A Measurable Goal for New Zealand – How will you make a difference to the future?
Since the release of “Swan Dive or Belly Flop?” other New Zealand companies, as well as individuals, have been putting serious work into shaping our future.
Download A Measurable Goal for New Zealand presentation from Morrison & Co for some outstanding analysis and conclusions.
From Morrison & Co – How will you make a difference to the future of New Zealand?
“We’d like to promote a conversation amongst ALL New Zealanders about our nation’s long term goal – only by broadly agreeing a target can New Zealanders, through joint ambition, work to get the nation we want. Loose well meaning but unmeasured targets no longer suffice. New Zealand’s relative standard of living has fallen too far. It is time to do something about it!”
1. Do you agree that we need an ambitious, measurable, shared goal for New Zealand?
2. Do you believe that we ought to set our sights on returning to the global GDP per capita top 10 by 2025?
3. Do you have better ideas?
You can also download a set of frequently asked questions about the presentation here.
If you're new here, you may want to subscribe to the NZX Blog RSS feed. Thanks for visiting!
Great stuff Wolf. Maybe it’s directly related to a small population but nothing we can’t fix given the tools and desire to excel. What steps do you suggest need to be taken to achieve the results that you envisaged? Would really appreciate more indepth info on these issues that you can see need improvement.
And hang in there mate, this country is going to go ahead rapidly. Constructive advice most welcome.
Aileen, you are absolutely right and I do not want to sound negative, but just realistic and will hang in as long as I can afford it). I created several reports with proposals to set up something like an Industry Service Centre, which were welcomed by some people. Unfortunately none of them was in the position to find the necessary budget to kick start it.
I cannot conjure rabbits from hats, but think that local businesses could be as competitive as any where else. The point is that most of them are too small to afford all the nifty software to manage your company, to afford their own marketing and sales specialists or to afford as an owner to take lots of courses in modern management, while having to care about the daily business.
Thus the only way might be to establish a source where the SME’s can draw on the necessary expertise and can buy exactly the amount of support they need and can pay for. Imagine this in some ways like a tax accountant, where you buy in for some expertise, but it would be far broader and ddeepr in its approach by trying to transfer the expertise of the centre into the businesses.
A similar approach was done in 1978 where the NZ government initiated a centre to save the steel industry (http://www.hera.org.nz/about.html).
A potential success could over time (more than 5 – 10 years) grow and achieve a shift in business culture.
By the way I do not believe in the too small a population concept. Look at countries like Denmark and Finland, which are not that much bigger and very successful in what they are doing.
Hi there, interesting discussion. To play devil’s advocate, a few points..
1) There is no discussion of the idea that, under some circumstances, increased GDP can decrease quality of life.
2) There is no discussion of the idea that, while economic development (defined as “better stuff”) can theoretically go on forever, economic growth (defined as “more stuff”) cannot. Resources are finite. Raw materials are finite, Oil is finite, phosphorous is finite, arable land is finite, coal is finite, aluminium is finite, uranium is finite, fresh water supplies are finite, fishing grounds are finite. This is simply not debatable, especially with regards to things like uranium, phosphorous, nitrogen, aluminium, iron, cobalt, copper, etc.. these elements are forged in supernovas, not factories, and if we have one of those nearby, we have other problems on our hands! Additionally, by the nature of economics, easy-to-extract resources get extracted first (for example, light sweet crude in easily drillable oilfields), and hard-to-extract resources get extracted last (for example, shale oil), therefore, the extraction costs of resources generally increase. Technology can help, but not stop, this trend.
3) There is no discussion of the idea of a steady-state economy as opposed to a growth economy. As Prof. Herman Daly puts it: “Anyone who thinks that exponential growth can go on forever in a finite system is either a madman or an economist”.
This quote sums up why GDP is not an appropriate measure for development, or anything else:
“..the quantitative expansion of the economic subsystem increases environmental and social costs faster than production benefits, making us poorer not richer, at least in high consumption countries. Given the laws of diminishing marginal utility and increasing marginal costs this should not have been unexpected. And even new technology sometimes makes it worse. For example, tetraethyl lead provided the benefit of reducing engine knock, but at the cost spreading a toxic heavy metal into the biosphere; chlorofluorocarbons gave us the benefit of a nontoxic propellant and refrigerant, but at the cost of creating a hole in the ozone layer and a resulting increase in ultraviolet radiation. It is hard to know for sure that growth now increases costs faster than benefits since we do not bother to separate costs from benefits in our national accounts. Instead we lump them together as “activity” in the calculation of GDP.”
http://www.theoildrum.com/node/3941
The key is that GDP does not separate benefits from economic growth from costs, so the assumption that further economic growth will increase quality of life is just that, an assumption.
Therefore, since GDP does not separate benefits from costs, we could already be at the point where further economic growth adds more costs than benefits. How would you know, from GDP figures?
There is evidence that this is already happening, especially in high-consumption economies. The USA has experienced consistently high economic growth, yet by most measures of happiness, the happiness of the population is not increasing and has not been increasing for some time. Is increased GDP actually correlated with quality of life? It seems it is, but only when you define quality of life by… er… increased GDP. I think we can see the circularity of this argument. So,
I am with some posters here who point to increased R&D as a way forward, as this works well with the “better stuff, not more stuff” idea. However, it seems that you are all stuck in the growth-economy model, in spite of considerable evidence that it is
1) unsustainable
2) actually decreasing quality of life, past a certain point
3) using economic measures that lump costs and benefits together in some nebulous bag known as “economic activity”
Even those who discuss other measures of growth, like the GPI and HDI, are not ever, ever, saying that there is a point where more economic growth is, er, uneconomic. Possibly I have missed those who did, in which case I apologise.
Additionally, I would like to point out some problems with the countries that have high GDP and why we can never, or should never, follow them.
1)Quatar. Quatar has high GDP because it’s sitting on lots of oil, but mostly because a huge chunk of economic activity is carried out by slaves, oops, “guest workers”, who are on sickeningly low rates and horrifying contracts, and contribute to GDP but do not count as “citizens”, and therefore skew GDP per capita. Similar situation in Bahrain, Kuwait and the UAE.
2) Luxembourg and Switzerland. Tiny countries that, while rich, are perhaps so small that they skew the statistics, and are also ethnically homogenous, boring and conservative.
3) USA and Ireland. One wonders how they are doing now. The USA in particular has increased GDP through consumer spending on the back of a debt bubble (on the back of increased house valuations), that has now burst. The USA has also been at war, which increased GDP.
4) Singapore and Norway. Norway is a high-tax country that is basically a socialist democracy. I actually think we should follow this model. Singapore has increased GDP on the back of massive government investment in R&D. Again, a good idea.
5) Kazakhstan. Population is decreasing, leading to increased GDP per capita.
So here’s my somewhat facetious prescription for increased GDP, some parts borrowed from FHM.
1) Get the All Blacks to throw the Bledisloe Cup by at least 40 points. The following morning, invade Australia (War=increased GDP) and turn all Australians into “guest workers (=increased GDP) who strip-mine the country on our behalf (=increased GDP), until they get the upper hand and in a case of inevitable blowback, wipe out half the population of NZ (=increased GDP per capita). Sweet!
Yes, some of my points are half-joking, but I hope I have stimulated some new discussions. Flame away.
DJ would be good to know who you are! Joking aside you made some good points, but lost track a little bit.
Norway definetly is not a good example, since they are a rich country having lots of oil resources, which makes things easier. Better look at other countries as Denmark and Finland (Nokia and wood).
Of course the presentation uses some examples as Kasachstan to point out the important things, but in principle it is absolutely true. Believe me!
Luxembourg and Switzerland do not count as there are some special circumstances (too comprehensive to explain here).
Sure the growth is limited. Everyone knows that, but point is that you have to be more productive, more inventive and faster to get an advantage. Growth is not the cure but the difference between cost and profit is!!!
There is the the key to success: be smarter, faster, better (where your strength are!!!)
… then you can gain some advantage in international competition.
Wolf an Industry Service Centre sounds like a step in the right direction for small businesses. Maybe now is a good time to consider establishing a pilot scheme, along with other enthusiastic skilled people and businesses, to test the market?
My point re small population was in reference to ‘closed mindedness’ only as even in NZ my experience has been that the larger the city’s population, and thus the more diverse the people, the more opportunities and necessities to develop flexibile thinking happen.
Aileen, we need tangible steps to achieve something. A goal (measurable or not) is important, but if there is no idea how to get there it’s useless. What New Zealand needs is a goal AND a way to get there. Otherwise it’s just another nice talk. My proposals were very much appreciated, but unfortunately there was no further support by neither government nor any other institution (and I was talking to people on CEO/Director level) . May be Lloyd will take it on as he got a copy. The small population thing, by the way I am in Wellington (still too small
).
First steps first. Until we have the goal we can’t start deaming it and thus creating the pathway to achieve it.
My goal in the industry I am in is to go for ‘Organic NZ’, I know how we could get there and I’m in process of taking my own steps. Maybe if we all put forward our own goal in the fields we are focusing on, asked ourselves what steps we could personally take to achieve this, we may discover there is a common thread running through various ideas that might serve as a basis for a collective measurable goal/goals for this country that may have wide support.
Definitely goals on there own are more than worthless. Better to be in an uncertain state than to dream a goal and kid ourselves we need take no further action; we all need to get in boots and all and take some steps ourselves, not expect someone else to create it for us.
So how about some personal goals for this country, even some steps if you’ve got that far, and lets see what happens. This could be fun and if you take up the challenge it personalizes the process so it really means something to each of us.
(Wolf try Auckland – the population is larger!)
Ha ha – can anyone name a measurable human goal (apart from material demands reducive asceticism) which does not require the effort to save and invest?
Wolf, did not the “economic miracle” after monetary reform in the early 1950s in West Germany happen through Marshall Aid (American savings) and Prof Ludwig Erhard’s “Vermögensbildung” (Estate Ownership wealth creative) domestic savings?
Unfortunately, his “estate creative” savings commitments were only of 10 year durations, because if they had been “until retirement” as KiwiSavings are meant to be, (and not to be invested in public debt), Germany might not have the apparently very burdensome taxation dependent retirement welfare problems it is reported to be facing now?
There still has not been a discussion on the pros and cons of allocating the NZ Super Fund to Personal Accounts, as an all-inclusive initial step into accelerated poverty elimination on a creative – not wealth redistributive – basis.
A Measurable Goal for New Zealand – How will you make a difference to the future?…
I received an email last night Subject: A Measurable Goal for New Zealand.
To be honest, at first I thought it was Spam! I qucikly glanced at it on my Blackberry and saw it was from ‘admin@…’ – a very common sender of the Spam I recei…
[WORDPRESS HASHCASH] The comment’s server IP (67.205.4.179) doesn’t match the comment’s URL host IP () and so is spam.
What exactly does the above BLOCKED BY STBV message mean?
Please explain why, in today’s opinion column in the NZ herald, you pay almost no attention to the litany of comments (which you solicited) pointing out that GDP is a useless measure of what is “good”, and in fact does not really measure anything that most people in NZ care about?
“Most New Zealanders are deeply committed to values that cannot be fully measured by as blunt a tool as GDP per capita, but I’m confident that our collective social and environmental conscience would set the parameters and define the desired outcomes of sustainable economic growth.”
On what, precisely, is your confidence based? The fact that New Zealanders think that they are clean and green, in the face of all available evidence? On the fact that we have one of the worst per-capita environmental footprints in the world? May I suggest that your confidence is misplaced. May I further suggest that, as you admit, GDP is a blunt tool, and the answer is not to keep using that blunt tool, but to replace it with another tool. Of which the people on this (solicited by you) forum have pointed out numerous examples. What’s the point of soliciting all these comments if you ignore the main point that has been raised?
Are you captaining the ship, or is the course already plotted and you’re just a passenger?
DJ, we have taken the discussion of GDP’s strengths and weaknesses on board. However, the blog and email comments we’ve received on this topic have been much more balanced than you suggest. On one hand, several people have highlighted the limitations of GDP as a measure of economic and social progress. But many others have argued that, for all its weaknesses, GDP offers a broadly accepted, internationally comparable yardstick. We do hope to continue to foster informed debate about what measure gives the appropriate balance of simplicity and comprehensiveness. And we are open to the possibility that this may lead to the conclusion that there is a better tool than GDP per capita to measure New Zealand’s progress.
Nevertheless our fundamental priority is to lift New Zealand’s collective ambition and encourage a focus on measurable outcomes. Whether or not GDP per capita is ultimately the measure that’s employed, we do believe that it highlights the problem of New Zealand’s long-term relative decline. This is an issue that we need New Zealanders to understand and get concerned about. To borrow your metaphor, we believe that this broad public awareness will put wind in the sails of the ship, while expert debate around the choice of measure will ensure that we plot an optimal course.
I have followed and enjoyed this discussion since its launch, and have been somewhat disappointed to find that six weeks into 2009 have transpired without further comment. Accordingly I felt it might be useful to throw some different ideas into the cocktail shaker.
I do note that more than one participant has mentioned the concept of complementing the measurable goal with tangible processes and initiatives to get there. Since we are considering GDP per capita as a measurable benchmark for where we stand in the global league table of wellbeing, it stands to reason that success on a measurable basis is meaningless if it is not simultaneously matched by both tangible and intangible hallmarks of an improved standard of living.
Amongst such hallmarks, for example, are the quality and efficacy of our infrastructure relative to those of the countries we would wish to be compared with. Projects to improve that infrastructure have the ability to both boost measurable economic outputs and yet, at the same time, make us feel better about our worth in less tangible ways.
For those who wish to think on it, throughout New Zealand today, people live with (and most certainly take for granted) many features of the landscape that were created almost 80 years ago during the Great Depression.
So the question might be asked, if we were to embark on new infrastructure projects at this juncture, what might stand the test of time and remain part of people’s daily lives in another 80 years? Our Government has already earmarked a range of worthwhile projects to provide an initial “shot in the arm” to the economy. This is not, however, the point of this message.
Starting from a perspective of looking at infrastructure problems (or at least inadequacies) today, what might be suggestions for bigger picture consideration? These are not “quick fix” type solutions, of course. They are about the fact that there is a long-term that needs to be considered and that short-term compromise “patches” for these problems are sometimes false economies. The long-term also starts today; it is not a convenient excuse for deferment.
Accordingly I suggest the following as candidates for debate, in no special order of priority:
1. Define long term energy resource strategy (including location issues) as the basis for comprehensively redesigning the National Grid. Address questions such as the long term role of hydro generation, the place for wind (we are an island nation in the middle of the roaring forties – we should have some kind of advantage over most countries), the place for gas or coal or other carbon-based thermal fuels in the future
2. Target world leadership in the exploitation of new energy technologies, including: tide/waves; biofuels; buy side energy efficiency technologies; clean burning of coal/biomass. With a leadership role New Zealand would become a magnet for venture capital and development investment, with the added prospect of providing building breadth and depth in this sector of the NZ capital markets. (In an ideal future world companies want to list in NZ as the best place to price such assets, rather than the likes of NASDAQ or AIM! Is that too far-fetched?).
3. Define and plan for the infrastructure requirements in the event of future energy discoveries or developments in regions such as Southland or the West Coast, for example. If oil or gas were discovered somewhere completely separated from the existing Taranaki/North Island infrastructure, how would we deal with it or with the flow on industries that not only feed off it but also ensure that development is viable?
4. Roads: Establish a national strategy for SH1 to become a minimum 4 lane expressway from Bay of Islands/Whangarei to Wellington, Picton to Invercargill, plus key regional highway routes (e.g. Bay of Plenty loop). The potential benefits (other than jobs) are greater fuel efficiency for road users, reduced travel times for freight and commerce and increased safety with the risk of driver frustration and head on accidents reduced.
5. Establish long-term plans for future port sector development, including the most suitable locations for handling new generation deep draught container ships, and the most effective feeder systems – whether sea-based or land-based. This would not necessarily affect the place for inter-port competition for cargoes, but rather how they are serviced at the national level.
6. Start the process of separating urban freight and passenger rail facilities, including tracks. In the 21st century rail corridors (or tracks) for one are unlikely to be the most suitable solution for the other as more specialised facilities provide efficiency benefits and competing access timing otherwise becomes a nightmare as frequency of trains increases.
7. Establish an underground rail network plan for Auckland (and comprehensive public transport integration). Auckland (population 2 million by 2040 – which is larger than many overseas cities were when they introduced underground) is a sprawling city and the combination of speed and accessibility of underground rail is the only comprehensive solution to sprawl and the reliance on automobiles. Underground is what defines fast public transport (“rapid transit”) in many overseas cities. It is new and different in a New Zealand context and, aside from its environmental credentials, it stands a better chance of genuinely changing attitudes and behaviour toward public transport.
8. Establish long-term broadband network planning with a view to leading the world (as a source of both standard of living and competitive leadership), rather than playing catch up. Such a goal would enable to New Zealand to (again?) become an early adopter/ high tech test lab for the world, and provide the basis for establishing genuinely competitive high tech manufacturing and services sectors.
It should be taken as a given that none of these projects could not be undertaken without both private and public capital being involved. Perhaps it is therefore timely to rethink how the public private partnership model works. It is unfortunately easy to conclude that the current legislative model is little more than a form of glorified contracting out of services to private capital, based presumably on the assumption that the private sector is solely motivated by greed and therefore needs to be constantly checked and watched over, rather than a true “partnership”. If so, does it actually harness the advantages of the private sector efficiently, or has the model structure created additional burdens and costs that effectively undermine the purpose and value of the partnership concept?
At another level, large scale private sector involvement could serve to improve the breadth and depth of larger listed securities traded through NZX.
Of course it is also important to distinguish these projects from the “Think Big” projects of the late 70s and early 80s. This is not to say that those projects were wrong, and indeed some have proven to be valuable economic contributors over the subsequent decades, but rather to simply note that the new projects of today should be based on wider assumptions about the needs of the country far into the future, rather than a reaction to short-term events or to specific key assumptions regarding energy prices, for example.
If we have bitten the bullet and committed to such projects, would we have a better society and a higher quality of life in, say, 20 to 30 years time?
New Zealand has come joint ninth with Denmark in an international “prosperity index” compiled by The Legatum Institute, a London think tank run by three former senior White House staffers in the Bush administration. Notably, “the index does not rank countries according to which have the most material wealth or the highest levels of happiness at a given time… rather, it is an index of drivers, which means that countries are ranked by how well they are doing at fostering economic growth and improved quality of life.”
Of course, ranking countries based on “drivers” of prosperity is more subjective than tracking the outcomes directly, since there can be plenty of debate over which “drivers” actually result in national prosperity. For example, the Legatum Institute includes a score for religious belief in their prosperity index.
What do others think? Does this index provide a useful measure of our national wellbeing?
See http://www.prosperity.com/ranking.aspx