By Michael Coote
Friday 26th July 2002 |
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He read out a droning speech that was a strange amalgam of deadpan, dry-as-dust central banker talk and the odd flat, indirect plug for his political party
It was hard to know whether Dr Brash was campaigning or not. He appeared to be anything but a political firebrand and it was difficult to detect even a glow of passion. Certainly, for those unaware of what was going on in the country, it would have been difficult to guess a general election was up for grabs in just a week's time from a speech that sounded like a timeless academic paper.
Dr Brash's theme was how to improve savings in New Zealand - a highly topical matter for FPIA members, who make their livelihoods from being paid to help clients make appropriate decisions about building and conserving retirement wealth.
Dealing as these advisers do with higher net worth individuals fretting over pocketing a fair whack of redistribution in their golden years, the audience was ideal to pitch to for votes. For one matter, such advisers have a vested interest in seeing the Cullen fund sunk if that means less complacency among savers about state funding in old age.
But with only passing references to National election policy thrown in without any immediate call to action, Dr Brash missed his chance. It was evident he needs to be worked on by a media presentation coach.
The most amusing part emerged when Dr Brash announced National had a policy of tax incentives for retirement saving before going on to trash tax-driven savings incentives from an economist's point of view.
Few in the room seemed to get the joke, but there have been rumblings in the past from the Nats that an independently minded Dr Brash would come right once he boned up on policy. The good doctor had better be a fast learner before tomorrow, unless he is keeping his powder dry for the inevitable upheavals and policy shifts that will occur in his party once heads begin to roll.
However, the most disturbing comment was that New Zealand needed an uninterrupted decade of economic growth at a rate of at least 4% if it is to climb back up the ranks of OECD countries to a respectable level.
His remark deserves some unpacking. If Labour wins the next election as seems likely, then the decade required will be postponed by at least three years. So we could be looking at 13 or so years to claw back lost ground.
Why should those of us who can get out and resettle in a prepackaged, 4%-plus developed economy hang around to see if Dr Brash's medicine will work in Godzone whenever he eventually gets the chance to commence treatment?
If a week is a lifetime in politics, then 13 years is an eternity in which any number of vicissitudes could derail the sustained growth Dr Brash advised the FPIA was essential. The likelihood of achieving the goal is so fraught with uncertainties that it is not worth waiting for unless Kiwis have some other non-economic reason for not leaving, such as lifestyle, children, criminal records or treaty settlements.
Just across the Tasman there is such a pre-packaged, high-growth, developed economy. It is called Australia.
Dr Brash did not win my vote for National but he did finally persuade my feet to do some voting of their own.
Anyone else who thinks living in a high-growth OECD economy counts as a major life goal should be getting the same itchy soles. To stay and become older by 13 years only to find that the promised nirvana has not emerged here will mean having sacrificed the opportunity to emigrate and have much of a working life left in a new land, assuming one was not too old even to be accepted as a migrant. Better hope by then the Cullen fund has worked after all and can cough up 10% of the pension.
Viewed from an investment perspective, the local share market going forward 13 years does not look like a winner from Dr Brash's forecast. Some companies will do well but in general most will be trapped within the kind of low-growth, low-productivity quagmire that Labour certainly cannot fix and National is unlikely to get an early chance to do anything about. Investors and retirement savers should be no more desirous than those who want to live and work within a sustainably vigorous economy to risk much of their earnings in the local markets.
FPIA members were much vexed at the conference over how to keep their clients invested in overseas markets through managed funds during a period of falling foreign sharemarkets, a rising kiwi dollar and increasing local interest rates.
Dr Brash gave them the answer. Tell clients to believe the pitch that Labour and National are both capable of delivering 4% growth rates and invest everything here on a far-sighted bet of at least 13 years' duration. A long-term perspective is all that is required.
"Yeah, right," one can hear these clients responding.
Disclosure: Michael Coote is an Act list candidate
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