Primarily written during the Lockdown, David’s work has been written in an apolitical manner, without regard to political issues current in the 2020 election. David sees politicial parties from all parts of the spectrum avoiding the hard, longer term issues which NZ needs to confront, if it is really going to succeed as a nation going forward.
A Prime Minister who is clearly genuine and caring and a positive contrast to many other world leaders; a better than expected economic performance over the last 6 years, (thanks to booming trade with China, high immigration, and booming tourist numbers), a good medical containment of Covid, and a better than expected economic bounce back after the Covid lockdown, leaves NZ feeling it is doing better than many other nations right now- and that is true.
But those good impressions mask long term structural problems in New Zealand- both economically and socially. The better than expected bounce back also results from free spending NZ fiscal and monetary policy which (in David’s description) may well ultimately show the economic cure to have been worse than the complaint. Even although New Zealand feels right now it is doing well, if we really want to progress as a country, there are major changes we need to make to our present monetary and fiscal policies; to our economy and to our social programmes.
While the world’s initial economic recovery from Covid has been promising, risks remain- both medically and economically. If a significant economic downturn worldwide ultimately results from Covid- which cannot yet be discounted- then that time of societal stress could well enable significant reforms to be attempted. Circumstances potentially could develop in the next 3-5 years, providing a once in a generation opportunity to make significant change in New Zealand. We need carefully thought through policy ready, if the country is to make the most of the opportunities for change which may appear post-Covid.
The book is an attempt to open up discussion on those policy areas. While covering numerous policy areas, David advocates three major policy changes of direction for New Zealand.
First, David challenges the major interventionist monetary policies currently being pursued by the NZ Reserve Bank; and the proposed deficit NZ government finances for the next 5 years, set out in the 2020/21 Budget. He sees current NZ fiscal and monetary policy going further than is in the long term interests of the country. “Free money” as the Economist calls the product of these policies, is presently being spent unwisely, in poor quality, politically driven investment decisions made in an election run up. These policies appear certain to leave our children and grandchildren with an unfortunate debt legacy. There is a real risk post Covid, of a worldwide economic slowdown, which will then see these debt legacies having to be addressed by a stagnant NZ economy. David argues these monetary and fiscal policies have been inadequately debated, and go further than is in the national interest.
Economically, David advocates two key structural changes – a major increase in institutional savings through Kiwisaver, and thereby a change which would see New Zealanders holding much more of their wealth (via those institutional savings) in shares and productive commercial investments; and much less of their wealth in housing. The book outlines the various changes needed to rebalance the economy away from housing, and towards institutional saving. Subsidiary economic issues addressed include NZ’s low productivity; its increasing financial disparity; and the disappointing amount of add value we still achieve in parts of our primary exports.
The final key concern addressed in the book is in relation to our social expenditure, which is already high and certain to increase steeply in the future. Despite these massive social expenditures, our social outcomes as a country continue to disappoint and if anything are getting worse. The book suggests that however much money governments spend on them, the disappointing performance of our health and education sectors, and the country’s underlying social problems will not materially improve, unless there is a fundamental rethink of these policy areas. They need to become a partnership, in which beneficiaries work with the government; and take shared responsibility for the own lives. The government will never be able materially to improve these social areas on its own.
David’s work is a serious attempt to open debate about the future direction of New Zealand. It covers topics which unfortunately politicians put in the too hard basket, and tend not to discuss. But they are topics vital for the future New Zealand which we will bequeath to our children and grandchildren.
Post Covid, many commentators are telling us, “things will never be the same again”. David’s book: COVID – CATALYST FOR CHANGE is an attempt to lay out some ideas of what such a new world for New Zealand might look like.
Covid – Catalyst for Change 