Most of politics is problem. Can it be opportunity instead? That was a challenge to Labour at its conference at the weekend. It is National’s challenge as ministers start to make their bids for next year’s budget.
The local elections were a flicker of both problem and opportunity. For Labour, opportunity: Len Brown, Celia Wade-Brown and a better “left” showing than Labour dared hope for — but councils spend 3 per cent of GDP and local elections mostly reflect local factors. For National, problem — but John Key’s poll results, while a bit down, are still stellar.
But that is because of what he is, not what he does. Key has yet to make a start on making a legacy. That is both problem and opportunity.
Chief Science Adviser Sir Peter Gluckman, former AgResearch chief executive Andrew West and Science and Innovation Minister Wayne Mapp are pushing a legacy option for Key. The crunch comes next month when bids go in for the 2011 budget.
The word is that the budget will not be a pre-election lolly scramble. That would trash Bill English’s restraint rhetoric.
The alternative is to project into a second term an at least halfway convincing strategy for long-term better economic performance — that is, focus on opportunity.
For two decades governments have underinvested in research, science and technology (RS&T) and innovation. It was thought economically and fiscally improper to match rich Denmark and Finland, which got rich partly on heavy investment in RS&T and innovation, not just by business but by governments.
Here successive cabinets saw RS&T spending as problem. The under-0.6 per cent of GDP spend fell short of the OECD average government spend. Singapore and Korea, once (but no more) considered poor by New Zealanders, are pushing their government spend up to 1 per cent. Even Key says RS&T has been “undercooked”.
Successive finance ministers have moaned at the private sector for spending much less than foreign counterparts — though this may be partly due to tax rules which make much research a capital item which cannot be expensed and so lead medium-sized companies to hide their research as expenses.
Over the past two years the RS&T focus has been on restructuring and reallocating funding aimed at strengthening Crown research institutes’ capability and directing more to business (for example, through the voucher scheme, the takeup of which Mapp says has exceeded expectations) and agriculture (for example, through the primary growth partnership fund).
Sir Peter says this has changed thinking and there is now more strategic linking of science, innovation, business and the economy.
Still, government funding has barely moved as a percentage of GDP. It has been reshuffled.
But now Mapp, who started slowly in RS&T because his main interest was defence (his “review” is about to reach his desk), has got enthusiastic. On Thursday he will scan the role of science over the next 20 years. He got West to find “demonstrable evidence in the New Zealand situation that expenditure on science leads to economic growth”.
West has done that and a lot more. His still very-much-under-wraps report goes far beyond a simple cost-benefit exercise. In his idiosyncratic manner he has crafted a bold, maybe even daring, strategy.
Off that back of that Mapp will pitch for more funds. He is talking of a “modest but not insignificant” lift in the 2011 budget. Others in the swim think it might not be so modest if Key gets enthused and pulls rank on English. One option is an annual commitment of a significant additional sum, accumulating over time to a large lift in GDP terms. That would fit three elements of existing rhetoric. One is not spending on election lollies. Another is boosting innovation, which gradually key cabinet ministers have come to understand is the key to lifting real wages by comparison with other countries. A third is ambition: Key used to say, in the vacuous language of pre-election puffery, that he was “ambitious for New Zealand”.
Sir Peter, Key’s personal appointee, is similarly ambitious. He is frequently offshore forging partnerships with research institutions and governments in other countries, notably in east Asia. (But that is another story.)
What might stop Key? Unimaginative colleagues and colleagues who think focus groups are the cornerstone of democracy and guarantors of power.
Focus groups embody problem, not opportunity. They look backwards and demand timidity, not strategy. Agriculture minister David Carter illustrated their limitation in April with a quote from car manufacturer Henry Ford: “If I had asked people what they wanted, they would have answered ‘faster horses’.”
That brings us back to legacy. Sir Peter, West and Mapp are putting to Key an opportunity.
It might be the wrong opportunity for Key or just too risky or too hard. But small hints suggest he might (just conceivably) go for it. If he does, the 2011 budget might (just conceivably) be his prime ministership’s defining day.