Opening opportunity – a government's real test

The Top 200 is an uplifting night out: all about high-performing companies and executives. How would the government go in such a contest?

These are not two separate questions. Companies can do better — especially offshore — if the government is high-performing. Governments don’t do well if companies aren’t high-performing.

Governments’ role is classically defined as managing risk — originally the risks to national integrity from other nations but in the modern world a far more complex array of internal and external factors.

But risks are only one dimension. The difference between a competent government and a high-performing one is how much it focuses on and enables opportunity — not for itself, a company’s straightforward task, but for citizens and economic actors.

At one level that task involves removing barriers to opportunity. For companies, successive governments since 1984 have scored well on various global measures of the business operating environment, including ease of doing business and low corruption. New Zealand consistently comes in very high, top on some measures.

Governments have also done fairly well — very well for a small, open economy with zero leverage — in getting trade agreements to open up markets and improve behind-the-border access to get problems fixed. Trade Minister Tim Groser has been involved in many of those deals and is regarded as one of the most able in the world. (Downside: the government has put skimpy resources into getting New Zealanders “Asia-literate” — that is, deeply understanding Asian cultures — so they can truly exploit the opportunities.)

John Key’s government has continued to streamline and recast regulation to make doing business easier. In fact, its reforms of resource management, local government, workplace relations and mining law alone have made it the most active reforming government since the revolutionary 1984-92 period.

It has also upped major road building, started on fast broadband and set up a project to get more irrigation dams built. Some of its education changes are aimed at getting more focus on business’s immediate workforce needs. Welfare, public and fiscal reform help, too.

All pluses for opportunity.

But has Key’s cabinet put weight into science and research to lift the game?

It has reorganised output to focus more on responding to needs existing businesses identify. But it has not made the big investment lift chief science adviser Sir Peter Gluckman demanded, which in small countries like Denmark and Israel generate opportunities to start up and develop high-technology ventures. The government still invests less than the OECD average.

It is lukewarm about backing the “big pipe” internet capacity researchers need to fully integrate into the world research ecosystem from here, so they don’t have to live offshore to get the connections.

Key and Bill English make much of low interest rates. But they have not significantly dented the chronic balance of payments deficits (if you take out Christchurch reinsurance inflows), so foreign debt keeps rising and businesses’ cost of funds is higher than in competitor countries. The tax system favours multinationals over locals.

Moreover, the deregulatory law changes have not settled policy. If Labour leads the government after 2014, it will reverse many of those changes. That is a significant regulatory risk for business. Add in tightening climate change and environmental policy.

The Key government has made a start — but only a start — on social and educational investment to remove barriers to children being able to learn so they can become productive members of businesses’ workforces. A unanimous, far-reaching, research-and-economics-based parliamentary health committee report on 18 November recommended a step-change in investment in pre-conception, ante-natal and baby years to rescue the large numbers who get a bad start and, as a result, never make great workers.

Life was a lot simpler for governments in the days when they had only to manage risk. But as Top 200 businesses know, opportunity is far more complex — and rewarding.