UNIVERSITY OF AUCKLAND MBA CLASS DINNERPrime Minister
Ladies and gentlemen.
Thank you for the invitation to share some thoughts with you this evening.
I am sure that after the rigours of a course that I understand both stimulates and illuminates, you are champing at the bit to put the theory into practice.
I can understand and empathise with your enthusiasm.
The challenge of business and the challenge of politics are not dissimilar, however, they are conducted within different parameters.
As I mentioned here in Auckland last week the business of democracy under a system of proportional representation brings with it different inputs and pressures quite distinct from the independence of action that comes with picking an All Black team or, in your case, running a business.
There are any number of corporate executives who regularly tell anyone willing to listen that Corporation New Zealand should be run like a successful business.
Interesting theory, but that is not the way democracy works.
First you don't select your executives - the MPs - they are selected for you and, further, you have to be much more consultative than the great majority of business.
Tonight I want to talk to you about some aspects of the Government's management role.
It has changed a lot in recent years and it's clear from public comment it is not well understood.
New Zealand rejected the management model described as a 'command economy' many years ago for the simple reason it did not work.
In New Zealand politics only the Alliance Party still believe in the 'command economy' approach, where the Government seeks to manage everything.
The reverse is equally rejected by most.
That approach would prescribe a very limited role for Government and leave the market to sort out the rest.
Most reject this on grounds of social equity.
The need for the Government of the day to ensure that essential social services are available to all, requires significant involvement in developing the economic and social policy framework.
While businesses can single-mindedly focus on increasing the wealth of their shareholders, Governments must accommodate the aspirations of a much wider range of stakeholders.
Good management is all about setting long-term goals and measuring progress towards them in business and in Government, but in addition Governments also live by the vagaries of the three-year electoral cycle.
Business decision makers can rely largely on the hard data of sales reports and productivity measures to guide their decisions, Governments must use both hard data and deal with the less tangible inputs of perceptions and public opinions.
For completeness sake I must mention that Governments have a greater capacity to change some of the ground rules than perhaps business does.
These are a few of the differences between the framework within which business works and Government works.
In Government it is called accountability, and it's called democracy.
The new element is of course MMP - proportional representation and Coalition Governments.
Coalition Governments will be the norm under any form of proportional representation.
That means we have to accommodate the interests of more than one party.
In leadership terms, it is more demanding bringing together the policy aspirations of two political parties rather than one.
It's a challenge, but it's do-able.
In nautical terms once you get your political sea legs in the new system, it is not that difficult to manage the more turbulent politics the new system has created.
If measured public opinion is anything to go by, despite voting for MMP, the public were not prepared for the reality of coalition government and the give and take that it requires in policy development.
Hopefully that understanding will improve now that the first phase is behind us.
The key document that guides the Government's policies is the Coalition Agreement.
This Agreement sets out Government policy in many areas, but it is not a straightjacket and can be varied with the agreement of both parties.
This is sensible, as it's impossible to determine the merits of every issue in advance.
A clear case in point is the future of TVNZ.
What Cabinet has agreed is that the Ministers responsible should bring an options paper to Cabinet and then the issue will be discussed in both Caucuses and decisions made.
The decision will be based on what is the sensible long term policy position.
That is our approach on all issues.
Sometimes there are short term political costs as political opponents offer slick short-term answers.
Such an approach never works over time.
Underpinning our economic programme are the five principles that have been at the core of Government policy since 1990.
Maintaining an open and competitive economy.
Ensuring flexible labour markets.
Overseeing general price stability.
Responsible fiscal management; and
Working to a low-rate, broad-based tax system.
That framework represents the broad principles of an orthodox, high quality programme designed to foster growth and make the economy more competitive.
That framework has seen the New Zealand economy in the six years to March 1997 grow at an average of 3.1 per cent annually, which I believe stacks up very well when compared with the United States which grew an average of 2.7 per cent over the same period.
Or compared with New Zealand's annual growth rate between 1975 and 1990 which was only 1 per cent per annum.
The hard data speaks clearly.
Our country has made huge economic strides.
New Zealand is in its fifth year of economic growth, has been in surplus for five years, has slashed public debt from 52 per cent to under 27 per cent and created 250,000 new jobs since 1991 - in a current workforce of 1.5 million.
While other countries have also been lifting their games, international agencies have recognised the quality of our performance.
In May the Swiss-based World Economic Forum ranked New Zealand fifth in the world for international competitiveness.
In June the Heritage Foundation ranked us fourth in the world for economic freedom.
At the same time, the Canadian Fraser Institute ranked New Zealand one place higher, at third in the world for economic freedom, and ahead of the United States.
The reason these studies augur well for New Zealand is straightforward.
To quote Professor Jeffrey Sachs, of the World Economic Forum: "The competitive nations are the ones that have chosen the institutions and policies that promote long-term growth."
My intention is that we build on the competitive advantage we have put in place over the last few years.
It was with that goal in mind that last week I set out a number of initiatives that the Government is working on at present.
Getting the basics right is essential for success in business and in Government.
To that end we're working on initiatives in several areas: the electricity market, Resource Management Act compliance costs, Local Government efficiency, non-strategic asset sales, tariff reviews and roading costs.
Those are important infrastructure issues.
We know we can get efficiencies, and we're going to get them.
Our strategy for growth is clear:
Responsible fiscal management;
Flexible labour market;
Reducing the cost of doing business, to lift competitiveness;
Further reducing taxes and tariffs;
Lifting the performance of education to produce young people with the talent to drive a high wage economy;
Fostering innovation by marrying up the research and science community with the private sector; and
Reducing the social and economic costs of unemployment.
Add to that issues like ACC reform which is designed to provide better service and clearer accountability.
Improving economic performance permits Government to deliver improved social services - whether it be education, health, Police, income support and so on.
The reason that's important is because I recognise that, important though they are, there is more to life than costs and balance sheets.
For a satisfying life it's essential to be wanted, to be involved, to have an opportunity to have a say.
That certainly happened in village communities in pioneering New Zealand.
The greater centralisation of government power and authority of the last 50 plus years changed that.
The demand that Government be all powerful to do all things changed that.
The ethos of cradle to the grave government protection, while well intentioned, inevitably led to big Central Governments.
Now, if we want to, we can change that.
I believe we should because I have no faith in monopolies.
Earlier this year I gave a number of speeches on the theme of building the 'social capital' of New Zealand to match our economic capital.
The central thrust is to provide greater opportunities for people to be involved in issues that directly affect them - like education, health and safer communities.
The way to achieve this is to devolve power.
The devolution of greater power to the people is our next great challenge.
In my mind it must be the real millennium agenda.
With the deregulation of financial markets, the lowering of trade barriers and the technology and communications explosions, we are fast moving decision making away from Central Government.
Power and influence can flow back to individuals and the communities in which they gather - their towns, cities and regions, corporations, trade and voluntary associations, and their social organisations including their churches.
That influence must include greater authority over how the education system operates through the direct resourcing of schools.
Schools are the most important institution in your community.
We want to give schools more autonomy through direct resourcing and, given their importance, the most able people in the community should be on school boards.
Good teachers must be supported and poor teachers should go.
Monopolistic teacher unions following old fashioned union tactics have no place in the provision of modern education.
To achieve excellence in education requires three ingredients: appropriate resources, quality teachers and enthusiastic community involvement.
Government policy aims to achieve all three.
Likewise to bring confidence back to the health system we must re-engage the community on why reform is necessary.
Last week British Labour Prime Minister Tony Blair spoke to his Party Conference as follows:
"Barriers between GPs, social services and hospitals must be broken down.
Hospitals cannot stand still. Increasingly, general hospitals will provide routine care, supported by specialist centres of excellence in treatment, research and education.
GPs and nurses will do more of what hospitals used to do, often working on the same site in partnership with chemists, dentists, opticians and physiotherapists.
New technology offers huge opportunities in healthcare but we haven't yet begun to seize them properly.
We will get the money in. But in return, I want reform."
Like Tony Blair we are putting more money in, but new systems like the new SuperClinic I opened in Manukau today are needed to break down barriers and welcome in the new.
If we want safer communities we the community must demand zero tolerance to crime.
Crime is committed in the community by members of the community.
The Police role is important but the community's role is pivotal.
Insist on no graffiti by always painting it out.
Insist your school has a programme to control truancy, has a programme to control drugs.
If the community affected is not interested why should anyone else be interested.
My central message is don't accept monopolies in business or in social policy, because they will never meet your expectations.
If monopolies worked, then the old Soviet Union would have been the success story of the 20th century.
The Soviet disaster should be a warning to all central planners in the Labour Party and the Alliance.
The market place has its imperfections but its better than all the alternatives.
Which is why the Government is committed to opening up international access to markets, including an open skies agreement.
In a world first for a country like ours we have committed ourselves to move to zero tariffs well before the 2010 APEC deadline.
We will review on a case by case basis Crown ownership of assets to determine whether it is justified.
My suggestion that we consider the sale of TVNZ has created some ripples but who can tell me what are the advantages of the State owning a TV network which it has absolutely no control of, other than to pay the bills or collect the profit.
We are working on the next step to create greater competition in the energy sector, including consideration of further splitting the major state-owned generating company, the Electricity Corporation.
Our programme is to improve our international competitiveness by reducing costs at home.
Alongside that we must focus the Government's energy on its core responsibilities.
One of these is the security of the realm and to that end we are in the process of reviewing our long-term investment in defence equipment.
It won't surprise you to know we have under invested for years and to remain at credible levels will require a modest increase in investment.
Expect the left of politics to be just as outraged by that comment as they are when I talk of private involvement in healthcare or parents involvement in education.
The real challenge for New Zealand as we face the dawn of the new century is whether we have the courage to keep going or whether we lose our collective nerve and turn back.
That is exactly the same dilemma you will, from time to time, face in business.
I am much more optimistic about New Zealand's future now than when I became Prime Minister in 1990.
Back then it all looked black.
The opening of the books after the 1990 election disclosed huge deception by the outgoing Labour Government and we collectively were looking into a great black hole.
Today that's behind us and the issues are on the surface.
Managing the Coalition, determining which asset should be divested and when, and most importantly including the community in vital decisions concerning social services.
I am committed to a fresh modern approach to Government and its responsibilities.
Yes, it will be different in some areas but it will be better.
I suggest you adopt the same approach to business.
Be fresh and innovative and you will succeed, be tentative and timid and you will fail.
Listen carefully to the strategies of your competitors.
If they are arguing for yesterday ignore them, if they are planning for tomorrow speed up your own planning to get or keep in front of them.
That's my approach and it's worked thus far.
I wish each of you well.