Dr Michael Bassett

Dr Michael Bassett

Newspaper Columns

Columns

16/12/07 Keith Holyoake
05/12/07 Roger Douglas's 70th birthday
26/11/07 Announcement
09/10/07 Election Spending
25/09/07 Glad-handing and Time-wasting
15/09/07 Reflections on Helen Clark (PRESS Mainlander)
11/09/07 Time for Road Pricing
28/08/07 Personal Attacks
14/08/07 Parity with Australian Pay
31/07/07 Political Paralysis: France and New Zealand
19/06/07 Robert Muldoon is Back
05/06/07 Polls, Damned Polls
22/05/07 The Strange Death of the New Zealand Economy
08/05/07 Reserve Bank Inquiry
24/04/07 Health Union Extremism
10/04/07 Daylight Saving
27/03/07 The Really Big Issue
13/03/07 The Anti-Police Hysteria
27/02/07 Slowing Down Justice
13/02/07 Political Soft Options
30/01/07 An End to Treaty Historical Claims
16/01/07 Learning from History
19/12/06 Problems of Opposition since 2001
13/12/06 TIM PANKHURST Dominion Post
05/12/06 Nicky Hager and the Hollow Book
21/11/06 Greeks Bearing Gifts
07/11/06 Poor Policing in Auckland
24/10/06 Careless decisions on Auckland's Waterfront
10/10/06 The PC Clobbering Machine
26/09/06 Toxic Politics
12/09/06 Auckland's Robbers' Convention (NZ Herald)
12/09/06 Labour's Political Scandals
29/08/06 Corruption and Party Funding
14/08/06 War in the Middle East
01/08/06 New Zealand's Future?
20/06/06 Our Infrastructural Needs
20/06/06 Leave
06/06/06 Diverting the Public's Attention
23/05/06 New Zealand and Australia
09/05/06 The Maori Seats
11/04/06 Dogs and Priorities
28/03/06 Parliament's Size
14/03/06 Crime and Police priorities
28/02/06 Family Planning and Poverty
14/02/06 The Cartoon Furore
31/01/06 Greater Financial Understanding
03/01/06 Encouraging Economic Literacy

Encouraging Economic Literacy

03/01/2006

While browsing through the report of the Commonwealth Bank of Australia recently my eye fell on an item about the bank's funding of a programme to improve Australians' understanding of basic economics. Balancing bank accounts, preparing budgets and learning to save and borrow wisely are its main aims. Research has demonstrated, they say, that lifting levels of economic literacy amongst the bottom 20% of the population could add as much as $6 billion per annum to Australia's economy, creating 16,000 new jobs. To this end, CBA makes grants to primary and secondary schools, and is helping with the development of school curricula. It also funds a website to assist teachers to improve students' money management skills. Not a bad idea, I thought. While New Zealanders like to regard themselves as superior to Australians, it is an undeniable fact that the average wage in Australia is 30% higher than here, and the gap is widening. This suggests either that Australia has more resources, or its inhabitants are better educated. Like any good Kiwi I'm reluctant to accept the latter.

If New Zealand's Ralph Norris and his predecessor David Murray at CBA can help lift levels of economic literacy in Australia, maybe it could be done here too? With this in mind, I contacted Hugh Burrett, Managing Director of ASB Bank, a wholly-owned subsidiary of CBA. I recall ASB with affection. When I was at primary school in Auckland teachers collected our thruppenny bits each Friday, and wrote the details in our ASB passbooks, a practice, sadly discontinued. I was pleased to discover that ASB is now contemplating a similar economic literacy scheme to CBA's. What with Alan Bollard lifting interest rates and Kiwis spending beyond prudent limits, some improvement is surely necessary? Unfortunately, the credit card has never proved as educational as the passbook!

The modern economy is a much more complex animal than when I was small. Education about its intricacies will always need explaining. When I was young it was axiomatic that everyone would have a job. New Zealand enjoyed what was known as over-full employment. People with few skills shopped around for better pay. We lived in a highly regulated society where consumer goods got dearer and dearer as wages rose steadily. Initially we were richer than Australia, and our dollar was worth more. Nevertheless, our shops were relatively empty of consumer goods. New Zealand manufacturers had no competition from cheaper imports; high tariffs kept them out. Most people couldn't understand why a locally-made fridge cost three times the price of its US equivalent. There, of course, consumers had choices. Both National and Labour governments spent to the hilt, fuelling inflation. They forced banks, insurance companies and finance houses to lend large portions of their funds to the government at interest rates below inflation. When this wasn't enough, Robert Muldoon borrowed big time. New Zealand's dollar slipped behind Australia's because we kept living beyond our means. It took a foreign exchange crisis in 1984, and years of restructuring, before prosperity returned.

But there are few signs that New Zealanders learned from the 1980s. They enjoy greater choices resulting from an end to import licensing and tariffs; they wear cheaper goods, and they drive newer, more affordable cars. Reducing union stand-over tactics has given them the chance to negotiate more employment flexibility that suits modern life styles. But there has been no measurable increase in Kiwis' understanding of economic fundamentals. Auckland's Herald runs what it calls a "Weekend Jury" where each week some topical issue is put to a diverse group of varying ages and occupations. The results are often depressing. By a three to one margin the jury recently thought the government should save the jobs of Air New Zealand's engineers. They favoured subsidies to achieve this. Such knee-jerk, short-term measures compounded in number and cost, and played a big part in the 1984 economic crisis

Unfortunately, lifting basic economic literacy isn't a requirement only for the lowest socio-economic groups. Most Kiwis have no idea which government policies work well, or which are certain to create future problems. Many care little for tomorrow. A bill in the post next week is faraway; a looming economic downturn, beyond comprehension. Today, too many run their personal finances like Muldoon did the country's. They will pay a consequence as the economy slows. My New Year's wish is for CBA and the ASB to succeed with their educational endeavours. Someone has to try.