The NZ deficit has blown out in the half-year budgetary review. Clearly the NZ govt has to rein in spending and restrain itself to prudent expenditure. There is a lot the government could do of course. Maybe it was looking for such bad news to justify some tough decisions. Among the measures are likely to be:
1. Chasing 'tax cheats' with greater powers - Who can argue with slavery as a means of repaying debts that governments took out to retain power....oh offer bad service.
2. Abolishing the interest-free concession on student loans. This is too generous. Even Australians pay a nominal interest rate on their student loans. Also, NZ will have a tough time recouping the money if those students head overseas.
3. Bringing forward fibre optic layout: There are plans to lay a fibre network in NZ. The problem is that the network envisaged will not be laid until 2015. This is a little slow I suggest.
4. Supporting call centre development: NZ ought to be the call centre hub for Australia, and even some European countries like the UK. Why? Because it has the lowest wages of all English-speaking OECD countries, with comparatively high standards of training; plus a relatively weak currency, and the expectation that will remain the case. NZ needs jobs. There are good reasons for NZ to develop call centres for Australia, as opposed to outsourcing them to Asia. There are certain jobs that NZ will do better, e.g. Selling conference tickets, product marketing, and even SEO services like content writing.
5. Software development: NZ is a logical base for the development of software products. It is one thing to have a financial base in LA, etc, however as far as software development is concerned, NZ is a great place to develop product because of its education system and cheap wages. The problem however is creating your own corporate culture because many NZ'ers are not accustomed to hard work. Things are a little slow here....the world is moving on...and too many are being left behind. The country's biggest industries are milk, tourism and retirement.
6. Boosting savings: NZ needs more investment funds, and those funds ought to be geared completely to investing in Australian mining. Why? The Australian dollar is going to be stronger over the next 20 years, the Australian mining sector is going to benefit from a strong commodities market (thanks to China and India). Greater savings means less spending; which means a balanced budget. NZ citizens are too reliant on government.
7. Business incubation: I think there is an opportunity for local governments to engage in some business incubation in order to help the unemployed develop some skills. There really is no need for the high-cost education skills in the modern era, as a great deal of information is free if you know how to harvest it.