Monday, January 30, 2006

Sideswipe

By Ana Samways

Richard Honnor was feeling lucky until he went into a Ponsonby Lotto outlet to buy a Big Wednesday ticket. "I asked for an $8 ticket and placed $20 on counter. As the cashier is taking ticket from machine and about to hand me $12 change an oscillating fan behind counter snatched the note, blew it off the counter and into a seemingly irretrievable crack between the till and counter. The boss comes out from back room and after much discussion tells me it's my tough luck, there never was $20 and to sling my hook. Two phone calls to Lotteries Commission in Wellington reunited us with our original ticket and change."

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The acting PM of Chechnya is floating the idea of polygamy because women outnumber men there by 10 per cent. Whereas the gender imbalance here is due to the lure of sterling or Bondi Beach, in Chechnya it's because of war fatalities.

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Mcdonald's - a family job: The world's largest restaurant chain is trialing a scheme in the UK whereby two people from the same family working at the same branch of McDonalds can cover each other's shifts without giving any notice. "By giving our employees the freedom to manage their shift commitments, we will increase their motivation and enjoyment of work," said a spokesperson. "In the future we may even look to extend it beyond the family to include friends and extended family members such as cousins." (Source: Reuters)

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From the Sydney Morning Herald: Rory O'Donoghue writes, "Discussing opera after dinner, 9-year-old Kirsty said, 'I don't like opera'. I replied, 'That's OK, opera is an acquired taste', to which she replied, 'I don't like the choir either'."

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A reader who would really like to slap her neighbour writes to Sideswipe instead: "Thank you to the thoughtful neighbour in our small and quiet Auckland cul de sac who reported our car for being parked on the road outside our home ... No, it hadn't been moved for a few weeks, but if you had looked inside you would have seen that the ignition switch had been destroyed during an attempted theft. Thanks to your kind attention we now have a $200 ticket because the WOF expired while it was sitting there. If it was offending you that much, it would have been so much nicer if you had simply walked down the drive and offered to help shift it."

Editorial: Mayors shine with toll issue

Auckland's anniversary is a good day to applaud the decision of three city leaders who will make a case to the Government for the tolling of roads. Road tolling takes political courage. The mere suggestion has exposed mayors Dick Hubbard, Barry Curtis and Bob Harvey to cheap and short-sighted criticism. Nobody welcomes the prospect of paying tolls, even by modern electronic monitoring methods, but nothing less is likely to relieve Auckland's congestion.

It is a proud decision for Auckland for the same reasons that some decry it. They say the mayors are relieving the Government of its responsibility to fully fund national roading and going where the Government fears to tread. Indeed they are. The mayors have looked at the gap between what Transit NZ has the funds to build and what Auckland needs to complete its arterial roads. And they have decided that rather than continue whingeing to Wellington, they will do something about it.

That is the spirit we should expect of a country's largest city. Auckland is demeaned by local politicians and pundits who continually carp about the supposed imbalances of tax collected and spent in the region. On a national scale it is only natural that disproportionate amounts must be spent on services to less populated centres, simply because it is more efficient to service larger populations.

Road and motor fuel taxes should be invested entirely in roads and public transport, but even that might not close the infrastructure gaps in Auckland. In any case, tolls have benefits that no amount of fuel tax can provide. Tolls are a form of tax that can be easily varied to reflect the costs of using a particular road at a particular time of the day. Fuel taxes are much less efficient in that sense. Fuel is taxed the same wherever or whenever it is used.

Tolls are also the best way of attracting private investment in roads, which will be needed to augment Transit NZ's resources. Tolls are the means by which the private sector earns a return on its investment, and it is unlikely to make the investment unless it is certain a tolled road will be used. That is a test that works to the benefit of taxpayers and everyone in the economy. Roads that cannot attract an economic return in tolls are not sufficiently needed and should not be built.

Tolling mechanisms, of course, carry their own considerable cost, which reduces the net cash return from the road. But that equation ignores the non-cash benefits of tolling: the reduced congestion not only on tollways but on freeways that have to carry all traffic at present. Government policy will permit tollways only where a reasonable free alternative exists, though the mayors' proposal seems to involve tolling existing thoroughfares for the sake of new ones.

Mr Hubbard sounds particularly anxious to pay for a motorway tunnel under Victoria Park, replacing the flyover entirely. That is a needless extravagance in Transit NZ's national perspective. But if tolls were permitted for that purpose it would be a test of how much Aucklanders would pay to be rid of the existing structure. Tolls, however, should not be collected for a purpose distant from them. Mr Hubbard's talk of a cordon around areas where motorists could be offered an alternative of public transport sounds suspiciously like an ulterior motive.

Quibbles aside, it is good to see three of Auckland's mayors offering leadership on the city's most pressing problem, and a pity that the mayor of North Shore and the chairman of the Regional Council do not support them. Tolls might never be popular but neither is congestion. With sustained leadership the city will get moving again.

Brian Rudman: Clampdowns sign of tougher times for bylaw transgressors

About the time Captain Cook was rediscovering New Zealand, Admiral Byng was being court-martialled and executed for "failure to do his utmost". His crime had been to let the French get the better of him in some skirmish or other.

Voltaire, the French playwright, later suggested the British, from time to time, found it desirable to shoot an admiral "pour encourager les autres" - to encourage the others.

The bon mot came to mind in the case of two enforcement actions the Auckland City Council has recently been involved in. One, the restorative justice conference involving Royal Oak tree-chopper George Bernard Shaw, the other, the dawn raid by council agents to remove illegal signs on the Retravision Stereo World shop in Dominion Rd. With luck, both actions would have encouraged like-minded property developers and shop-owners to remember that council bylaws apply to everyone, not just the other bloke.

Of course, in the admiral's case, the implication is that he was dealt with excessively harshly in order to put the fear of God into his fellow officers.

In the two local cases, it's not so much the harshness of any council action that might dissuade others, as the certainty of being pursued, and the inevitability of bad publicity.

And with councillors last year voting another $200,000 for enforcement activities, there is now every chance that more "encouraging the others" cases will pop up.

Which is wonderful news, particularly if it helps to get the message out that the council is no longer a walkover when it comes to regulatory infringements, which many developers and the like seem to think it is.

I have to confess, as a dedicated foe of billboards, that I've been a bit slow to jump into the council's long-running battle against the uglification of the Stereo World shop.

The truth is, between you and me, the shop has long been my electronic bargain basement of choice. Over the years, the garish blue paint that covers the place has come to be something of a beacon for me, even when I'm just passing by.

It wasn't until the council's dawn raid this month and the removal of more than a dozen illegal signs, that I had to admit to myself how out-of-control the outdoor advertising had become.

Defiantly, by the end of the week, Stereo World had bounced back by decorating the now broader expanses of blue paint with assorted polka dots in such tasteful retro shades as lime green and shocking pink.

A merry jape, perhaps, but I do hope a temporary one. On Friday I drove out and for once resisted the temptation to disappear inside. Instead I looked at the eyesore the outside has become.

The 99-year-old landmark corner brick building was purpose-built as a butcher shop and could scrub up to be the grandest shop in the area.

But at present the best that can be said is that we customers can be sure that none of our hard-earned cash has gone into discretionary building maintenance.

Sash windows upstairs were propped open with an old brick and a bit of skirting board. The windows at pavement level are covered by grubby board signs.

As far as I'm aware, TV's One News has not caught up with this battle, which is a shame. For if ever an organisation needed to be "encouraged" by what is happening to others, it's the state broadcaster, which drapes ugly promotional banners down its landmark central Auckland headquarters.

To deface its prestige building in such a manner is just as tacky as what's happening down Dominion Rd. And it gets worse.

Rival TV3 commandeered the apartment building diagonally opposite TVNZ , using it to taunt the state broadcaster with huge images of then newsreaders John Campbell and Carol Hirschfeld.

As a one-off it was amusing and perhaps forgivable.

But TVNZ was obviously so put out it made an offer for the site that couldn't be refused, and took it over for its own use.

One objective of the sign bylaws is that a sign should not significantly alter the presence of a building.

On that count, both Stereo World and TVNZ seem equally culpable.

Claire Harvey: Heartfelt show of teenage angst is oddly reassuring

His voice sounds as though it has recently broken, a little raspy, mostly deep, occasionally betraying him with a slip into squeakiness.

About13, maybe just 14, and blond, like his mum, who's about 30cm shorter. They're standing outside a shop, with a fair-haired sister a few feet away, texting, oblivious.

The half-boy half-man is sobbing, heaving great breaths in and shuddering them out. "I'm never going back, never, I'm not, not there, not to that stuffed-up place." His face is red and wet under his baseball cap, his mouth stretched and turned down at the corners, that crying-grimace that shows all your teeth. His mum is trying to hug him, which he's allowing, probably only because his mates aren't around.

Who knows what happened to cause this Saturday-morning scene in suburban Auckland - maybe a shopkeeper accused him of pinching things, maybe some cool girls teased him in the surf-shop, maybe he was shouted at for spilling his drink in the cafe.

Whatever, it must have been the sort of everyday humiliation which makes adolescence a miserable tunnel of pain, a great big reminder that he's alone, nobody understands him, the world is stupid, everything's unfair, everyone sucks.

He can't stop himself weeping, which is making it all worse; now everyone probably thinks he's a baby, everyone's staring, everyone's laughing. "I'm not going back, I'm not, they're just ****ed, mum."

The swear-word dissolves Mum's sympathy in a second and her words of comfort - "It's all right, darling, it was awful, you're right, we don't have to go back" - turn into admonition: "Robert! Don't you speak like that! We do not swear!"

Poor little bastard. Not even his mum's on his team now.

She's still patting Robert's arm, still trying to hug him, but she can't let an obscenity go, must set boundaries. That's what you have to do with teenagers, isn't it? Otherwise, before you know it, they're smoking crack and robbing dairies.

The little drama between Robert and his mum - which lasts all of 10 seconds - is a tiny flash of recollection, a reminder of how awfully lonely it is to be a teenager. There you are, trapped in this limbo between Xbox and pushbikes and dolls and pimples and sex and drink-driving, and not even your mum gets you any more.

But maybe mum's just terrified.

As a society, we seem to be perennially petrified of teenagers, of their fragility, their potential for sudden emotional eruptions, their sensitivity to any hint of mockery, their potential for violence.

The British papers are full of the new incarnation of adolescent horror; a kind of gang-bashing known as "happy slapping", where a bunch of kids approaches a stranger, often a homeless man, pushes him to the ground and kicks his head and body until he stops moving.

A gang of four youths was sentenced at the Old Bailey six days ago to manslaughter sentences of between eight and 12 years for the "happy slap" killing of young Londoner David Morley, whom they accosted one autumn night in 2004.

One of the killers, Chelsea O'Mahoney, was only 14 on that night, when her gang (the others were aged 19, 16 and 15) attacked eight strangers including Morley, who died of a ruptured spleen after more than 40 kicks and blows.

Closed-circuit television footage of one of their attacks shows the gang's boots crunching into the head of a homeless man huddled against a wall, as O'Mahoney stands back, calmly recording it all on her video-enabled mobile phone.

The "happy slapping" phenomenon, which reportedly began as a schoolyard game of accosting another kid, slapping his or her face and using a cellphone to record the astonished reaction, has plainly turned ugly, and each week there's a new incident being reported.

It's interesting to see how this is being interpreted by many British commentators as evidence of some new kind of teenage menace. Many of the press reports give the impression that these teenagers have been warped into little savages by their cellphone cameras, or by television programmes such as MTV's Jackass and Dirty Sanchez, which feature the kind of dodgy stunts and violent practical jokes (like do-it-yourself genital piercing and drinking one's own sweat) which teenage boys find hilarious.

It's all so familiar, all reported with the kind of lost-innocence dismay that accompanied stories about moshing in the 1990s and skateboarding gangs in the 1980s and rock'n'roll in the 1950s, the sense that an entire generation is suddenly different, suddenly wild, suddenly prey to all sorts of sinister influences that never led their parents astray.

It's far too simple to be plausible, isn't it? Gang violence has existed forever, and there have always been rotten little beasts kicking people's heads in and beating up grannies. Moral panic about the youth of today is just as unrealistic now as it always was, and that's why it was oddly reassuring to see Robert grappling with life and his mum, just as his parents' and grandparents' generations did.

Despite the disturbing stories, it's nice to know adolescence has not suddenly become Chelsea O'Mahoney and her mobile phone; it's still Robert, sobbing on the footpath, sensitive and misunderstood and unappreciated and perpetually embarrassed. What a relief.

Anthony Scott: Research vital to making headway

As the New Zealand economy seems set to enter a rough patch, the Crown Research Institutes will face a critical test of their central task of developing knowledge into benefit for New Zealand.

Will this year demonstrate that public and private sector entities regard R&D as an optional extra - a cost which can be jettisoned - or an investment which underpins performance and spurs advance?

Advanced economies understand that it is almost impossible to stay in business, let alone get ahead of the game, without R&D investment.

Companies in software, consumer electronics, and biotechnology endorse the value of R&D. Smaller companies see R&D as a route to riches.

Ours is the only first world economy reliant upon primary production. It isn't sexy, and so the R&D it relies on is overlooked.

What grabbed your attention this summer: the story on the clover root weevil parasite AgResearch is trialling, or the new iPod? If, like most, it was the iPod, you will have missed the fact that the research will save the country hundreds of millions of dollars.

Nevertheless, at a corporate level, R&D has been gathering pace. Investment in R&D through the Government (including CRIs), universities and the private sector rose 13 per cent between 2002 and 2004 to $1.6 billion.

Can we be confident that this indicates R&D is seen as a long-term investment, not to be derailed by a little "rough patch"?

But I worry when, in a Herald report this month, Owen Hembry quotes a businessman asking what is the most significant output of Crown Research Institutes. It's as if R&D is all about big-ticket, prominently branded things - just what gets cut when rough patches come along.

Ironically, it is the success in integrating knowledge into products, processes, jobs and our environment that sells the value of CRI R&D short.

It is not our job to become billion-dollar companies, subsidiaries of multi-nationals, develop companies to compete against the private sector or enter global deals solely for revenue.

We help sectors to develop and succeed, usually staying in the background.

So I offer a proposal - only partly tongue in cheek - to bring R&D from the shadows.

It would apply to knowledge forming part of a much larger output - much as the clover root weevil parasite contributes to the wealth and welfare of each of us.

It would also apply to R&D output commissioned by someone else (increasingly, private sector firms). It could be applied retrospectively to things we now routinely use that owe their origins to CRI science.

My model is Intel. Its R&D knowledge is embedded in the Pentium chips that power most PCs - hidden except for the sticker "Intel inside".

Now apply that to CRIs. Our brand values are a plus to marketers: we are ethically and socially responsible, good employers, do research to benefit New Zealand, and pursue excellence.

The benefits of the little sticker (CRI inside?) to New Zealand would be immense. It would indicate how dependent this country is upon R&D, stimulate national pride, encourage investment, and inspire study and career choices.

Imagine seeing that stamped on milk factories, timber mills, meat processor, furniture plant, fishing boats, hospitals, office blocks, museums, packing houses, ski fields and vineyards, dams, cafes, police station and policy documents.

The list is as big as our economy. Imagine it on each tree, fish, wine bottle, grass, fruit, machinery and material.

Hundreds of thousands of jobs are dependent upon the R&D that keep provincial New Zealand producing and exporting, and our metropolitan areas servicing.

And how do you stamp cleaner air, water and pure birdsong and undamaged trees with the underlying intellectual property which has either restored or conserved such environmental wealth for recreation and tourism?

So the challenge is to begin this year not just anticipating rough patches but knowing that what has got us through, and will again, is the quality of our R&D. Just look around you.

* Anthony Scott is executive director of the Association of Crown Research Institutes.

Gwynne Dyer: Ray of hope amid Palestinian election upheaval

Hamas did not win its surprise victory in the parliamentary election in the occupied territories because a majority of Palestinians are religious fanatics, nor because they believe that Israel must be destroyed.

It won because the old mainstream liberation movement, Fatah, had squandered its credibility in 10 years of corrupt and incompetent rule in the West Bank and the Gaza Strip, and because after 39 years of Israeli military occupation there is still no sign of a genuinely independent Palestinian state.

There is actually a small ray of hope in Israel at the moment. The political demise of Ariel Sharon has changed the dynamics of Israeli politics, and there is an outside chance that the Israeli elections in March could produce a government that is prepared to enter genuine negotiations with the Palestinians. Or rather, there WAS an outside chance, but most Israelis will see the victory of Hamas as evidence that Palestinians don't want peace.

In fact, most Palestinians do want peace. They would quite like it if Israel were to vanish, of course, just as most Israelis would be happy if the Palestinians vanished. But as much the weaker party in the conflict, Palestinians have long been more realistic about what they would have to give up in a final peace settlement. For almost 20 years Fatah's demand has been for a state in the territories that Israel conquered in 1967, not the other three-quarters of colonial Palestine that they lost to the new Israeli state in the 1948 war.

The problem is that for 20 years Fatah has made almost no progress in its pursuit of that goal through peaceful negotiations. Indeed, apart from the first three years after the Oslo accord of 1992, before Prime Minister Yitzhak Rabin was assassinated by a Jewish extremist who feared that he would give too much away to the Palestinians, and a brief period around the turn of the millennium when Ehud Barak was Prime Minister, there have hardly been any real peace negotiations.

Instead, Israel has been convulsed by an endless internal debate about how much of the conquered land it has to give back in return for a permanent peace with the Palestinians.

During this period the Jewish settler population in the occupied territories has grown fivefold to over a quarter-million people, average Palestinian incomes have fallen by more than half, and still there has been no substantial progress towards a genuinely independent Palestinian state.

So it is hardly surprising that parties such as Hamas, which reject the Fatah strategy of compromise with Israel, have enjoyed growing support among despairing Palestinians.

The fact that both Hamas and its smaller and more extreme rival, Islamic Jihad, are religious parties is simply a reflection of political trends across the Arab world. Thirty years ago, it was secular parties like Fatah that were seen by the Israelis as the extremists and the rejectionists. Back in the 1980s the Israeli intelligence services encouraged the growth of Hamas as a counter-balance to the secular radicals of Fatah. (To be fair, that was no more stupid than the CIA's support for people like Osama bin Laden in the Afghan war at the same time.) Now the Palestinians have given Hamas a clear majority of seats in the Palestinian parliament, and Prime Minister Ahmed Qureia and his Fatah-dominated cabinet have already resigned. So is the "peace process" finally, legally dead?

It is for the moment. Hamas has reaffirmed that it has no intention of giving up the armed struggle against Israeli occupation (although its armed wing has largely respected a ceasefire negotiated with Israel by Fatah and Egypt a year ago), and it has said once again that it has no intention of negotiating with Israel. This really is a political earthquake.

And yet ... And yet there is always hope, because having genuine political power and responsibility for the results of exercising that power is a crash course in realism. Fatah made the journey from rejectionism to negotiation; it is not inconceivable that Hamas can do the same. It may just take more time than remains for the present peace process, which is already 14 years old.

In the meantime, don't despair just because the United States, the European Union, and all their friends have officially branded Hamas a terrorist movement, and every news agency report dutifully describes it as a group that has killed hundreds of Israeli civilians. So it has, but then the Israeli Army is a group that has killed much larger numbers of Palestinian civilians. History has made these people enemies, and they behave accordingly.

But as Israeli general and politician Moshe Dayan once remarked: "If you want to make peace, you don't talk to your friends. You talk to your enemies."

A Palestinian government led by Hamas and the government of Israel will end up in negotiations one of these days. This is not the end of the road.

Christopher Niesche: Slow growth not enough to lower OCR

If business expects Alan Bollard to deliver lower interest rates any time soon it will be sorely disappointed - even slowing growth won't induce the Reserve Bank Governor to cut rates over the next few months.

In fact, it would be foolhardy to bank on a rate cut any time this year.

True, Bollard said last week that he had probably finished raising interest rates in the current cycle. But just because rates aren't going up any more it doesn't naturally follow that they'll immediately start going down, a point Bollard was at pains to make - but one which will probably be ignored.

"We see no prospect of an OCR easing, given the relatively high medium-term inflation outlook," he said.

The end of the tightening cycle already has banks and businesses eagerly forecasting the first rate cut. Businesses will point to the sub-2 per cent growth expected this year and say it's time to give the economy some renewed stimulus.

Some forecasters are expecting mid-year rate cuts and there may be a case for this based on the softer growth outlook alone. Certainly after four or five years of strong economic growth, annual gross domestic growth under 2 per cent will seem like a crawl.

But Bollard will remain squarely focused on inflation and will leave the OCR at 7.25 per cent for as long as he needs to.

Calls for rate cuts ignore the fact that several quarters of tepid growth will be needed to relieve the economy of built-up inflationary pressures after those years of red-hot growth. One or two soft quarters - although they'll have the business lobby screaming for lower rates - just won't be enough.

With low unemployment, strong wage growth and still increasing house prices, it's hard to see how inflation - now running at 3.2 per cent a year - will fall enough to let Bollard drop rates over the next few months. Under his inflation-fighting agreement with the Government, the Reserve Bank Governor has to keep annual inflation between 1 per cent and 3 per cent and so has little comfort zone to risk letting inflation climb higher.

Add the possibility that the New Zealand dollar could drop sharply and push up the price of imported goods and the chance that oil prices could climb further, and you see that Bollard won't risk cutting rates until he's certain he's beaten inflation.

Only rapidly rising unemployment, falling corporate profits, and the gloom accompanying a recession would halt inflation enough to allow a rate cut.

Certainly there are factors in place making New Zealand vulnerable to a recession: a ballooning current account deficit, inflation pressure, an overvalued housing market, a high dollar and high interest rates.

These factors alone won't cause a recession. That would have to be caused by a sudden and unforeseen external shock hitting New Zealand, such as a global downturn or another Asian financial crisis. Neither of these prospects appears likely at the moment.

Business has some justification in feeling a little hard done by. It is bearing the brunt of the rate rise through higher interest costs, while householders - whose uncontrolled spending caused the inflationary pressures and who are Bollard's real target - have so far largely been protected by fixed-rate mortgages.

And Bollard's statement in a speech on Friday that he can't adjust interest rates to help manufacturers and exporters who are struggling with offshore competition and the high New Zealand dollar won't have helped businesses' mood either.

The one consolation for business in having an OCR at 7.25 per cent is it gives Bollard a lot of scope to cut rates if the downturn gets too severe. By contrast, if the nascent Japanese recovery turns sour, there's nowhere for official interest rates in Japan - which stand at zero - to go.

As New Zealand's growth slows this year and business starts to feel the squeeze, calls for more accommodating monetary policy will grow more strident. But the reality is any rate cuts before the end of the year will be in response to a recession.

Business should be careful what it wishes for.

Wayne Mapp: Slowdown calls for productivity boost

This year is going to be tough if the current low level of business confidence is a guide to the future. The effect will be that growth might be doing well to reach 1 per cent a year. This figure barely matches population growth, with the result that per capita income would be static.

It is time for the Workplace Productivity Group, established by the Government in 2004, to make a real impact on how New Zealand can improve its growth. The group is intended to be a collaborative exercise between the Government and business and, given the ideology of the current Government, unions. The objective is to boost New Zealand's productivity.

Our productivity growth has remained stubbornly low at 1.4 per cent a year on average over the last 10 years, compared with 2 per cent in Australia over the same period. Australians have become richer compared to New Zealanders. Our low level of productivity is also one of the reasons why New Zealand is so vulnerable to the impact of exchange rates, interest rates and commodity prices.

Research by the New Zealand Institute shows that the overall composition of New Zealand exports has scarcely changed over the last decade. We remain primarily an efficient, low-cost producer of temperate agricultural products.

The reforms of the 1980s have certainly made the economy more efficient, and improved the profitability of our principal agricultural producers. They do not seem to have led to a more diverse range of exports, at least in goods. In 2005, only 50 firms had annual exports greater than $75 million.

Of course, trade in commodities and physical goods gives only a partial picture of our economy. Trade in services, tourism and by the creative industry, particularly film production and educational services, has grown at a much faster pace than our traditional commodity-based business. Tourism has grown from $9.1 billion in 1995, to $17.2 billion in 2004. Nevertheless, New Zealand's export performance compared with other similar developed economies is poor. In Ireland, exports are 86 per cent of GDP; in Finland the figure is 43 per cent, but in New Zealand it is 29 per cent. As the New Zealand Institute notes, there is no developed country with a similar population to ours that exports less than New Zealand.

All this raises the question, "What can be done about it?"

This is where the Workplace Productivity Group should have something to say. The work done to date largely consists of platitudes. There is no sense of urgency on what has to be done to improve New Zealand's economic performance. Much of what the Government does is counter-productive. It has been steadily increasing the cost of business through greater compliance costs. It has stubbornly refused to reduce taxes, either for individuals or the corporate sector, even though there is an annual surplus of $8 billion. However, the question that has to be asked is whether the productive potential of the economy can be unlocked if the principal prescription is to reduce taxes and compliance costs.

In successful economies, Governments do more than get out of the way. They are the primary funders of education, and actively work to attract international business. The common theme of the most successful countries is a highly skilled workforce. In 2002, New Zealand's expenditure in tertiary education is 1.5 per cent of GDP, falling well short of Australia's 1.7 per cent, particularly given so much of New Zealand's tertiary education expenditure is on low-quality and low-level courses such as those offered by Te Wananga o Aotearoa.

There is comparatively little sense of strategic direction for tertiary education. There is not any significant consultation with the business and private sectors, although some notable efforts to change this, with the University of Auckland's new business school, and business incubators such as Auckland's Icehouse, and Massey University's Albany facility.

The productivity reference group needs to take a much more focused approach to improving the quality of New Zealand's workforce and building quality management. We need to do more to work out what are the key drivers of success in other small highly developed economies. The alternative will be a continuation of the brain drain across the Tasman, and less choice and opportunity for those New Zealanders who remain here.

* Wayne Mapp is a National MP and spokesman for labour and industrial relations