What will the world look like in 2025? Will it be like The Jetsons with hover cars and spaceships to get around? Or will it be the same as today but with slightly faster Internet connections?
The National led government in New Zealand decided not to have great expectations of the future: they just want Australia’s living standards.
New Zealand’s GDP per capita is about a third less than Australia’s. For an average family of four, that gap is worth about $NZ64,000 a year. This gap has seen a net 260,000 New Zealanders move to Australia permanently in the past decade.
To this end, the government created the 2025 Taskforce, led by former RBNZ Governor and former leader of the opposition Dr Don Brash, to find ways to improve New Zealand’s economic prospects.
In its report released on Monday, the taskforce advocated the sound policies centred around reducing government expenditure, which had increased by a whopping 45% in the past five years, by picking fewer winners and reducing government involvement in individuals’ lives.
This would be achieved by a greater reliance on market mechanisms and funder/provider splits in the provision of health, education, and certain social services. It called for a rethink and minimisation of the role of government, and to drop the top rate of income tax from 38 to 20%.
New Zealanders mostly agree our economic performance has been woeful for a long time. This tide was stemmed somewhat with reforms of in the late 1980s and early 1990s, but the poor performance continues.
Instead of using its popularity to introduce the Taskforce’s tough but much needed practical solutions, the Key government decided to play it safe. In calling the recommendations ‘too radical,’ the government has conceded that it would rather give up on growth than raise living standards.
So while 2025 might bring some Jetsonesque technological advances, it is increasingly unlikely that New Zealanders will be able to afford them. As the world moves forward, Kiwis remain stuck in reverse gear.
Luke Malpass is a Policy Analyst with the Centre’s New Zealand Policy Unit.
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