Michael Cullen is a paradox. So is his economy.
In debate in Parliament Cullen is the master of snide. Off-camera and relaxed, he can punch out a side-splitting one-liner a minute.
In public he is a grim Scrooge. But on television last week he let show, for just an instant, an emotional upset about the poor. His emotion about historical wrongs is a driver in his Treaty of Waitangi deals.
He often divines devious motives in innocent inquiry and is then quick into verbal fisticuffs. But equally often he is patience personified explaining the complex to the confused.
The brainiest intellectual in the House, Labour’s best explainer when he unbuttons, he goes to puzzling lengths not to let on that he is. Labour’s scourge of the Greens, he is also Labour’s most cogent “sustainability” presenter.
The 1980s supposed lefty got on famously with Australian conservative Treasurer Peter Costello. The alleged socialist was the advocate of public-private partnerships inside the cabinet. The minister business loves to hate has extensively cut and simplified business tax.
Then there is Cullen’s economic paradox: apparently effortlessly soaring growth and fiscal surpluses that actually sprang from private debt, the economic transformation that wasn’t, the “sustainable” economy that is less sustainable than he found it.
He leaves for the next finance minister — himself, if Labour crawls over the line and he and Helen Clark still want him in the job — a hard grind out of his paradox economy. The bill is in for the debt. Households will do it tough as they fix red-inked balance sheets amid a housing bust. Cullen has thoughtfully left them KiwiSaver as a moral reminder to save and invest.
Households’ adjustment must be made just as the international economy is souring — including, now, China, our saviour-that-was-to-be with its booming, high-end protein-eating middle class — and downpricing our export commodities.
But look through the rebalancing and you see an economy that has huge challenges but also huge opportunities.
The challenges centre on deficiencies in capital, research, hard infrastructure and human capital. Productivity growth, the generator of real wealth, has been low.
Labour focused first on re-resourcing social services and rebalancing workplace relations –that is, on “equity”. There was some human capital gain from that but the long “tail” of underperformers in the school system persists, to all our costs. And Cullen and his colleagues came more slowly to infrastructure, savings and early childhood education and have not yet really focused on the under-3s, the critical formative years that create the education tail.
Inexplicably, given Labour’s “innovation” rhetoric, science and research were short-changed. This, too, is a Cullen legacy — and one which National seems uninterested in reversing, judging by the lack of real money in its policy.
In the short term policymakers will focus on keeping the boat upright and afloat in the swells, breakers and tidal waves of a stormy international economy. Both major parties and all small parties except ACT propose to raid the Budget to do that.
But, once through the storm (one hopes without plunging the budget back into chronic deficit), will governments — and the rest of us — then make the most of the opportunities?
These opportunities are large and rest on five strong comparative advantages.
* abundant water in a world that for some time will be water-short;
* efficient high-end protein production in a protein-short world;
* abundant and diverse energy resources, including oil, in an energy-short world;
* relative to other countries, benign direct effects from climate change if it follows the trajectory traced by the United Nations’ panel of scientists;
* distance — a constraint because of long and vulnerable supply lines but also conferring the advantage of safety.
That list gives governments and voters choices most countries would die for. And it is wrapped in a top brand, “clean and green” (though we seem hellbent on losing it, not least by mismanaging water).
The real economic issue in this election is not who can give bigger tax and other relief to households or pander to oldies or students or iwi. It is who can develop policies and institutions which most effectively use the window of opportunity those advantages give us to encourage a vibrant, high-waged, durable and well-branded economy.
John Key wants to be a Prime Minister who triggers a step-change in economic performance but his policies point to a quiet life in the middle — exactly what most voters want. Helen Clark has resurrected a goal of getting into the top half of the OECD in wealth but is promising more of the policies which have taken us down, not up, that ladder.
That leaves the small parties. But they are tails, not the dog. So how can you vote to ensure the opportunities do not go begging? There’s a paradox to ponder.
* Next week: take us to our leaders