Scale up or Die

Friday 16 November 2012

Scale up or Die

Today we're launching a new report Lifting Export Performance, carried out for ExportNZ by the New Zealand Institute of Economic Research. It shines a light on what is holding New Zealand back, the effectiveness of export policies, and how best to move forward.

It's a sobering reality check on the state of the nation’s export performance and how vital it is to get the policy framework right.

The main focus is addressing New Zealand’s big issues – its smallness and isolation.

One of the obvious ways to overcome these problems is to make New Zealand a bigger country with bigger companies.

Once grown, the challenge is then keeping companies of scale in New Zealand so the country benefits from them. The alternative is selling out to other countries and losing talent overseas for better jobs and better pay.

The report outlines a variety of issues New Zealand policymakers and firms need to address now and into the future.

Key points:

Download the report [1.3MB]

• The government is already doing a lot to support export capability. We need to assess the effectiveness of existing policies and programmes before throwing more money at the problem. Let’s aim to do a few things really well rather than spreading the capability spending too thinly.
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• Part of the reason for the high exchange rate is that growth in government social spending tends to favour domestic consumption instead of saving and investment. On-going efforts to cut less vital spending like Working for Families and interest-free student loans will ease the pressure on the Kiwi dollar.
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• Public spending has acted like a tax on the export sector. During the 2000s the Government administration share of GDP grew by 60%, driving up the demand for labour and sucking resources away from businesses that were already struggling to grow.
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• New Zealand needs to hold a serious debate about its optimal population. NZIER is on the record as saying that 15 million by 2060 would be a good start.
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• There is merit in investigating policies to reward high-performing firms that retain capability in New Zealand rather than move offshore.
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• Regulatory risks around the primary sector won’t go away: New Zealand primary exporters need to front-foot these issues so that unnecessarily draconian policies aren’t imposed upon them that would restrict their efforts to grow and export.
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• New sources of scale could come from the minerals sector and Māori-owned businesses.
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• Smaller New Zealand companies need to collaborate onshore to compete offshore.
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I look forward to working with all stakeholders to use this report’s findings to help develop New Zealand into a bigger, more successful exporting nation; better able to offer interesting and competitively paid jobs to future generations.
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