Behind the brassy fanfares English builds a policy

Bill English is not a great self-trumpeter. He’s more believable in a low key. Trumpets make noisy politics. His strength is in the subtleties of strategic policy.

Largely unnoticed amid the big brass Budget fanfares, English has been tinkling out a melody of National economic policy renewal.

On Budget night leader Jenny Shipley banged on about the low-paid. That’s defensible — just — as an attempt to wedge the government away from its core vote and English dutifully hums along.

But if National is to write an economic score that wins elections on more than its rival’s bum notes — that is, lays foundations for long-term rule — it needs more than cymbal-bashing.

Helen Clark is gradually assembling a strategic economic policy, built around innovation and partnerships at home and abroad. Michael Cullen’s most important Budget item was enunciation of some theoretical underpinning of its economics.

Their prescriptions are debatable and some fiscal holes have come to light. But the fact that they are thinking strategically and the noisier elements of their opposition thinking at best tactically gives them precious elbow room.

Which is where English comes in. He is shifting National from a 1990s “passive” stance, leaving everything to deregulation, lower taxes and the like, to one of “active leadership” — though not necessarily through government programmes.

In fact, the “passive” stance did lift productivity and so growth — from around 2 per cent to nearly 3 per cent. But in policy terms that was the easy bit. The next 1 per cent, English says, needs a wider and more complex range of policy instruments, including social policy along with economic policy.

On one central point he and Cullen are now at one: the need to lift productivity. Cullen says productivity growth must double to lift GDP growth to 4 per cent — and even then, Cullen acknowledges, it will take two and a-half to three decades to climb back into the top half of the OECD wealth league. English’s aim is more modest — a 10-year climb at 4 per cent to equate average incomes with Australians’.

English’s formula is not tuneful to the ears of radicals. He insists the policy must start with today’s political and economic realities — “how New Zealanders work” — but also the reality that “things keep changing”.

That means, first, defending “traditional advantages”, tourism, niche manufacturing, primary products and low-cost, high-skill services. “We will be one of very few countries where our future depends on how we apply new technologies to primary production.” (Actually Clark has grasped this, too.)

Second, it means encouraging “emerging enterprises — information technology, biotechnology, eco-tourism and environmental innovation”. Third is “the far horizon, the innovative ideas that might work if we take risks, with a tail wind. It requires a mix of competent people, available financing, strong intellectual property laws and a stock of ideas. And we need to develop a risk-taking culture.”

This requires a shift from a “nation that has had to learn fast” — the 1980s and 1990s — to “a nation that wants to learn fast”.

None of that is harshly discordant with the Clark/Cullen score. So, too, English’s “better infrastructure” and “a culture that values teamwork” (Clark says “collaboration”), “success and entrepreneurialism” (the Budget committed funds to celebrating a culture of success).

But there are big differences. English wants decentralised education; Trevor Mallard and Steve Maharey are recentralising. English wants microeconomic reform — moderate deregulation instead of re-regulation, asset sales instead of increased investment in state-owned enterprises.

English wants to cut taxes, which have gone up under Clark and Cullen. And he pays less attention to savings and will lead National in rejecting Cullen’s super fund legislation next month.

There is a lot to flesh out yet and English’s next stage is to draw more on outside input, which he says is now plentifully available.

His low-key policy construction lacks the big-bang quality Shipley is promising for her spring repositioning offensive. But, if anything, it will provide a sounder foundation for hopes of heading off Clark from long-run rule.