, nothing to lose and everything to gain.

Cant expand right now, just back from computer free family holiday and have to get back on the hamster wheel 3am in morn.
Good evening