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Rod Oram: The three key ministers for the economy

Rod Oram picks out David Parker, Grant Robertson and James Shaw as three key ministers in the Government's drive to change the inner workings of the economy

Of the new government’s many challenges, the greatest is helping us all create a high value/low emissions economy.

Conventional thinking says a booming economy delivers social and environmental benefits. ‘Rising tides float all ships’ and ‘you can’t be green if you’re in the red’ are two of the most inane arguments made. Well, we’ve seen how impoverished that’s made us.

In reality, an economy is only a subset of society and the environment. A healthy society in which all people are valued and contribute, and a healthy environment which is bountiful and resilient will together deliver a healthy economy.

If we succeed in this transformation, we will create common wealth, in all the economic, social, cultural and environmental senses of the word.

While these are tasks for all of us, the government has a crucial role in helping us to articulate what we want and need, to devise strategies and policies to assist us, and to deliver on them for us.

This column attempts to identify who needs to do what in the new government to make it an effective agent in the economy. This is not a simple exercise. The tasks are complicated and the roles inter-linked.

The very top level is obvious. Prime Minister Jacinda Ardern leads, seeking to deliver on her promise of a fairer and wealthier society. It gets complicated thereafter. Three ministers help individuals make the most of their lives: David Clark on health, Chris Hipkins on education and Carmel Sepuloni on social development. All three fields are crucial to economic and social well-being. All three need massive reinvention to serve people better.

The heavy lifters for a big shift

Drilling down to people with direct economic responsibilities identifies 15 people with 24 portfolios. Previous governments have done a poor job on coordinating such complexity, let alone building synergies. Nothing yet suggests this government will be better. However, the new government brings fresh hope and a strategic direction National lacked.

Of the 15 people three are the most crucial for the breadth of their responsibilities. Again, the first is obvious – Grant Robertson as Finance Minister. But the other two are less so. They are David Parker and James Shaw because their tasks are to lead the transformation of the economy.

The scale and scope of change we must have is succinctly articulated by the Productivity Commission in its issues paper on our transition to a low emissions economy. The following quote appeared in my column before last. But it’s worth repeating:

“…the shift from the old economy to a new, low-emissions economy will be profound and widespread, transforming land use, the energy system, production methods and technology, regulatory frameworks and institutions, and business and political culture.”

Robertson’s core task is to enforce fiscal responsibility in the government. But he must also address two issues previous governments have dodged – tax reforms so production, investment, income and consumption are equally and fairly treated; and to ensure the country invests in its future rather than supports the status quo.

The appointment of David Parker as Associate Finance Minister is significant. With his other roles entirely focused on economic transformation, he will be a powerful, experienced and respected advocate for them in the budget-making process.

As minister of economic development, he has to help government help business deliver the big shifts needed to revive productivity growth and drive value creation.

As environment minister, he has to help government help all sectors of business, including farmers, and all sectors of society make rapid progress towards deep sustainability.

As minister of trade and export growth, he has to restore New Zealand’s leadership on international trade negotiations. Not to flog the dead horse of TPPA and other 20th century deals, but to help pioneer 21st century trade agreements that ensure globalisation works for all societies and the ecosystem.

The architect of zero

James Shaw is the third most important person in government on the economy. As climate change minister, he has the enormous task of building the support of other parties, business, including farmers, and all sectors of civil society for a Zero Carbon Act and an independent parliamentary climate commission.

The latter will set the long-term carbon goals and short-term carbon budgets, and monitor the government’s policies and performance on them. These will deliver the massive emissions reductions required, and derive economic, environmental and social benefits from doing so.

This framework will fundamentally shape government policies, business strategies and citizen engagement to achieve the “profound and widespread” change the Productivity Commission identifies.

These three ministers have another big task: to help their colleagues deliver in their areas on these core transformational drivers and goals in their portfolios.

In the natural environment:

* Damien O’Connor has to help agriculture shift from low value commodities with high environmental impacts, to high value foods with minimal ecosystem impact.

* Shane Jones has to help forestry shift from low value logs and frequently harvested radiata pine to high value products and species, and permanent forests, both exotics and natives.

* Stuart Nash has to help fisheries shift from a quota system that barely keeps fish stocks above the point of collapse to fishing systems that help the marine ecosystem restore itself, and then learn how to create value from that in the marketplace.

* Eugenie Sage has to help mobilise a vast citizen movement to progress the 100 percent predator free goal critical to ecosystem restoration, and develop many other partnerships and resources to ensure that we as a nation are looking after the third of our land which is in the conservation estate.

* Kelvin Davis has to help the tourism sector achieve greater economic, environmental and cultural sustainability. He brings to the job his Maori heritage, particularly the core value of hospitality, manaakitanga.

In the built environment:

* Phil Twyford has the enormous challenges of housing, urban development and transport. Building more of the same is not an option. We have to become as responsible with our built environment as we have to become with our natural environment. This will take great innovation in design and materials, and use of land, energy and other natural resources.

* Julie Anne Genter, his associate transport minister, will bring her professional planning skills to the central task of expanding public and active transport.

* Shane Jones’ responsibility for infrastructure is almost as daunting in terms of the ramp-up in investment and construction we need, and likewise the urgent need for innovation in design and delivery.

* Jenny Salesa faces the same herculean tasks in building and construction.

In economy capability:

* David Parker’s work on economic development is one of the hardest areas of economic policy at a national level, and even more so locally, in every country. Too often government investment delivers poor or unsustainable returns, or worse perverse consequences.

The risks are higher now. For decades, we have fallen behind world’s best practice, believing the market would in all cases more effectively allocate resources; and higher now because NZ First secured in its coalitional agreement $1 bn a year funding for regional economic development, with Jones the minister responsible for it.

The best hope on both issues is to focus much of the economic development work on the transition to the low emissions economy, in all its facets. There’s a wealth of material to draw on from overseas and to adapt to our particular circumstances, such as the OECD’s work on green growth and on local economic development.

* Iain Lees-Galloway on workplace relations and safety, Willie Jackson on employment and Nash on small business all have roles to play in helping employers and employees prepare for the fast changing nature of work, a subject on which Robertson is well versed.

* Megan Woods has the challenge of driving clean and efficient use of energy and other natural resources; and of helping our research, science and technology communities take a big step change in innovation and commercialisation.

* Winston Peters as minister for state owned enterprises should transform them from government cash cows to agents of change. Big ones such as Landcorp, Housing NZ, NZ Post, KiwiRail, Transpower, the generator-retailers, Crown Research Institutes and the NZ Super Fund, and highly innovative small ones such as MetService, Airways and AsureQuality could help the country take big leaps in technology and sophistication.

Can the old dog learn new tricks?

But Peters is also a risk. He is old and conservative. Ardern and Shaw are young and progressive. Potentially, he could thwart their ambition.

If, though, the leaders of Labour and Greens can persuade their coalition partner that old dogs can learn new tricks, then they might persuade many more people that New Zealand can unleash its potential.

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