Economic Debate – What To Do About The Economy?
November 13th, 2008
There wouldn’t be much room for Sir Roger Douglas’ ideas in the new Cabinet, if it remains committed to a centrist path, even if the ACT MP and architect of Rogernomics hadn’t been ruled out of considerations before the election. Special pleadings from business lobbies were squashed while he was introducing his reforms in the 1980s. More than 20 years later, the lobbying business is thriving and John Key has been welcomed to the Prime Ministership by business people offering a range of advice on how to run an economy in tough times (and help them make an easier buck).
Business Wants More Co-Operation. Curiously, after the fostering of public-private sector partnerships in several sectors under Clark, business people aren’t bridling against Beehive influence on their enterprise and are reported to want more co-operation with the public sector. Ken Stevens, from Export NZ, warbled about wanting “to engage with Govt to see how we can collectively get the economy moving.” Don Braid, at Mainfreight, wants the Govt to think about small- and medium-sized businesses with cashflow issues, and “force the banks to free up the credit lines.” Other ideas: cutting corporate tax to lure offshore investors; simplifying the Resource Management Act; speeding up progress on road building and (from Federated Farmers) on building dams to store water for the agricultural sector.
ETS To Stay. Key knows the fiscal figures have deteriorated but is sticking to plans for further tax cuts and infrastructural investment, obviously through developments facilitated by an easier resource-consents process. Key’s ACT partners are on side with this but not with his intentions to change the Clark Govt’s Emissions Trading Scheme. They want it scrapped, although not even Federated Farmers goes as far with its howls of objection. Trouble is, National is stuck with a trading scheme after rejecting a carbon tax. Harvard professor Greg Mankiw gave an easily understood rationale for a tax: “Basic economics tells us when you tax something, you normally get less of it. So if we want to reduce global emissions of carbon, we need a global carbon tax. Q.E.D.”
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Duncan Cotterill