Tony Abbott

Mr Key’s defining strategy is one of incremental radicalism. It resists any bold rhetoric or big picture reforms. In their stead, reforms are taken one step at a time. This enables the government to make its case and take the public along a journey.

New Zealand proves that reforms, even in mature democracies, are still possible. They should be possible in Australia as well where they are much needed. For any political leaders wishing to embark on a process of economic reform, whether in Australia or in Europe, a look at New Zealand may well be inspirational.

Do today’s politicians have the courage to make hard choices? Or has the furious pace of modern politics put an end to the age of reform? While Australia has been avoiding difficult decisions, the New Zealanders have been silently forging ahead.

Ultimately, Australia’s future prosperity depends on Abbott’s succeeding in just that. The adoption of the New Zealand method of quiet, incremental radicalism may be Australia’s best hope of rediscovering the art of reform.

If Australia wanted to draw any conclusions from the German turnaround of the past decade, there are a few. To trigger a wave of economic modernisation, it either takes a conviction politician such as Margaret Thatcher or it takes an economic crisis to force it onto the agenda, as happened to Gerhard Schröder.

It’s not enough for New Zealand to compete with Australia in the battle for Olympic gold. We now have to beat the Australians in the battle for foreign investment to grow the Kiwi economy. Thanks to Gillard and Abbott, New Zealand’s chances are better than ever.

Abbott’s scheme, while meant to create a more family friendly society, will only enlarge the welfare state and increase taxes. But looking at Japan, Canada or Germany we can see that imposing bigger tax burdens and increasing the welfare state are not conducive to lifting either productivity or fertility.