3 Mar 2010

Govt policies 'not enough' to catch up with Australia

8:12 pm on 3 March 2010

An economic think-tank has criticised Government policies as not going far enough to close the income gap with Australia.

New Zealand Institute director Rick Boven says the New Zealand economy will have to grow at between 4% and 5% a year for the next 15 years to catch up with Australia.

He says the Government's effort to close the gap lacks rigour, and questions whether it will make enough of a difference.

Dr Boven says the institute's initial work reveals much of the difference between the two countries is linked to differences in capital investment and in innovation and business sophistication.

He told Morning Report there's a lot of effort in improving the inventiveness of New Zealand, but those inventions can't be converted effectively into a business success.

"Partly because we don't have enough entrepreneurs and enough capital for those ventures, party because we're just new at it, we need to put more effort into it," he says.

"Australia for example has been developing its ability to convert innovation into business for about 30 years, we've been doing it for about 10 years."

Dr Boven says more needs to be done to encourage greater domestic savings and greater investment in productive assets and innovation.