DEPUTY Prime Minister Winston Peters in his brief remarks to the Economic Development Summit held in Whakatāne on Friday, September 20, expressed a sentiment that I have often expressed myself, albeit in a different way.

Mr Peters said New Zealand had “lost its mojo” when it comes to infrastructure development and productivity. I have spent the days since that summit pondering what exactly he really meant.

Mr Peters was born in 1945 and just makes it into the baby boomer generation. Thus, I can only assume that he was referring to the years of the 1950s and 60s when the New Zealand pound (1933 until 1967) was on parity with the British pound, and we got stuff done.

Such allusions to the past are things that folk who have been around a while often do. Sometimes, our memories fade into the distance and we tend to romanticise the past.

I have found myself applauding the feats of the great Ministry of Works (MoW) that was established in 1871, and eventually disestablished in 1988. Back in the day, the MoW was probably, unjustifiably, the objective of derision.

However, during the times of the MoW, New Zealand developed a lot of basic infrastructure including water, roading and electricity.

I often tell folk that we have barely built a new road in our district since I have been alive. Today, according to the Infrastructure Commission, New Zealand has a $106 billion infrastructure deficit or crisis.

Like any history, the economic history of New Zealand is a bit sketchy. However, the infant colony of the late 19th and early 20th century had a great need for infrastructure. Everything required to support society and economy had to be planned and built from scratch – including roads, railways, schools, hospitals, sewerage systems, ports, and factories – and somebody had to pay for it.

Private enterprise played a role in building businesses, but the main weight of responsibility for financing infrastructure fell on the Government.

Early economic growth focused on the pastoral sector, but the main engine behind New Zealand’s fledgling economy by the early 1860s was gold.

The wool exports and the gold boom provided the platform for the development of railways. Christchurch had the first public railway track that opened in 1863.

The first locomotive, the Pilgrim, ran from Ferrymead Wharf into central Christchurch. This required the excavation of the 2.4-kilometre long Moorehouse (Lyttelton) Tunnel at a cost of £195,000. This represented an enormous amount of money for the small population base.

As the gold fields started to deplete, the main commodity for trade was wool.

Given its colonial history, New Zealand has always had a strong association with the “Mother land”.

For instance, the development of a fledgling motor industry in New Zealand occurred when Charles Todd and his son, Charles Jr, of the Yorkshire-based Todd family dynasty, set up a garage in 1912 and went on to import Ford, Gray, Wolseley, Maxwell and Oakland vehicles.

During the Great Depression of the 1930s, the government incentivised local assembly of motor vehicles, and in 1935, the Todd Motor Plant was built along the Hutt Road in Petone. My father worked in that plant for a time. In 1987, the whole Todd Motors business was sold to Mitsubishi, who eventually decommissioned the plant and moved it to Thailand.

Although World War II was a human tragedy, New Zealand benefited from the strong demand for our commodity exports. The Government took control of the economy and the New Zealand pound (£NZ), which was initially on parity with the British pound sterling, was devalued. Eventually, all external debt was paid off and the economy started performing well. In 1948, the New Zealand pund returned to parity with the British pound.

Following World War II, the British Empire, to which we had hitched our wagon, was in decline and the need for reconstruction was urgent. The post war era in New Zealand was one of fixed exchange rates and capital controls with strong government intervention in the economy.

Although export volumes did not grow spectacularly during the 1950s, prices soared, and terms of trade soared. These high prices – and the fact that New Zealand hadn’t been badly affected by the war – meant New Zealand income rankings were high compared to peer countries. At the time, New Zealand’s per-capita income was 88 percent that of the United States.

The 1950s and 1960s were times when the country had less than half the population it has today, but it was a time that we constructed much of the infrastructure we rely on today.

The 1970s were the years of the oil crisis and fuel rationing. Energy shortages were holding the country back and the Muldoon government’s response was the Think Big projects that revolved around energy and were a perfectly valid response to the energy crises of the 1970s.

How easily we have forgotten the lesson of history which should have taught us how important energy and energy infrastructure is to maintain a modern society.

In fact, I have warned many times over the years that being dependent on a single energy source (hydro) can be a huge advantage in the world of climate change but also a significant liability when lakes and rivers run low.

Recent timber mill closures tragically prove this point. For readers interested in educating themselves on the history of electrical infrastructure development in New Zealand, I can recommend the book Power Surge: How Think Big and Rogernomics Transformed New Zealand by John Boshier.

By the early 1980s, our country underwent something of a not so quiet revolution that was brought about at the hands of the fourth Labour Government of David Lange (1984-1990). This economic revolution occurred under the helmsmanship of the then economy minister, Roger Douglas, in a series of reforms that became affectionately known as Rogernomics. New Zealand’s economic system was quickly converted from one of the most heavily regulated in the OECD to one of the least regulated.

The public sector was restructured to separate core administrative functions from government-owned production activities. The latter were corporatised, and many privatised. Product markets were deregulated and opened to international competition. Virtually all producer subsidies were abolished. Foreign trade was liberalised. Financial and capital markets were liberalised and foreign investment and immigrants were made welcome. Labour markets were freed up, and workers were given the right to associate freely.

Many would say that a formerly inward looking, slow-moving economy with rising unemployment was turned into a flexible, globally competitive, high-growth economy with price stability, above-average job creation and small, effective government.

With all of this, by the early 2000s, New Zealand’s GDP per capita was in the bottom half of the developed world.

Somehow, somewhere, we lost our mojo and our ability to build the critical infrastructure that is necessary to unlock the productive capacity of a modern nation.

And it’s not as if we are alone in this. The Americans and other nations also talk about crumbling infrastructure such as roads and bridges. Clearly the deregulated markets and the financialisation of economies have not encouraged the building of infrastructure.

Therefore, when Winston says, “we lost our mojo”, we have to ask what exactly that means? Perhaps it means that we changed a system from one where Government was a pivotal player in the building of the country, to one in which there is a greater reliance on the private sector and competitive globalised markets.

Today, the much-vaunted advantages of globalisation are being called into question as nations start to look inward and protectionism is on the march.

Rather, the focus is turning to sovereignty and supply security. Global economic and geopolitical trends seem to be inverting.

Somewhere, governments lost control of the money system, relinquishing a large part of that role to privately-owned banks. I firmly believe that there are some things that Government must do rather than leaving it to the market. Included in that is the development of critical infrastructure.

Losing our mojo could also mean many other things, including losing our values, our sense of decency, our work ethic, or our dedication to the common good or something else?

Or maybe, we became over bureaucratised and over-regulated, or fell prey to an over-exuberant safety enterprise. It is now well-recognised that road safety management accounts for 40-50 percent of the cost of building roads.

If this really is the case, then something is clearly wrong.

My speech at the summit touched on some of what is written here and can be viewed at this address:

www.votevictorluca.com/post/speech-to-the-economic-development-summit

I will leave readers to ponder what loss of mojo means while I do more homework. Perhaps we should write to Winston and ask him what he meant.

-Victor Luca