British Prime Minister Harold Wilson once observed that a week was a long time in politics. By that reckoning, a month is a lifetime. While holidaying for four weeks I received several interesting letters about my last column on the advantages to be gained from a higher level of economic literacy within the community. Arriving home, I discover that there's been a sea change in levels of anxiety about the economy as large numbers of people adjust their thinking away from the "eat, drink and be merry" approach of the last few years. Higher levels of financial understanding now seem even more necessary than they were a month ago. Pity we can't magic them into existence.

First, an acknowledgement. In my earlier article I talked about the Commonwealth Bank of Australia's economic literacy programmes, and those being started by ASB Bank, its Kiwi subsidiary. They were the ones I knew about. What I didn't realise was that many other banks are engaged in the same thing. And the Retirement Commission, of course, has a major interest in greater financial understanding amongst citizens. Since 1975 when Robert Muldoon offered the biggest election bribe in New Zealand's history with National Superannuation at 80% of the average wage, payable at 60, retirement arrangements have been constantly re-jigged because of the nation's inability to afford such a gold-plated scheme. Now reduced to 66% payable at 65, people's need to set aside more for retirement has steadily grown. At the end of 2004 a Retirement Commission- ANZ Bank funded survey of the levels of personal understanding about finance seems to have discovered that about 30% of the population need assistance. This looks like the group that Australian research identified as capable of making a significant contribution to that country's growth if only their financial knowledge could be increased.

Besides ASB Bank, HSBC and ANZ-National have been working with young people. In HSBC's case, they concentrate on lifting students' understanding of credit and money management, while ANZ's efforts encourage training in numeracy. The National Bank, now merged with ANZ, re-introduced school banking through their branch network with those schools prepared to become partners in the scheme. Many have joined. The children themselves play a key role in the activity, with one member of each class being nominated as banker. Kids themselves keep records of their balances. Even the small Canterbury-based Loan and Building Society is busily engaged with four local schools promoting weekly banking, in their case using parent helpers. They have passbooks, and like all the others, charge no fees for children's accounts.

However, much more than these commendable schemes is required. While some private secondary schools have entrepreneurship competitions, others do little to educate students about hard-core economic realities. Tens of thousands of students leave school with no understanding of economic realities. At a time like now when an overheated exchange rate, sliding manufacturing output, and a declining job market bite into people's lives, greater understanding about which political steps can produce beneficial outcomes, and which are no more than short-term, feel-good measures, would help the country big time. People might even understand that continuing poorly-targeted government spending has actually contributed to today's problems. Instead of urging ministers to reach for the regulators' manual, or to increase spending, they'd be more likely to endorse easing off, especially if they knew about the statistics showing that recent huge increases in spending on health, education and welfare have produced little improvement in outcomes, helping instead, to fuel the inflation that worries Dr Bollard who keeps interest rates high.

A nation is only as good as its citizens. In 1900 New Zealand had the highest proportion of literate people in the world. Statistics show that our average incomes were right up there with the world's wealthiest. In those days, reading, writing and arithmetic were core subjects. Teaching was a highly respected profession. Now in our time of need, general unease with the educational system is understandable, given that New Zealand's incomes have slipped so far behind Australia's. Better teacher training, fewer politically correct agendas, higher levels of numeracy, courses in basic economics for all students, and a better understanding of what we used to call "civics" would together pay huge economic dividends. Improved accountability from teachers in return for better pay are also fundamental ingredients of any longer-term campaign to lift our economic performance. It's a pity it has taken a downturn to bring such issues to the fore.