THE ART OF ASSOCIATION

HYATT HOTEL
AUCKLAND

President Geoff Thompson, Divisional Chairman John Slater and Margaret Slater, Ministers, MPs, delegates, ladies and gentlemen.

I have had the opportunity to speak to the Auckland Divisional Conference many times before but never in circumstances as politically interesting as they are today.

First I want to thank your Chairman, John Slater, and the whole Auckland Division for the great result you achieved at the last election.

Thank the volunteers and your MPs for the effort and the result.

In the past few years, Auckland has become one of the powerful support bases for the National Party.

And I want to say well done to all of those who have brought that about - a great achievement.

It's six months since the election - and as I have said before - doesn't time fly when you are having fun!

Helen and team get angry when I say that because they are sure not having much fun in Opposition again.

Jim Anderton and his motley group of misfits certainly don't seem happy with anything.

Pam - the voice - wishes she was back on radio earning as much as Paul Holmes.

ACT, consistent with their claim to represent thinking New Zealanders have made a detailed study of taxi chits.

When they work out where all Jonathan's chits have gone, Rodney is going to make a study of trains.

Our coalition partner New Zealand First have had a demanding six months since the election; first the long coalition talks and since then getting a new team up and running in Government.

We all know some of them have made mistakes but working alongside them every day I want to say that their contribution to the work of providing New Zealand with stable, constructive, Government deserves recognition and thanks from those who support the broad thrust of National's economic policies.

The alternative was that New Zealand First helped Labour and the Alliance form a Government.

That would have been a disaster for New Zealand.

I thank them for going with National and for their commitment to build a strong centre-right Coalition Government which will last more than one three-year term.

That's what is really making the left unhappy. The wilderness of Opposition is a lonely place.

Of historic importance is the fact that because New Zealand First represents all Maori electorate seats Maori electorate MPs are working on the centre-right of politics for the first time in 60 years.

That's certainly making Helen unhappy as well.

She's achieved what no other Labour leader achieved - she lost the Maori vote.

Many sectors of the media were so excited about the possibility of the Labour leader being the first woman Prime Minister - remember the Time cover, Prime Minister in waiting - that they completely overlooked the fact that the 1996 election was a disaster for Labour.

Helen Clark moved Labour left and Labour saw their support drop to its lowest level since 1928.

After two terms in Opposition where political parties traditionally build support and gain voter share, the Helen Clark-led Labour Party did the opposite and lost seven per cent support.

It's called the midas touch in reverse.

Compare that with the British Labour Party which under Tony Blair deliberately moved Labour to the centre, and on issues like privatisation the centre-right, and they gained huge support.

The lesson for New Zealand Labour from the British election is a grim one.

Going left loses votes and New Zealand Labour can't move to the centre-right because that's National territory and we don't intend to give it to Labour.

The only party that made New Zealand Labour look good was their left wing partner the Alliance, which lost almost half its support.

The Pam Corkery-led revolution fizzed out early.

As the governing party which had led New Zealand through some difficult and some unpopular change, we did very well to retain our vote despite in the end losing the six per cent we had hoped to gain to ACT, as a direct result of National leaning voters looking to create a coalition partner.

In the event our coalition partner came from the centre in the form of New Zealand First.

The 1996 vote which enabled National to form and lead the new Government renewed our mandate and by so doing positioned us to carry forward our programmes and to deal fairly with all New Zealanders in a way that recognises our past while building opportunities for our future as a vibrant, diverse society.

Our first steps to independent nationhood took place in the peaceful village of Waitangi a short 157 years ago.

There have been many mistakes along the way.

Some by the deliberate act of early Governments who between 1862 and 1899 passed or amended on 60 occasions Acts of Parliament which had a negative impact on Maori owned land.

We can't go back and undo all those mistakes but we can learn to listen carefully to the concerns of Maori.

That is what your Government has committed considerable time and energy to doing as we seek to redress past wrongs.

There are no perfect answers but with goodwill, as we showed with Tainui, solutions acceptable to the great majority of New Zealanders, Maori and non-Maori, can be found.

So I ask for your support, tolerance and patience as Doug Graham, myself and others work to make progress.

In 1955 the Soviet Communist Party Leader, Nikita Khruschev, was asked what must have seemed an absurd question at the time: what were the chances of the Soviet Union rejecting communism?

He replied:

&Those who wait on that must wait until the shrimp learns to whistle.8

Which just goes to show that, when you're dealing with the future, you can never be too sure what lurks around the corner - it may even be a whistling shrimp.

As we gather here in Auckland this weekend, the National Party is engaged in no less than three historic tasks which will determine the party and perhaps the nation we will have in the years ahead.

The first of these is that of leading New Zealand's first MMP era Government.

For some it is proving to be something of a magical mystery tour, but given that New Zealand has no tradition of MMP, this was always to be expected - but it's working well.

Importantly, I can assure you that we are on course to finalise the Budget which again will be the envy of most countries, as we will show that we can increase spending in key areas like health and education and still produce a large surplus to further repay debt.

The economy after pre-election uncertainty, coalition uncertainty, is moving back into its growth rhythm which will be helped by the dollar stabilising and 90-day interest rates falling back under seven per cent.

We are still on track to achieve strong economic growth year on year through to, and past, the end of the century.

Over the three year term we will implement the broad sweep of the Coalition Agreement that we negotiated last year.

The second task - and this is the big one - is to understand the new realities that are going to drive policy in enlightened democracies and the challenge this poses for conservative parties like ours.

To be successful in politics at times of rapid change it is essential to be open to radically different ways of approaching issues - something that has often proved difficult for a ruling conservative party.

Historically, a clear example of this was the 1930s when conservative Governments were unable to capture the need for far-reaching change and were swept away.

More recently, in the early 1980s while National was bringing forward change in many areas it wasn't bold or radical enough and we were also swept aside.

The risk now is that we will concentrate all our energy solely on completing that package of reform when we should also be thinking of the next wave of change.

I am sorry, there is no time for a cup of tea in modern politics - as David Lange will tell you.

The last of the tasks in which we are engaged is the organisational review which aims to re-gear the Party to meet the unfolding realities of an MMP-based democracy.

A democracy in which all future Governments will be Coalition Governments.

Many in the Party find that fact itself difficult to accept but it's true and won't change.

This effort is being spear-headed by a team led by the Hon Jim McLay.

I want to thank Jim for his efforts and without getting into the details suggest you might consider adopting a relatively flat structure in which Electorate Chairs, because of their important role in the party, are given further recognition.

A political party's structure is only going to be effective if we have a clear view of our goals.

These could be stated as:

`Getting the Government out of peoples lives when there is no need to be there and to be there when that is what a modern civilised society would expect.'

I want to make the changes we must face in modern democracies the focus not only of my speech today, but also of the addresses which I will be giving to the other Divisional Conferences in the weeks ahead.

I stated a few moments ago that the biggest task we face is to understand the new realities that will drive policy in the 21st century and demonstrate an ability to respond to these realities.

The term `Global Village' now trips lightly off the tongue, but we give too little thought to the full implications of such a `village' in terms of policy, trade or the loss of absolute sovereignty.

That loss of absolute sovereignty with regards to the European Union was a key element in the debate in the British election, and the divisions it created within the Conservative Party contributed to their defeat.

There are other major shifts in society that New Zealand must face up to.

Every delegate in this room will tell you that New Zealand's population is ageing and will do so very rapidly after the first decade of the next century - a short 13 years away.

The response of most New Zealanders until now has been to shrug their shoulders and hope it will work out - somehow - a conservative response.

All sides agree that further savings by individuals are necessary for a comfortable retirement.

We have ads on TV every night from the Retirement Commissioner urging us to save.

The only debate is whether they should be voluntary or compulsory.

The right of politics, ACT, and the centre, New Zealand First, have suggested that the correct response is a compulsory superannuation scheme so that in future New Zealanders will have greater certainty in their retirement because they have saved for it through their working lives.

My judgement is most people in this room will oppose that because they don't like the concept of compulsion and so will prefer to rely on centralised state-funding for super through compulsory taxes.

I ask you to consider the question carefully because centralised state-funded superannuation is not consistent with the centre-right approach of requiring people to provide for themselves when they are able to do so.

You must make your own decision on superannuation in the referendum in September.

We are not alone in debating the challenge of an ageing society.

The average age in Japan is now 40 years; no society in all of history has ever been so old - we are following closely behind with our average age of about 35 years.

I return to the point that to succeed in the 21st century we will need to throw open the window to let new ideas in.

Ideas that fit in with the concept of the Global Village, ideas that acknowledge the radically changed nature and age of society.

We also need policy ideas that are attractive to a New Zealand society which has much higher levels of education and knowledge, and higher levels of expectation.

A society which is increasingly concerned not just with their personal economic well-being, but the quality of life provided by the community in which they live.

There isn't much joy in us owning a million dollar home if you have to surround it with a high fence to keep your wife and kids safe.

And that is increasingly the reality in many seemingly wealthy societies today.

We have the chance to do things a better way; to blaze a new trail in building better communities, in the same way that we did in the economic area.

For much of the 20th century, economic debate was dominated by the competing philosophies of free-enterprise capitalism, on the one side, and state-sponsored communism on the other.

With the fall of the former Soviet Union, free enterprise clearly won; and global economic thinking reached a broad consensus about what works and what doesn't

The New Zealand experience in developing the free enterprise model has attracted much attention and support.

The Coalition Government will continue to reform as we must to remain competitive; which is why we recently introduced legislation into the House to deregulate New Zealand's postal services.

We will constantly review the reasons for both restrictive regulations that deny opportunity and for the continued Government ownership of various institutions or shares in institutions unless we have already said a particular asset is not going to be privatised.

Local Government must do likewise.

In New Zealand we have learnt much and our reform programme has been admired by many, but today I issue a call to the National Party to look anew at tomorrow's options.

To ponder again Adam Smith's observation that economic life is deeply embedded in social life and cannot be understood apart from the customs, morals and habits of the society.

We cannot divorce the economy of a nation from its culture; because it is culture, not economic theory alone that guides the lives and decisions of its citizens.

In having a new look at policies we must look not only at the economy's impact on the community, but equally importantly at the community's impact on the economy.

The deregulation of financial markets, the lowering of trade barriers and the technology and communications explosions are fast moving decision making away from Central Government.

Power is flowing back to individuals and the intimate communities in which they gather; whether these be geographically defined communities or communities defined by a common interest.

The days when a Prime Minister could, or thought he could, decree most things in life, are long gone.

And, while inevitably there are those who still yearn for the supposed certitude of big government, we must have as our focus the development of policies which continue to devolve power and decision-making from the centre.

Developments such as these fit like a glove on the core values of the National Party; they reach back to the way civic society operated before the arrival of big government.

With the failure of centralised planning, concepts based on the importance of the community are being presented with new language.

The economist Francis Fukuyama calls it `The Art of Association'.

Where it is present we will find cohesion and civic trust - referred to as social capital - which has a measurable economic benefit, in the same way fiscal capital does.

It can be nurtured, accumulated and stored away for a rainy day; or alternatively, it can be ignored, squandered and depleted.

We are going to hear more of the concept of social capital, but there is as yet no clear consensus on how we go about building it in a modern society.

That, I suggest, is the next great political challenge; one which we must keep foremost in our minds as we consider what the National Party's policy will be tomorrow.

While no one has yet produced the definitive answer to the question of how a nation goes about accumulating social capital, there are four characteristics which are found in communities that have it.

They are:

a sure sense of belonging;
strong social cohesion;
support systems for the family; and
the nurturing of individual potential.
Where all four are found we find strong, trusting communities.

Building a sense of belonging requires that we know who we are, many of the factors which contribute towards the building of a strong sense of identity are within our influence.

At a local level we must foster communities which:

demonstrate a sense of leadership, a spirit of co-operation and participation and respect for cultural diversity;

build social cohesion by providing opportunities for citizens to participate in meaningful activity, reducing the feeling of alienation and isolation;

promote the essentials of family well-being; a sense of belonging, caring and stability, a healthy start in life, and security in later years;

provide a diversity of services and activities which enhance the quality of family life, build self-reliance and reduce dependency;

encourage knowledge and skills, the dissemination of civic information, and provide employment opportunities.
In these ways they establish a virtuous circle in which civic strength, social cohesion, and a sense of trust steadily grow, producing abundant social and economic dividends.

Many of the matters I have spoken of here - such as health, education and social welfare - have traditionally been seen only as Central Government responsibilities.

But the reality is that the benefits which flow from our spending on these services can be greatly enhanced when there is both voluntary and professional participation at the local level.

What we are talking about here is working together to add value.

To those wedded in the concept of large Central Government these are very radical concepts, but to those who think carefully about the real issues we face in society and think about them in human terms they will have the ring of truth.

Certainly they are concepts our National Party will want to explore and develop as we prepare for the next century.

Such concepts throw the spotlight on the future role and structure of local authorities; we must ask not only how should they fulfil their purpose, but also what is their purpose?

In Auckland we have the Tale of Two Cities - Papakura and Manakau - which appear to be taking starkly contrasting approaches to life.

Papakura is your stripped-down, private enterprise number whose philosophy is `if the private sector can do the job faster, better and cheaper for the community, then why not let it? '

Manakau, by contrast, has an outward appearance of being more concerned with the social well-being of its citizens - some might call it a more socially concerned city.

Which raises the question of which one is taking the right approach? The answer, I believe, is that - at least in part - they both are.

Papakura is a trail-blazer from which the rest of New Zealand, with its intense concerns about infra-structure development - especially relating to transportation, can learn much.

The fact is that the bridges, tunnels and rapid transport systems of tomorrow are physically going to be built by neither Central Government nor Local Government, but by private enterprise.

The role of Government, both Central and Local, will in the future be more of a facilitator and Papakura knows this.

Manakau City, on the other hand, recognises the importance of social cohesion, a sense of belonging and support systems for the family, and is prepared to rate its citizens to support it.

We all agree with the goals, the question is what is the best way to provide them.

The Papakura and Manakau approaches may look very different, but they are not necessarily incompatible.

On the contrary, the model for tomorrow may well see local bodies privatising non-essential services, becoming purchasers rather than providers of essential ones, and putting their energy into fostering civic participation in developing the strength of their communities.

It is only by having strong families in strong communities that we will overcome many of the concerns that beset modern societies.

Delegates, the decade of the 90s will be remembered as the decade in which we improved our economic infrastructure, kept the size of the economy growing and provided jobs and opportunities for more and more New Zealanders.

My goal is that the first decade of the 21st century will be recognised as the decade in which we rediscovered that which builds social cohesion through community involvement.

Fortunately, the advent of Coalition Government and the larger number of Maori, Pacific Island and one Asian MP will help this to happen, because all three groups place great emphasis on family and local community.

The House of Representatives is now far more representative than before.

We have more women - 36 at the latest count with the arrival of National's newest member, Annabel Young, last week - and a greater number of Maori than before.

We also have, in Pansy Wong, New Zealand's first Asian member and, in Arthur Anae, National has our first member from the Pacific Island community.

To build broad-based community trust, we need them; cultural diversity is now a marked characteristic of the New Zealand identity.

It must also be a characteristic of the modern National Party.

Today I have deliberately couched my remarks in terms of what the community and the individual can do, rather than what the Government might do.

What a Government might achieve directly is limited; by contrast, what a vibrant community can influence in our daily lives is great.

It's stimulating to be involved in politics at a time when another sea change is gathering momentum.

I invite your participation in what will be one of the great debates of modern politics - the growth and influence of communities.

The day of expecting ever larger Central Government to deliver all is over, and the issue has now moved on to how a better partnership between the Government and the people can be developed.

Be warned - your views and my views are going to be challenged as we seek to better meet the needs of communities.

This conference is the first Divisional Conference in the new era of MMP and we have much to do to strengthen our position as the pre-eminent political party in New Zealand.

We will do it by clearly defining our position on the issues that are or will be important to the electorate.

We will do it by having policies and attitudes which are in tune with the demands of the Global Village.

We will do it because the National Party is gearing up to embrace the new challenges with enthusiasm, with a sparkle in our eye and a dance in our step.

Thank you for all you have done thus far, have a great conference.

Ends
HYATT HOTEL
AUCKLAND

President Geoff Thompson, Divisional Chairman John Slater and Margaret Slater, Ministers, MPs, delegates, ladies and gentlemen.

I have had the opportunity to speak to the Auckland Divisional Conference many times before but never in circumstances as politically interesting as they are today.

First I want to thank your Chairman, John Slater, and the whole Auckland Division for the great result you achieved at the last election.

Thank the volunteers and your MPs for the effort and the result.

In the past few years, Auckland has become one of the powerful support bases for the National Party.

And I want to say well done to all of those who have brought that about - a great achievement.

It's six months since the election - and as I have said before - doesn't time fly when you are having fun!

Helen and team get angry when I say that because they are sure not having much fun in Opposition again.

Jim Anderton and his motley group of misfits certainly don't seem happy with anything.

Pam - the voice - wishes she was back on radio earning as much as Paul Holmes.

ACT, consistent with their claim to represent thinking New Zealanders have made a detailed study of taxi chits.

When they work out where all Jonathan's chits have gone, Rodney is going to make a study of trains.

Our coalition partner New Zealand First have had a demanding six months since the election; first the long coalition talks and since then getting a new team up and running in Government.

We all know some of them have made mistakes but working alongside them every day I want to say that their contribution to the work of providing New Zealand with stable, constructive, Government deserves recognition and thanks from those who support the broad thrust of National's economic policies.

The alternative was that New Zealand First helped Labour and the Alliance form a Government.

That would have been a disaster for New Zealand.

I thank them for going with National and for their commitment to build a strong centre-right Coalition Government which will last more than one three-year term.

That's what is really making the left unhappy. The wilderness of Opposition is a lonely place.

Of historic importance is the fact that because New Zealand First represents all Maori electorate seats Maori electorate MPs are working on the centre-right of politics for the first time in 60 years.

That's certainly making Helen unhappy as well.

She's achieved what no other Labour leader achieved - she lost the Maori vote.

Many sectors of the media were so excited about the possibility of the Labour leader being the first woman Prime Minister - remember the Time cover, Prime Minister in waiting - that they completely overlooked the fact that the 1996 election was a disaster for Labour.

Helen Clark moved Labour left and Labour saw their support drop to its lowest level since 1928.

After two terms in Opposition where political parties traditionally build support and gain voter share, the Helen Clark-led Labour Party did the opposite and lost seven per cent support.

It's called the midas touch in reverse.

Compare that with the British Labour Party which under Tony Blair deliberately moved Labour to the centre, and on issues like privatisation the centre-right, and they gained huge support.

The lesson for New Zealand Labour from the British election is a grim one.

Going left loses votes and New Zealand Labour can't move to the centre-right because that's National territory and we don't intend to give it to Labour.

The only party that made New Zealand Labour look good was their left wing partner the Alliance, which lost almost half its support.

The Pam Corkery-led revolution fizzed out early.

As the governing party which had led New Zealand through some difficult and some unpopular change, we did very well to retain our vote despite in the end losing the six per cent we had hoped to gain to ACT, as a direct result of National leaning voters looking to create a coalition partner.

In the event our coalition partner came from the centre in the form of New Zealand First.

The 1996 vote which enabled National to form and lead the new Government renewed our mandate and by so doing positioned us to carry forward our programmes and to deal fairly with all New Zealanders in a way that recognises our past while building opportunities for our future as a vibrant, diverse society.

Our first steps to independent nationhood took place in the peaceful village of Waitangi a short 157 years ago.

There have been many mistakes along the way.

Some by the deliberate act of early Governments who between 1862 and 1899 passed or amended on 60 occasions Acts of Parliament which had a negative impact on Maori owned land.

We can't go back and undo all those mistakes but we can learn to listen carefully to the concerns of Maori.

That is what your Government has committed considerable time and energy to doing as we seek to redress past wrongs.

There are no perfect answers but with goodwill, as we showed with Tainui, solutions acceptable to the great majority of New Zealanders, Maori and non-Maori, can be found.

So I ask for your support, tolerance and patience as Doug Graham, myself and others work to make progress.

In 1955 the Soviet Communist Party Leader, Nikita Khruschev, was asked what must have seemed an absurd question at the time: what were the chances of the Soviet Union rejecting communism?

He replied:

&Those who wait on that must wait until the shrimp learns to whistle.8

Which just goes to show that, when you're dealing with the future, you can never be too sure what lurks around the corner - it may even be a whistling shrimp.

As we gather here in Auckland this weekend, the National Party is engaged in no less than three historic tasks which will determine the party and perhaps the nation we will have in the years ahead.

The first of these is that of leading New Zealand's first MMP era Government.

For some it is proving to be something of a magical mystery tour, but given that New Zealand has no tradition of MMP, this was always to be expected - but it's working well.

Importantly, I can assure you that we are on course to finalise the Budget which again will be the envy of most countries, as we will show that we can increase spending in key areas like health and education and still produce a large surplus to further repay debt.

The economy after pre-election uncertainty, coalition uncertainty, is moving back into its growth rhythm which will be helped by the dollar stabilising and 90-day interest rates falling back under seven per cent.

We are still on track to achieve strong economic growth year on year through to, and past, the end of the century.

Over the three year term we will implement the broad sweep of the Coalition Agreement that we negotiated last year.

The second task - and this is the big one - is to understand the new realities that are going to drive policy in enlightened democracies and the challenge this poses for conservative parties like ours.

To be successful in politics at times of rapid change it is essential to be open to radically different ways of approaching issues - something that has often proved difficult for a ruling conservative party.

Historically, a clear example of this was the 1930s when conservative Governments were unable to capture the need for far-reaching change and were swept away.

More recently, in the early 1980s while National was bringing forward change in many areas it wasn't bold or radical enough and we were also swept aside.

The risk now is that we will concentrate all our energy solely on completing that package of reform when we should also be thinking of the next wave of change.

I am sorry, there is no time for a cup of tea in modern politics - as David Lange will tell you.

The last of the tasks in which we are engaged is the organisational review which aims to re-gear the Party to meet the unfolding realities of an MMP-based democracy.

A democracy in which all future Governments will be Coalition Governments.

Many in the Party find that fact itself difficult to accept but it's true and won't change.

This effort is being spear-headed by a team led by the Hon Jim McLay.

I want to thank Jim for his efforts and without getting into the details suggest you might consider adopting a relatively flat structure in which Electorate Chairs, because of their important role in the party, are given further recognition.

A political party's structure is only going to be effective if we have a clear view of our goals.

These could be stated as:

`Getting the Government out of peoples lives when there is no need to be there and to be there when that is what a modern civilised society would expect.'

I want to make the changes we must face in modern democracies the focus not only of my speech today, but also of the addresses which I will be giving to the other Divisional Conferences in the weeks ahead.

I stated a few moments ago that the biggest task we face is to understand the new realities that will drive policy in the 21st century and demonstrate an ability to respond to these realities.

The term `Global Village' now trips lightly off the tongue, but we give too little thought to the full implications of such a `village' in terms of policy, trade or the loss of absolute sovereignty.

That loss of absolute sovereignty with regards to the European Union was a key element in the debate in the British election, and the divisions it created within the Conservative Party contributed to their defeat.

There are other major shifts in society that New Zealand must face up to.

Every delegate in this room will tell you that New Zealand's population is ageing and will do so very rapidly after the first decade of the next century - a short 13 years away.

The response of most New Zealanders until now has been to shrug their shoulders and hope it will work out - somehow - a conservative response.

All sides agree that further savings by individuals are necessary for a comfortable retirement.

We have ads on TV every night from the Retirement Commissioner urging us to save.

The only debate is whether they should be voluntary or compulsory.

The right of politics, ACT, and the centre, New Zealand First, have suggested that the correct response is a compulsory superannuation scheme so that in future New Zealanders will have greater certainty in their retirement because they have saved for it through their working lives.

My judgement is most people in this room will oppose that because they don't like the concept of compulsion and so will prefer to rely on centralised state-funding for super through compulsory taxes.

I ask you to consider the question carefully because centralised state-funded superannuation is not consistent with the centre-right approach of requiring people to provide for themselves when they are able to do so.

You must make your own decision on superannuation in the referendum in September.

We are not alone in debating the challenge of an ageing society.

The average age in Japan is now 40 years; no society in all of history has ever been so old - we are following closely behind with our average age of about 35 years.

I return to the point that to succeed in the 21st century we will need to throw open the window to let new ideas in.

Ideas that fit in with the concept of the Global Village, ideas that acknowledge the radically changed nature and age of society.

We also need policy ideas that are attractive to a New Zealand society which has much higher levels of education and knowledge, and higher levels of expectation.

A society which is increasingly concerned not just with their personal economic well-being, but the quality of life provided by the community in which they live.

There isn't much joy in us owning a million dollar home if you have to surround it with a high fence to keep your wife and kids safe.

And that is increasingly the reality in many seemingly wealthy societies today.

We have the chance to do things a better way; to blaze a new trail in building better communities, in the same way that we did in the economic area.

For much of the 20th century, economic debate was dominated by the competing philosophies of free-enterprise capitalism, on the one side, and state-sponsored communism on the other.

With the fall of the former Soviet Union, free enterprise clearly won; and global economic thinking reached a broad consensus about what works and what doesn't

The New Zealand experience in developing the free enterprise model has attracted much attention and support.

The Coalition Government will continue to reform as we must to remain competitive; which is why we recently introduced legislation into the House to deregulate New Zealand's postal services.

We will constantly review the reasons for both restrictive regulations that deny opportunity and for the continued Government ownership of various institutions or shares in institutions unless we have already said a particular asset is not going to be privatised.

Local Government must do likewise.

In New Zealand we have learnt much and our reform programme has been admired by many, but today I issue a call to the National Party to look anew at tomorrow's options.

To ponder again Adam Smith's observation that economic life is deeply embedded in social life and cannot be understood apart from the customs, morals and habits of the society.

We cannot divorce the economy of a nation from its culture; because it is culture, not economic theory alone that guides the lives and decisions of its citizens.

In having a new look at policies we must look not only at the economy's impact on the community, but equally importantly at the community's impact on the economy.

The deregulation of financial markets, the lowering of trade barriers and the technology and communications explosions are fast moving decision making away from Central Government.

Power is flowing back to individuals and the intimate communities in which they gather; whether these be geographically defined communities or communities defined by a common interest.

The days when a Prime Minister could, or thought he could, decree most things in life, are long gone.

And, while inevitably there are those who still yearn for the supposed certitude of big government, we must have as our focus the development of policies which continue to devolve power and decision-making from the centre.

Developments such as these fit like a glove on the core values of the National Party; they reach back to the way civic society operated before the arrival of big government.

With the failure of centralised planning, concepts based on the importance of the community are being presented with new language.

The economist Francis Fukuyama calls it `The Art of Association'.

Where it is present we will find cohesion and civic trust - referred to as social capital - which has a measurable economic benefit, in the same way fiscal capital does.

It can be nurtured, accumulated and stored away for a rainy day; or alternatively, it can be ignored, squandered and depleted.

We are going to hear more of the concept of social capital, but there is as yet no clear consensus on how we go about building it in a modern society.

That, I suggest, is the next great political challenge; one which we must keep foremost in our minds as we consider what the National Party's policy will be tomorrow.

While no one has yet produced the definitive answer to the question of how a nation goes about accumulating social capital, there are four characteristics which are found in communities that have it.

They are:

a sure sense of belonging;
strong social cohesion;
support systems for the family; and
the nurturing of individual potential.
Where all four are found we find strong, trusting communities.

Building a sense of belonging requires that we know who we are, many of the factors which contribute towards the building of a strong sense of identity are within our influence.

At a local level we must foster communities which:

demonstrate a sense of leadership, a spirit of co-operation and participation and respect for cultural diversity;

build social cohesion by providing opportunities for citizens to participate in meaningful activity, reducing the feeling of alienation and isolation;

promote the essentials of family well-being; a sense of belonging, caring and stability, a healthy start in life, and security in later years;

provide a diversity of services and activities which enhance the quality of family life, build self-reliance and reduce dependency;

encourage knowledge and skills, the dissemination of civic information, and provide employment opportunities.
In these ways they establish a virtuous circle in which civic strength, social cohesion, and a sense of trust steadily grow, producing abundant social and economic dividends.

Many of the matters I have spoken of here - such as health, education and social welfare - have traditionally been seen only as Central Government responsibilities.

But the reality is that the benefits which flow from our spending on these services can be greatly enhanced when there is both voluntary and professional participation at the local level.

What we are talking about here is working together to add value.

To those wedded in the concept of large Central Government these are very radical concepts, but to those who think carefully about the real issues we face in society and think about them in human terms they will have the ring of truth.

Certainly they are concepts our National Party will want to explore and develop as we prepare for the next century.

Such concepts throw the spotlight on the future role and structure of local authorities; we must ask not only how should they fulfil their purpose, but also what is their purpose?

In Auckland we have the Tale of Two Cities - Papakura and Manakau - which appear to be taking starkly contrasting approaches to life.

Papakura is your stripped-down, private enterprise number whose philosophy is `if the private sector can do the job faster, better and cheaper for the community, then why not let it? '

Manakau, by contrast, has an outward appearance of being more concerned with the social well-being of its citizens - some might call it a more socially concerned city.

Which raises the question of which one is taking the right approach? The answer, I believe, is that - at least in part - they both are.

Papakura is a trail-blazer from which the rest of New Zealand, with its intense concerns about infra-structure development - especially relating to transportation, can learn much.

The fact is that the bridges, tunnels and rapid transport systems of tomorrow are physically going to be built by neither Central Government nor Local Government, but by private enterprise.

The role of Government, both Central and Local, will in the future be more of a facilitator and Papakura knows this.

Manakau City, on the other hand, recognises the importance of social cohesion, a sense of belonging and support systems for the family, and is prepared to rate its citizens to support it.

We all agree with the goals, the question is what is the best way to provide them.

The Papakura and Manakau approaches may look very different, but they are not necessarily incompatible.

On the contrary, the model for tomorrow may well see local bodies privatising non-essential services, becoming purchasers rather than providers of essential ones, and putting their energy into fostering civic participation in developing the strength of their communities.

It is only by having strong families in strong communities that we will overcome many of the concerns that beset modern societies.

Delegates, the decade of the 90s will be remembered as the decade in which we improved our economic infrastructure, kept the size of the economy growing and provided jobs and opportunities for more and more New Zealanders.

My goal is that the first decade of the 21st century will be recognised as the decade in which we rediscovered that which builds social cohesion through community involvement.

Fortunately, the advent of Coalition Government and the larger number of Maori, Pacific Island and one Asian MP will help this to happen, because all three groups place great emphasis on family and local community.

The House of Representatives is now far more representative than before.

We have more women - 36 at the latest count with the arrival of National's newest member, Annabel Young, last week - and a greater number of Maori than before.

We also have, in Pansy Wong, New Zealand's first Asian member and, in Arthur Anae, National has our first member from the Pacific Island community.

To build broad-based community trust, we need them; cultural diversity is now a marked characteristic of the New Zealand identity.

It must also be a characteristic of the modern National Party.

Today I have deliberately couched my remarks in terms of what the community and the individual can do, rather than what the Government might do.

What a Government might achieve directly is limited; by contrast, what a vibrant community can influence in our daily lives is great.

It's stimulating to be involved in politics at a time when another sea change is gathering momentum.

I invite your participation in what will be one of the great debates of modern politics - the growth and influence of communities.

The day of expecting ever larger Central Government to deliver all is over, and the issue has now moved on to how a better partnership between the Government and the people can be developed.

Be warned - your views and my views are going to be challenged as we seek to better meet the needs of communities.

This conference is the first Divisional Conference in the new era of MMP and we have much to do to strengthen our position as the pre-eminent political party in New Zealand.

We will do it by clearly defining our position on the issues that are or will be important to the electorate.

We will do it by having policies and attitudes which are in tune with the demands of the Global Village.

We will do it because the National Party is gearing up to embrace the new challenges with enthusiasm, with a sparkle in our eye and a dance in our step.

Thank you for all you have done thus far, have a great conference.

Ends