Government lacks 10-year economic plan - economist

The Government's lack of a long-term economic plan has been challenged by a leading economist.

Cameron Bagrie, managing director of Bagrie Economics, says industries such as dairy and non-renewables have been taking hits as the economy slowly moves towards a more sustainable growth model. 

Although the move towards sustainability is good, says Bagrie, there needs to be more planning about where the country will pick up the slack as income from those traditional sectors drop.

"If you're going to be dishing out those hits to run a more sustainable growth model you've got to have the opportunities on the other side. So the million-dollar question at the moment is: what are those opportunities on the other side?" Bagrie told the AM Show on Monday. 

His comments came as Fonterra signalled a $675 million loss for the year. The projected loss is the company's second since it was founded in 2001.

Bagrie says although the Government is running expansionary fiscal growth - "they're putting a little bit of money in people's pockets to help the economy along" - unless people have confidence in the long-term financial health of the country they won't end up spending more.

"There is a lot of uncertainty at the moment in regards to the economic plan," says Bagrie. 

Leader of the Opposition, Simon Bridges, says uncertainty around the economy is "an indictment of the Government's poor economic management".

He says his party would provide tax relief and invest in infrastructure in order to spur growth. 

According to Bagrie, however, such measures - by any Government - merely focus on the short term. He says although dairy has been a source of growth for New Zealand for the last 30 years, that growth has taken an environmental toll on the country and won't last forever.

"We're not going to get the same kind of growth out of the dairy sector."

We now need to look for that economic growth elsewhere, Bagrie said.

"We need to find alternative sources of growth, not in the next one to two years - but over the next 10 years."

If the country doesn't create opportunities in other industries the business sector won't be able to "continue hiring and invest in New Zealand's economic future."

"We need that growth plan in regard to where we're going to be in 10 years."

One example Bagrie highlighted for potential growth was the fish-farming industry.

"At the moment that's [worth] about $500 million. We need to turn that into a $2-3 billion sector within the next 10 years."

According to the New Zealand Institute of Economy Research, dairy currently contributes around $17 billion to the country's economy.