NURTURING THE INDIVIDUAL

CHATEAU TIMARU

Greetings to Party President, Geoff Thompson. Divisional Chairman Chris Dillon and Glen, Ministers, MPs, delegates, ladies and gentlemen.

Thank you for the welcome - it's good to be in Timaru for the Southern Division Regional Conference.

Three weeks ago in Auckland, I began a series of five speeches to the Divisional Conferences devoted to the theme of building social cohesion and increasing the social capital of New Zealand.

I said in that speech that there were four qualities required to forge cohesive communities.

They are a clear sense of national identity and belonging, strong communities, support systems for the family and opportunities for individuals to develop their potential.

I have spent the last few weeks exploring each of these issues.

Where all four are present we find strong, trusting, and successful communities -- communities that are rich in what is now referred to as `social capital'.

Today I want to complete the series by talking about how we can `nurture individual potential' and about how the development of social capital links back to the reforms that helped build up economic capital in New Zealand.

The stresses and strains brought about by earlier reforms led New Zealanders to vote for MMP in 1993.

They were voting to seek improvements in how our democracy works because they felt they weren't being listened to.

They were voting for a new constitutional framework which would change the House of Representatives forever.

Many now don't like what they voted for, they don't like the new voices and forces of the new system and would prefer the old order of single party Governments.

Well I am sorry, with MMP that's gone forever.

All future Governments will be Coalition Governments.

That being so we will have to work harder to inform and educate the public that the formation of a Coalition Government will always require give and take on policy issues.

That would have been so no matter who we formed a Coalition with.

No one party is going to have all its policy accepted.

That means for example that for Labour to ever form a Government in the future means having to do a deal with the Alliance.

The Alliance's policies are loopy - they not only oppose foreign capital they oppose exports, the life blood of New Zealand.

They want all New Zealanders to be happy little peasants tilling their little bit of land, growing their own potatoes and bean sprouts.

The Alliance are a millstone around the neck of Labour's aspirations.

You can see the look of horror on senior Labour MPs faces when one of the Alliance get up to speak on their economic theories.

I want to thank New Zealand First for choosing National and supporting the broad thrust of National's economic policies.

Today's challenge is the development of dynamic new policies to build up the social capital of New Zealand.

These policies must be conceived within a defined framework and a clear understanding of the way in which society is changing.

In this respect, no change will be more dramatic than the rapid devolution of power from the centre to the community.

The economic reforms of recent years are a clear example of such a trend.

The deregulation of financial markets, the lowering of trade barriers, the reduction of tariffs, the explosion in technology and information all contribute to remove power from government and give greater decision making to the community and the individuals within it.

That change has already produced significant gains in both employment and prosperity, for the people of this country.

The economy is already about 20% bigger than it was six years ago, in 1991.

Growth has moved faster here, in that period, than in any other developed economy in the western world.

New Zealand is now moving through the trough of the current business cycle with growth around 2.5%, with a pick-up projected to come in the next year or so, to 3.5-4.0%.

That expectation is supported by falling interest rates.

Ninety-day bill rates have fallen from 10% in mid-1996 to say 7.5% at present, we have a relatively stable exchange rate, and improving international conditions offering new opportunities to our exporters.

The rest of the world is not standing still and is expected to grow at around four per cent this year.

Many other countries are moving along the road of reform and we have to remain alert to stay with the pace.

A substantial part of New Zealand's success in the past decade has been due to the world-leading quality of our economic policies.

I am often asked around the world on how we achieved our success.

The question is flattering - yet the policies that encourage sustained growth are not a mystery.

The Asian Development Bank published, for example, a comprehensive study last week of the factors underlying the remarkable growth of the successful Asian economies.

Perhaps the most important finding was that factors such as geography, abundance of natural resources, or initial incomes, had a very limited effect, the ADB found, on outcomes.

By far the greatest contributor to the performance of those nations was sound government policy.

The Asian Development Bank study goes further.

It identifies four specific areas of policy which were most important to the level of Asian growth achievement - they are worth reflecting on:

1. An Open Economy

First and foremost came the degree of openness of the economy to international trade and capital flows; low to zero tariffs and trade restrictions, convertible currencies, and the absence of export monopolies.

New Zealand has come a long way down the road to openness since the old days of import licensing.

But let's not fool ourselves. So have most other countries.

Our tariff rates, despite the improvement, do not give us any spectacular advantage.

They are close to the OECD average for our types of manufactured goods.

Tariffs are an additional tax on exporters.

Steady on-going tariff reduction remains a critical part of the Coalition Government's agenda for increased export competitiveness.

One of the critical tariff reviews will be for the motor assembly industry.

The Ministry of Commerce estimates that the direct cost of industry assistance to the assembly industry through tariffs in 1996 was almost $200,000 per employee.

2. Prudent Fiscal Policy

The second critical factor identified by the ADB as a contributor to growth is prudent, stable fiscal policy where strong government surpluses support high rates of national saving.

The Coalition is committed to policies which will maintain strong fiscal surpluses in each of the next three years and will, by the year 2000, reduce net public debt below 20% of GDP, compared with 52% in the early 1990s.

That's great progress in getting debt down.

3. Public Sector and Regulatory Efficiency

The third factor identified by the ADB as critical for growth is efficiency in the public sector and in any government intervention in markets.

The protection of private property rights, contract and freedom from corruption are all key factors.

The Coalition Government has a substantial agenda aimed at improving public sector efficiency, and improvements in market regulation.

On a wider front, the Government has also agreed to review existing regulations in general, and change the process of assessing new regulations, to reduce compliance costs and improve overall efficiency.

4. Role of Education

The fourth critical factor in the rapid progress of the successful Asian economies is identified by the ADB study is education.

So there is no mystery, it's straight forward, an open economy, prudent fiscal policy, an efficient public sector and good education.

New Zealand has made good progress in all areas but in terms of developing further our social capital education is a key ingredient.

Spending on education is already projected by the year 2000 to be $1.2 billion extra (27%) than in 1993.

In addition, since then, the new Coalition Government has agreed to commit to education a substantial portion of the extra $5 billion provided in our Agreement for new spending initiatives over the next three years.

Extra spending is but a factor. To further improve quality in education will also require changes of attitude and changes in how the education sector operates.

Which brings me to the specific theme of my address today - the nurturing of the individual.

It is interesting to deal with this subject in South Canterbury which has long prided itself on rugged individualism.

It is a quality to be admired, providing it does not imply a lack of commitment to the community -- this is a two-way street.

It is the values of the community that help to form the values of the individual and within the community it is the school environment and education in general that is the most important influence after the family.

Which is why how we develop and deliver education is so important to the individual and the nation.

We must always be seeking improvement.

The recently published `Third International Maths and Science Study' has challenged some of the entrenched ideas on the way in which we pursue success.

The tests involved in the study were taken in forty one countries covering both maths and science. Singapore came top in both and South Africa last -- New Zealand was around the middle of the field.

The results suggested that:

Spending on education may not necessarily correlate with academic success -- the USA spends three times as much on their schooling as South Korea, who nevertheless beat the Americans hands down in the tests.

Children may not necessarily do better in small classes than in large.

Asian classes average almost twice the size of those in the UK and significantly out-perform them.

Even the amount of time spent studying may not be relevant.

Our students spend long hours studying maths and science, but don't do significantly better than Norwegians who spend little time.

In maths Slovakia came seventh, Slovenia tenth and Bulgaria eleventh -- New Zealand came twenty fourth - still four places however ahead of the USA.

The United States on the other hand did better than New Zealand in science and two countries we often compare ourselves with, Australia and Ireland, were also both ahead of New Zealand in both subjects.

The only conclusion you can draw is that there is much more to education success than spending and class size.

Education is more than maths and science but we would be wise to note the results and reflect on them.

Some journalist may rush to write a headline that:

`Bolger wants to spend less on teaching the kids -- advocates bigger classes and less learning.'

No I'm not advocating any such thing, but I am very committed to improvement and we should reflect on methods and styles of teaching.

As I said outside the family education is the most formative influence on young New Zealanders.

We are now every year spending more on education and we should rightly be asking parents, teachers, teacher unions and students what must we do to improve further.

I am especially impressed with the results of the direct resourcing of schools.

The policy fits very well with the concept of building stronger, more caring communities by trusting them with the responsibility to manage their schools.

It works very well and I want it encouraged, but here's the rub.

It is totally opposed by the groups wedded to the old concept of Big Government - the teacher unions and the Labour and Alliance Parties.

That unlovely cohort of yesterday's thinkers are fearful of losing control.

Put starkly they oppose because they don't trust the community.

My message is the opposite - we must trust the community because it is only by trusting the community that we build up social capital.

I visit many schools and see and feel the new vitality among teachers and Boards of Trustees who have accepted the challenge of managing their own affairs.

They spend their money wisely and make good decisions.

The greatest break through we could make in education is not more money, though more money is planned, but to change the attitude of the old fashioned, teacher unions.

The teachers want to get on with the job, the unions keep getting in the way.

A new approach is needed, more community involvement is required.

Another way we nurture and develop the individual is on the job training.

The `Skill New Zealand' strategy is designed to promote a learning culture among employers, employees and industry groups.

The key objective is to ensure that the skills a worker learns are those which they are going to need in a world of rapid technological change.

Another dimension is skilled communities, that develop their individual areas of specialisation become - what Michael Porter of Harvard describes as - `clusters of excellence'.

He argues, in his book `The Competitive Advantage of Nation's' that it is these -- rather than natural resources, as was once believed -- that determine a community's economic strength.

A similar conclusion to that arrived at by the Asian Development Bank study.

The latest studies suggest that we are beginning to develop these clusters of excellence in New Zealand.

Auckland's marine industry, Rotorua forestry, Nelson seafood industry, and agricultural technology in the Waikato are all recent New Zealand examples of clusters of excellence.

Indeed, Christchurch has its own cluster - the electronic industry; half of our country's electrical engineers are found there, leading the world in their field.

An interesting example of the use of technology is in the oldest occupation of all - talking about the weather.

This one comes not from the corporate world, but rather from a State-Owned Enterprise in Wellington -- the MetService.

When the service ceased doing observations its Christchurch didn't close and fire the staff -- they taught them desktop publishing skills.

Today they compile weather pages with high-quality colour graphics for newspapers, five of which are located in Australia.

The story gets better.

In the last few years the MetService has become world-leader in the presentation of weather information -- like their `fly by' presentation you see on TVNZ.

As a result they now sell their international weather services, complied in the Wellington Botanical Gardens just up from the Beehive, to 33 international airlines -- many of whom do not even fly to New Zealand.

China Southern Airlines -- who to the best of my knowledge have never been seen in our skies -- gets all their international weather service information from the MetService.

So do all Concorde charted flights operating anywhere west of Los Vegas.

Providing we continue to innovate at this level, develop the clusters of excellence I spoke of, educate and train our young people and continue to improve the economic framework, we will achieve the constant 3.5-4.5% growth rate we need to create the jobs that provide real purpose for all individuals and communities.

Important though it is there is more to life than paid employment.

In building up our social capital particular stress must be focussed on voluntary work in the community.

When a citizen gets involved in voluntary work for the community the contribution transcends personal profit, and the sense of self-worth is all the greater still.

This is why we often find people who are unable to get jobs, but are engaged in voluntary work, thoroughly enjoying life.

An example is the City Mission where the unemployed with skills are put to work as instructors in the `Youth At Risk' programme, for which they receive a modest payment from Government.

There are many answers society is still seeking on social policy, but I am certain that we must seek nothing less than a `new age of participation'.

The Government's approach must enable that to happen.

Employment Minister Peter McCardle is working to involve the long term unemployed in the community by converting the unemployment benefit to a community wage for the work they do.

The approach is totally consistent with developing a greater awareness of how everyone can contribute to society's good.

I have deliberately spoken about another dimension of New Zealand life and politics in this round of divisional conferences because like Simon Upton who spoke to you last night, I believe the next wave of change must go with the grain of public expectation and the values that still underpin our society.

The 20th century will be remembered as the century in which the greatest economic debate we are ever likely to see was played out, not in musty halls of academia, but on the world stage.

It would pitch (

The old Soviet Union against what we chose to call `The Free World'.

The theories of Karl Marx against those of the successors to Adam Smith, and

The practises of collectivisation against those of free enterprise.

It is believed between 1929 and 1932 more people died in the Ukraine in famine created by economic ideology than died in the First World War; the exact number is unknown.

After the Second War came the Cold War and a terrifying build up in the arsenals of mass destruction --between them the USA and the Soviets had the fire power to lay waste to the planet.

Next came the dirty wars -- from Korea to Vietnam to Afghanistan -- in which conflicting economic views were pressed home in the scream of rockets and chatter of machine gun fire.

Then one day in 1989 the great symbol of the debate, the Berlin Wall came down.

The great debate that had started with the publication of Marx's Das Kapital and bled the 20th century of so much of it's youth, talent and promise, was suddenly over.

The debate ended not with some flash of academic enlightenment, the Star Wars Programme with which President Reagan had promised to confront the Evil Empire, or a nuclear Armageddon.

It was over because Russia had gone broke -- while the West rode a wave of unprecedented prosperity.

Neo-classical economics had carried the day.

From that vantage point we could lapse into smugness and say well we haven't got any problems left.

It is a temptation we would do well to resist because, while we are far better endowed in terms of economic capital, we are not yet rich in social capital.

In considering policies for the future we must look not only at the economy's impact on the community, but equally importantly at the community's impact on the economy.

Fortunately 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.

This is where the decisions that will determine the type of society New Zealand becomes in the 21st century will be made -- not in the so-called `corridors of power' in Wellington, much less overseas.

And the quality of that decision making will almost certainly be determined by the willingness of ordinary citizens to get involved in the process.

This is why I have -- in the midst of the turbulent politics of the moment -- spent four weeks and five speeches dealing with the policies of the future.

In less than a thousand days from now we are going to party in the new millennium.

But before then we have to fight and win an election.

We will not win by advocating the policies of a century that is dying.

It is said the `the past is a different country'.

The same is true of the future

We stand on the brink of a new age.

It will be a time of new challenges the greatest of which will be to achieve growth in both economic and social capital, of building stronger communities in New Zealand.

The question now is whether we will have the stomach for the battle.

Or content ourselves with passing the gin and reliving the victories of yesterday.

That is the choice that confronts us.

I leave you with the words of the Bard:

``Once more into the breach, dear friends, once more ("

ENDS