Ross Wilson, Dominion Post Column, 2nd Jan 2006

2005 was a great year. Strongest economic growth in the OECD, lowest unemployment in decades, superb sporting achievement by our national players, unprecedented success in the film and music, and a Hui Taumata signalling a Maori economic renaissance to match the cultural one. We are a great country with a great future; but only if we continue to take up the challenges positively.So the constant negative refrain from business is not only unhelpful, but is damaging to our national morale and economy.

Despite the World Bank saying for the second year in a row that New Zealand is the best place in the OECD for "ease of doing business" NZ firms complain about compliance costs. Despite the Bank of New Zealand acknowledging that "New Zealand's corporate sector has been on an incredible roll in recent years", business lobbyists are now complaining about profit margins being squeezed.

If the last 5 years of economic growth, low unemployment, strong fiscal surpluses, sharply reducing government debt and robust company profits had been under a National Government, I don't think there is any doubt that business leaders would be hailing a golden era.

It is worrying that, at the first hint of a slowing economy to perhaps an annual rate of slightly above 2% rather than the 3% or 4% of recent years, we get such pessimism from business leaders. They could be taken more seriously if they had not been so pessimistic for much of the last 5 years while things have been booming.

Sure, things are going to get harder. And there are real issues such as the high dollar that are hurting some sections of the business sector. Profit levels are likely to drop. Treasury advocacy for another dose of Rogernomics hasn't helped sentiment either.

But it is rarely acknowledged that workers are also investors ? they invest their time, their energy, their skills, effort and application to workplaces. They take risks also. They face transaction costs. They have career plans and ideas on how they can develop within organisations and industries.

So we are all in this together, and we need greater acceptance from business that developing a nation involves more than just addressing the narrow priorities of business. The successful country models like Ireland and Finland show that the systematic involvement of the business and unions at national, industry and enterprise level can yield the best results in terms of long-term economic and social reforms, balancing flexibility with security, enhancing competitiveness and the quality of employment, and promoting economic and social security.

The recent New Zealand Institute analysis reveals the alarming evidence that, unlike those fast-growing small countries, our share of world trade and foreign direct investment is falling.

It appears that while we are achieving success globally as a sporting nation, our business performance in global markets has really fallen off. Exports account for only 29% of GDP compared with an OECD average of 54% and countries like Ireland, with a similar population, closer to 80%.

New Zealand exports grew at an average annual rate of 7.8% between 1971 and 2000 compared with world trade at 9.5%. If our exports had grown as fast as world trade they would be 66% bigger today according to the Institute calculations.

Similarly our foreign direct investment as a percentage of GDP has dropped during the past 15 years, while all other developed countries have increased.

It should be of real concern to all New Zealanders that we are the only OECD country on these measures to have gone backwards over the past two decades.

The evidence from the New Zealand Institute Report is once again saying very clearly to us that we need urgently review what products and services we are producing, and how we are doing it, and reorient our small country to exporting higher value and more sophisticated goods and services to global markets.

There is no doubt we can do that. In fact many companies already are, and Government policies and strategies are directed at how we do that more effectively. But we need to ensure that this becomes a national debate. A national strategy like this can't be achieved unless we take everybody along with us. And the positive point is that we all have something to gain out of a strategy that moves our economy up the value chain. We are never going to win on cheap labour costs. But like our national sporting achievers we can win on high skill, high performance and a high value strategy.

So my New Year wish is that we stop moaning about the perceived problems and barriers to success and get down to talking about a national strategy which will restore our place, alongside those other successful small countries like Ireland and Finland as a modern, high performing, and egalitarian economy. Government, business and union leaders all have a responsibility to make sure that this happens in 2006.