Greens need to talk business sense

MARIA SLADE
Last updated 08:11 27/09/2013

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OPINION: Green MP David Clendon is a sensible chap.

If you have an image of all Green Party members as herbal and home-spun types with dreadlocked hair and stripey leggings, Clendon will disavow you of this view.

Neatly pressed in a grey business suit and pale green tie, the former academic and business owner joined a panel at a small business conference last week to discuss "the New Normal" facing Kiwi SMEs.

The subject of the living wage and whether it can be compatible with productivity came up.

Advocating the living wage in a roomful of business owners is pretty much like standing in a bull ring with a red flag attached to your backside. There were definite rumbles of unrest when one panelist suggested if owners couldn't afford to pay wages at that level then they shouldn't be in business.

But Clendon did not echo this provocative statement. Instead he explained that the concept of a living wage is aspirational, not prescriptive, and this tends to get lost in the heat and light surrounding the debate.

Such soothing commonsense is not often seen at the farther ends of the political spectrum. It certainly wasn't in evidence as the Greens thumped the desk this week over the Productivity Commission's latest report.

The report highlights New Zealand's alarming slide down the OECD productivity rankings. Kiwis work 15 per cent more hours a year than the OECD average, and yet we produce 20 per cent less activity per hour.

While New Zealand's labour market has grown strongly in recent decades, our productivity growth has been rubbish.

Since the 1950s Australia has seen similar employment expansion but its productivity has grown considerably faster.

The fact Australia can dig up its desert and ship it straight to China has something to do with it, but even when like industries are compared New Zealand's productivity lags that of our trans-Tasman cousin.

The report says there are wide variations and some industries punch above their weight. But several of our major sectors - including agriculture, forestry and fishing - are making the largest contributions to the slowdown.

And the Greens' answer to all of this? The country must spend more on research and development (R&D).

In itself it's a reasonable response. New Zealand spends around half the OECD average on R&D, and of course investing more in this area would never go amiss.

But as has been proven down the ages, simply chucking more money at a problem does not fix it, and New Zealand needs to work much smarter in developing its innovation and entrepreneurial ecosystems.

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Coming up with and proving ideas is not our greatest challenge. We're arguably as good at that as the next country.

Where we have a dearth of expertise is in turning those bright ideas into valid commercial propositions, and within viable timeframes.

We're working on it - the advent of government body Callaghan Innovation, and its link-ups with the country's universities and Crown Research Institutes, is helping create a virtual circle between innovators, funders, investors and businesses.

But no mention of these kinds of initiatives in the Greens' statement this week. Nor was there talk of ways to encourage rank-and-file Kiwi businesses to adopt improved technology and practices.

Instead the party would reinstate the across-the-board R&D tax credit abolished by the current government, because picking our horses and backing those enterprises most likely to reward the country with success on the international stage is a poor strategy, apparently.

The Greens should take a leaf out of their more measured MP's book and start talking business sense.

Maria Slade is editor of Fairfax Media's Unlimited magazine. maria.slade@fairfaxmedia.co.nz

- Fairfax Media

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