Getting the message on a growth plan

00:13, Jul 05 2012

Austerity drives are so 2011. A drive for growth is much more 2012. And there are strong signs the Government is getting the message.

John Key would have heard the new tune being played in Europe during his recent visit, and his senior ministers can hear the strains here, too.

Unless their political instincts have deserted them, they will be alive to the potential dangers closer to home,  to the economy and their futures in the Beehive, from the expected long low-growth grind ahead. 

Without light in sight, confidence can quickly evaporate. Recent surveys have not been encouraging in that regard. And where confidence goes, votes quickly follow.

Of course, recognising the mood change is a million miles from throwing open the chequebook to stimulate the economy. But it does suggest the Government is waking up to the need to shift away from its belt-tightening refrain and start humming confidently about promoting growth.

That has become the new norm in Europe, since the election of President Francois Hollande in France, and the mood shift that started in Mediterranean countries is filtering further north, even into Germany.

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Closer to home, Labour - and in fact the wider Opposition - has been stepping up attacks on the Government's growth programme - or absence of one.

While Labour's recipe is far from populist, and is only making incremental inroads in its polling, it can rightly claim an agenda that is big-picture and far-reaching. By anyone's measure you could never describe a capital gains tax, significant changes to monetary policy, a big push on savings, more for research and development and a long-term plan to lift the state pension age as mere tinkering.

In contrast the Government's regime, led by Finance Minister Bill English with Steven Joyce riding shotgun on the MoBIE ministry, has been incrementalist.

Mr English would deny he never oversaw austerity here - or at least he would argue it was austerity-lite, NZ-style. But ask any minister what steps have been taken to promote economic growth, and you will probably get a list of small ''r'' reforms led by the 90-day probation period for new employees.

That softly-slowly approach is unlikely to change, but expect the Government to package up the next round of largely microeconomic changes and sell them hard.

Over the next four or five months there will be a series of public discussion documents and proposals looking at measures with ''an unashamed emphasis on growth''.

It is a phrase road-tested by John Key, but it echoes the words of UK Conservative Chancellor George Osborne in successive budgets. New planning rules in the UK are also being sold as ''unashamedly pro-growth'', raising the hackles of environmental lobby groups.

There are clear parallels in New Zealand, especially around the impact of planning laws on the availability and of affordable of housing. Opponents may see them as shortcuts, but the Government is watching closely  and learning - from the lessons of the Christchurch rebuild.

At its core the issue is about how far ''a presumption in favour of sustainable development'' becomes a bias toward growth and development at the expense of the environment.

Alongside planning rules, expect the Government to scope a raft of other changes too. So look for potential changes to the Resource Management Act and local government practices, regulations controlling water use and quality, greater promotion of financial markets (not just through asset sales but also a review of the unlisted market rules), a stronger push to ensure the right infrastructure is in place - especially roads and broadband - and moves to address the cost and availability of housing.

There are other pressures in play too.

As the books move toward a Budget surplus from next year, the Government may face calls for help from middle class households squeezed by rising costs and potentially higher mortgage interest rates.

With all forecasts pointing to a long period of what Mr English calls ''grumpy growth'' that will dictate a ''slow grind'' - another of his favourite phrases - the next two years will be no time for the Government to be caught short of a growth plan.

The polls are suggesting Mr Key is already in a tight race, so he cannot risk being typecast as the guy whose only ideas were cutting and managing, with no fresh ideas to win the promised ''brighter future''.

Because in the end, getting elected is so 2014.

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