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NZCPR
Guest Forum
Out of the Red
By Richard Prebble
11 November 06
I believe
the issues facing
New Zealand
are every bit as serious as we faced in 1984. It is true that
then we faced bankruptcy. As I say in my new book ‘Out of
the Red”
“I found
myself in government in the middle of the most serious
financial crisis in our history. There had been a run on the
kiwi dollar and all of the government’s reserves were
gone.”
Today the
government may have a surplus of $11 billion but it is giving
a false sense of security. The trade deficit is a record and
is unsustainable. At least in 1984 we knew we were in trouble.
No debate
is occurring over what is obvious wrong. As an economy we are
just not footing it in the global economy. Borrowing to
sustain our living standards is not sustainable. The economy
is a train wreck waiting to happen. In the book I say;
“Over the
last decade,
New Zealand
has enjoyed unprecedented prosperity; we’ve had a very good
run. But for the last five years our growth rate has been
static. How long is that going to last? To lift our prosperity
to a new level, to have
New Zealand
firms succeed internationally, to have world-class education
and health services, we need to change our culture, how we
react and think about our world.”
I believe
we discovered some remarkable things about what causes success
when turning around our basket case state businesses into
successful businesses. They are lessons we need to apply
again.
I relate
how on spring morning I walked into the prime minister’s
office expecting to be made minister of transport and walked
out the biggest businessman in
New Zealand
’s history. I was in charge of the country’s air, road and
rail systems, its national post office and phone company, half
the country’s forests, all the landcorp farms, an insurance
company, a bank, a computer company, all of the nations
electricity generation and the national grid, air traffic
control, a property company and the country’s biggest
printing company. In today’s dollars around one hundred
billion dollars worth of assets.
Together
they were losing a billion dollars a year and three years
later were earning the government a billion dollars a year.
“The
full, inside story of what happened with those twenty-one
businesses has never been told. There have been a number of
academic studies and analysis of what came to be known as the
SOE model. I‘ve told part of the story myself. But no one
knows about the body of ideas that drove the new enterprises.
They weren’t mine, and weren’t even from
New Zealand
. The managers and directors of the state owned enterprises
weren’t exposed to ‘Human Synergistics” directly, but
indirectly through me. It sounds like a strange cult. That was
how Robert Muldoon tried to characterize it. The ideas that
sounded eccentric twenty years ago are in the mainstream now,
but still haven’t been popularized. They constitute a
management practice that can transform the way large companies
are organized”
I believe
we need that thinking that turned around our hopeless
government trading departments again today.
It helps
explain what thinking people find inexplicable. How is it we
persist with our present welfare system when it is clearly
having the opposite result from what was intended, more people
dependant and in poverty?
Why do
governments persist with such policies that do not work?
It is
similar to the reason that most businesses are not very
successful. It is the same reason that government trading
departments went year after year losing money and providing
third world levels of service. It is how we think.
There is
research in the book that shows just 15% of New Zealanders
have a way of thinking that is going to enable them to be
successful. If you do not believe that your efforts make a
difference then of course you do not think reforming welfare
will produce different results.
What we
found is that it is possible to change the culture of an
organisation.
It is time
to apply these lessons we learnt again.
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