From the Prime Minister’s state of the nation speech onwards National has made it very clear that its unrelenting focus this year will be on catching the economic growth wave. It clearly hopes that this, along with Reserve Bank-engineered falling interest rates and, unless Donald Trump gets too much in the way, steadily falling inflation, will both help it to overcome stubbornly high unemployment rates and give the “squeezed middle” sufficient incentive to vote National once again at next year’s election.

But despite the constant talk about going for growth, National has so far revealed very little about specifically how it intends to achieve that. The closest any Minister has come to spelling out a plan has been New Zealand First Resources Minister Shane Jones with his commitment to more mineral exploration. While there is arguably considerable potential value in exploiting some of the country’s mineral reserves, that policy alone is unlikely to satisfy National’s growth objectives, even if all the conservation and environmental issues involved with more mining can ever be resolved.

In any case, New Zealand should have long learnt through bitter experience that governments picking winners in whatever sector is not a viable long-term way to achieve sustainable economic growth and development. Businesses seeking to invest in New Zealand, be they local or foreign, need assurance about the long-term investment and business environment before they commit to the economy in a way that will foster growth.

That is where the “bold” package of tax reform Finance and Economic Growth Minister Willis is mooting for this year’s Budget becomes critical. New Zealand’s current business tax rates are no longer competitive nor conducive to encouraging new business to locate here, or existing export businesses to stay.

Our current corporate tax rate of 28 cents in the dollar is out of line with countries we like to imitate where we can – in Ireland the corporate tax rate is 12.5%, and it is 17% in Singapore. Australia has a two-tier system of 25% for companies with a turnover of less than $A50 million, and 30% for those above that figure. In the United States the federal corporate tax rate is currently 21% although President Trump has pledged to reduce that to 15%. China’s corporate tax rate is 25%, with lower rates for some low-profit companies.

New Zealand’s current 28% corporate tax rate was set back in 2011, when I was Minister of Revenue. I had also overseen an earlier review, in 2007, which had led to the rate being reduced from 33% to 30% in that year’s Budget. However, prior to that, the last time corporate taxes had been reviewed was nearly twenty years earlier in 1988, following the 1987 Sharemarket Crash.

Only two business tax reductions in the last 36 years, and the last one nearly 14 years ago, at a time of considerable change and turmoil not only shows how badly New Zealand has lagged other countries, especially at a time when the international movement of capital and technology has never been more rapid. It also shows the extent to which successive New Zealand governments have failed to appreciate the role competitive corporate tax rates can play in attracting and retaining investment and jobs.  Without investment and jobs, and the wealth they create, it is increasingly difficult for modern societies like ours to fulfil all the responsibilities citizens expect.

So, Nicola Willis has a lot of catching up to do to both restore competitiveness in New Zealand’s corporate tax rates, and to stimulate the long-term investment that should flow from that. There will almost certainly be a significant short-term revenue loss from reducing corporate tax rates to a more competitive level. Part of her bold strategy will be having to absorb this, at least until the gains from the new rates start to flow in terms of new investment. Whatever she does, she must resist the temptation to try to offset potential revenue losses by new or additional taxes elsewhere that will nullify the benefits of lowering corporate taxes.

And should she make a change in this year’s Budget, she needs to then commit to regular reviews – say five yearly – to ensure that the new rates remain internationally attractive and competitive. Ireland and Singapore have shown that once it is underway, the bandwagon effect of competitive corporate tax rates gathers momentum exponentially, and the gains quickly flow.

Many have dismissed Prime Minister Luxon’s “growth” as just rhetoric so far, more about deflecting criticism at the start of the new political year of the government’s performance to date. Willis’ proclamation she is prepared to be “bold” offers not only the hope that she understands the need to reform our corporate tax rate, but also that she will now get on with the job of doing something about it. It will be to the country’s benefit.