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Dr Cullen's speech to Frankfurt Investors' Lunch

Dr Michael Cullen
Finance Minister
17 September 2000
Speech Notes
12 noon Monday 18 September (Frankfurt time)
Frankfurt Investors' Luncheon


Dr Cullen's speech to Frankfurt Investors' Luncheon

Thank you for inviting me here today. Frankfurt is the first stop on my itinerary for the Commonwealth Finance Ministers and the IMF/World Bank Meetings.

New Zealand is a small, island nation. International trade is vital to us. It is through our ability to trade with the rest of the world that we will take our place in the 21st century.

New Zealand has excellent, long-standing trading links with economies and organisations the world over. Our citizens are great travellers and we reflect that in our global, outward looking view of the world.

Over the years, international investment has contributed significantly to the development of New Zealand's economy. We recognise the need for overseas investment in New Zealand if our economy is to meet its long-term growth targets.

Our country offers investors the opportunity to thrive in an open, attractive business environment. This government particularly wants to encourage long haul, "greenfields" investment that contributes to the social and economic well being of all New Zealanders.

New Zealand has one of the most open economies in the world – the result of years of economic and structural reform. However this has not resulted in one of the best performing economies in the world.

This Government is taking a pragmatic approach to those reforms. The Labour/Alliance coalition government was elected to office last November in an emphatic vote for a change to rebalance social and economic policies.

We are keeping what worked of the economic reforms and taking another look at policies that did not help create high productivity and long term growth.

We are not returning to an overly regulated market but neither do we accept that a completely free market will deliver the living standards we demand for our citizens.

At the macroeconomic level, the government is continuing with a programme of fiscal conservatism and monetary policy orthodoxy.

The 2000 Budget confirmed our fiscal conservatism.

That Budget projected an operating surplus of around 0.9 percent of GDP in the current financial year, 1.8 percent in 2002, and 2.2 percent in 2003.

There are a number of other features of the economic policy framework that have been retained or reinforced.

Among them are:

 A commitment to an open and facilitative inward investment regime.

 A determination to forge wider trading partnerships, especially in the East Asian and South American theatres. We have finalised negotiations for a Closer Economic Partnership with Singapore and we have recently opened a new embassy in Brasilia.

 Expanding Closer Economic Relations with Australia

 Ongoing efforts to reduce business compliance costs.


I have indicated that I am willing to help with any legislative requirements for closer integration of the Australian and New Zealand stock exchanges, if need be.

We are making good progress on establishing a fund to meet some of the future cost of New Zealand Superannuation.

The Government is determined to help our exporters and producers and we want to reduce and where possible, eliminate barriers to New Zealand exports but we are not prepared to sell ourselves short by giving away more than we gain.

We have inherited weak external accounts. The current account deficit is currently around 8 percent of GDP and we have a legacy of over dependence on domestic consumption as the engine of economic growth.

I know there is no quick fix to the current account deficit but the Government is confident we can make significant progress over time. Our approach is multifaceted, more hands-on and consists of a broad range of interlocking policies.
We have set out quite deliberately to shift the emphasis of growth from the consumption of wealth to the production of wealth. We are actively supporting the move to what we call the 'knowledge economy' or 'info-tech' as it is known in the U.S. The health of the export sector is a top priority and we recognise that we need to put in place policies to help lift our national savings rate. In this environment the current account deficit is forecast to fall to below 5 percent of GDP by 2004.
We are encouraging New Zealand industry to become more involved in export activities and we want to attract foreign investment capital and know-how for productive export oriented industries.

New Zealand's regulations governing foreign investment are liberal by international standards.

There are no rules on the maximum level of equity interest a foreign investor may take in a New Zealand enterprise, except with respect to ownership of certain lands, domestic fishing quotas, Telecom and Air New Zealand (in accordance with international aviation conventions).

There are no restrictions on the movement of funds in or out of New Zealand, or on repatriation of profits. No additional performance measures are imposed on foreign owned enterprises.

Investors need the certainty of level playing fields. We have instigated a number of regulatory reviews to shore up the competitive environment and to make sure small investors and consumers are adequately protected under New Zealand laws. For instance, we are reviewing the regulatory regime governing the telecommunications and electricity industries.

We are moving to make sure that we have an insider trader regime that reassures investors that insider trading does not go unpunished and that the gains in the securities market are not limited to those with access to privileged information.

The Government is spending $332 million to boost industry and regional development over the next four years. A new agency called Industry New Zealand will be coordinating and delivering services and programmes. Again, the heart of these programmes is our mission to boost our export earnings by adding value to the export base and reducing our reliance on commodity export volumes.

We have implemented a number of different programmes: to support regional development, to help get good business ideas up and running and to help entrepreneurs raise finance early on in the life of a new venture.

We have launched a new proactive strategy to attract overseas investors to New Zealand.

Already we are reaping the benefits from a more co-ordinated investment strategy. Last month a new $80 million superyacht company was launched with $30 million export orders already in hand for three vessels. That demand can only grow in the lead up to the next America's Cup defence, as New Zealand's marine industry takes advantage of our reputation as a niche producer of excellence in yacht design and building.

The quick response the company received from the Investment Team at Trade New Zealand helped secured this venture for New Zealand ahead of Australia or other potential locations. The new company was not asking for handouts or government inducements. What they needed and got was immediate access to a range of central and local government services so that they could guarantee to be up and running before the next America's Cup.

Along with the removal of red tape, New Zealand's low cost structure is a significant attraction for many companies. Heinz Watties is one company that found we compare extremely well with the rest of the world.
Heinz Watties is closing its Australian factory in November to shift 39,000 tonnes of production to its New Zealand plant in Hastings. It transferred 30,000 tonnes from Japan earlier in the year. Total output from the Hastings plant will rise to 200,000 tonnes, making it one of the largest canneries in the Southern Hemisphere.

The company director said they were expanding their operation here rather than in Australia because the business environment here was "more favourable."

New Zealand has low power prices due to our deregulated, competitive environment and abundant natural resource both in hydro and geothermal energy.
The government is working in partnership with business to help New Zealand become a leader in e-commerce. We are holding a summit this year to work quickly to improve the competitive environment for the telecommunications industry, to roll out the e-government programmes and to lift education and skills in IT.

New Zealand is an attractive location for new technology industries. We are one of the most "connected" countries in the world. One in four New Zealanders use the Internet at work and eighty percent of our younger people regularly surf the Net. Three and three quarter million New Zealanders talk to each other using over one and a half million mobile phones!

The $2 billion Southern Cross Cable, which is expected to go live on November 15, links New Zealand, Australia, Hawaii and the United States and will allow for the huge volume of Internet traffic that Australasia is expected to generate.

New Zealand's widespread and enthusiastic adoption of IT has put us way ahead of many other more tentative countries. It has generated a thriving software industry. We spend 7 percent of GDP on IT – among the highest in the world.

New Zealanders create leading-edge technology. Now positioned as a global supplier of niche solutions, New Zealand software is in demand internationally.

A growing number of multinationals have already invested in New Zealand, and companies like IBM, Unisys, Digital and Fujitsu have strategic alliances with New Zealand software developers.

The electronic transportability of software makes New Zealand’s location irrelevant in the international marketplace, as modern communications and local distribution arrangements enable easy after-sales support to customers anywhere in the world.

New Zealand gets up first in the world. The dramatic growth of the "follow the sun, open all hours" call centre has seen New Zealand become an attractive option for global companies. We do the “night shift” for a number of markets as our time zone supports the Asian market yet is complementary to European and North American operations.

New Zealand has long been a world leader in agricultural and forestry research and development and continues to be so. But our R&D activities are now spreading across a wider range of industries, including electronics, telecommunications, information technology, food and beverages, environmental technology, medicine and pharmaceuticals, biotechnology and energy production and advanced engineering.

The Government strongly supports New Zealand's growing reputation as a centre for excellence in R&D. In the budget we raised public sector funding by 10 percent – the largest increase ever. Last week the Government's new $11.8 million grants scheme to help firms carry out research and development opened for business.

The government already provides over 65 percent of the country's R&D spending. We want to encourage greater private sector funding by co-funding new research projects. Currently private sector R&D is only about 0.34 percent of GDP. Most western economies spend 3 or 4 times more on private sector R&D and we need to lift our game.

A clean and green example of the sort of innovation to come out of the investment in R&D is the recent announcement of a world-first soft soap fungicide. The inventor of the fungicide, which works by making plants activate their own defences, says the product comes on the back of demand from environmentally conscious growers and customers.

Plantation forestry production is about to boom. It is already accounts for 4 percent of GDP, with an annual output of $5 billion. It is the third largest export sector and directly employs twenty-five thousand people.

Our current annual wood supply of 17 million cubic metres will double by 2015 and continue rising. It could reach 50-60 million cubic metres a year by 2025.

Some foresters call this the wall of wood. It's really a huge wave of opportunity.

Construction is under way for a new deep water Marsden Point port to cope with the huge volume of timber due from Northland forests. Complementary to this investment, Carter Holt Harvey is building an innovative high tech Laminated Veneer Lumber facility. This is a great example of the kind of added value processes we are promoting.

While tourism is one of New Zealand's largest single earners of foreign exchange and our temperate climate allows for a 12 month growing season, it is our people who are New Zealand's greatest resource.

New Zealanders are known for innovation, self-reliance and a "can-do" attitude.

New Zealand offers promising investment opportunities for international companies in the advanced technology fields of electronics, software and biotechnology. Food and wood fibre industries offer enormous growth potential because of New Zealand's comparative natural advantage.

New Zealand excels at innovative manufacturing. We have developed a specialised cluster of skills and competencies in advanced manufacturing. With most manufacturing shops employing under 10 staff, they have the flexibility to retool quickly and handle small, specialist production runs.

New Zealand is renowned for being a niche specialist in imaginative "can-do" manufacturing and design. Our ability to solve difficult problems in a cost-effective way offers significant competitive advantages for international manufacturers or investors.


We have made tertiary education more affordable and introduced a Modern Apprenticeship Programme to equip our young people with skills relevant to the new economy. It is estimated that by the age of 25 around 90 percent of the population will have participated in some form of tertiary education or training.

New Zealand's workforce is stable and adaptive. Our new labour law, which comes into effect next month, is a return to the international mainstream. The law is designed to promote collective bargaining and good faith relationships rather than the take it or leave it contracting promoted by the previous Employment Contracts Act which failed to comply with basic International Labour Organisation standards.

Our labour market is still lightly regulated by world standards, comparable in several respects to industrial legislation in parts of the United States.

New Zealand's multicultural society is the result of over 150 years of migration. Our business community reflects and reinforces this diversity and we continue to welcome talent, skill and achievement in people from other countries.

New Zealand's immigration policy is to produce social and economic benefits for New Zealand. This Government seeks to contribute to the skill base by selecting migrants who are able to match their skills with opportunities in New Zealand.

We have set the target at 38,000 residence approvals each year. We have rolled over the target so as to establish stability within the policies. Previous administrations have had a "tap-on, tap-off" approach to immigration, damaging our reputation as a migrant destination.

Business investors, professionals and entrepreneurs are welcomed under the Business Investor and General Skills immigration categories which recognises amongst other things, business experience, age, qualifications, investment funds and personal assets.

We are also focussing more on the settlement of migrants and resettlement of refugees. It is this Government's view that a successful immigration policy is only measured by the success of its settlement and resettlement outcomes.

It is important when we invite people to come to New Zealand, whether as new immigrants, investors or tourists, that we do everything we can to make them welcome.

Thank you for the opportunity to speak to you today. I would like to extend to you the same invitation that we recently gave to the richest man in the world, Bill Gates – come and visit us, we will make you welcome and I know you will like what you find.

EMNDS17 September 2000
Speech Notes
Embargoed until: 10.00 pm Sunday 17 September NZ time
12 noon Monday 18 September (Frankfurt time)
Frankfurt Investors' Luncheon


Dr Cullen's speech to Frankfurt Investors' Luncheon

Thank you for inviting me here today. Frankfurt is the first stop on my itinerary for the Commonwealth Finance Ministers and the IMF/World Bank Meetings.

New Zealand is a small, island nation. International trade is vital to us. It is through our ability to trade with the rest of the world that we will take our place in the 21st century.

New Zealand has excellent, long-standing trading links with economies and organisations the world over. Our citizens are great travellers and we reflect that in our global, outward looking view of the world.

Over the years, international investment has contributed significantly to the development of New Zealand's economy. We recognise the need for overseas investment in New Zealand if our economy is to meet its long-term growth targets.

Our country offers investors the opportunity to thrive in an open, attractive business environment. This government particularly wants to encourage long haul, "greenfields" investment that contributes to the social and economic well being of all New Zealanders.

New Zealand has one of the most open economies in the world – the result of years of economic and structural reform. However this has not resulted in one of the best performing economies in the world.

This Government is taking a pragmatic approach to those reforms. The Labour/Alliance coalition government was elected to office last November in an emphatic vote for a change to rebalance social and economic policies.

We are keeping what worked of the economic reforms and taking another look at policies that did not help create high productivity and long term growth.

We are not returning to an overly regulated market but neither do we accept that a completely free market will deliver the living standards we demand for our citizens.

At the macroeconomic level, the government is continuing with a programme of fiscal conservatism and monetary policy orthodoxy.

The 2000 Budget confirmed our fiscal conservatism.

That Budget projected an operating surplus of around 0.9 percent of GDP in the current financial year, 1.8 percent in 2002, and 2.2 percent in 2003.

There are a number of other features of the economic policy framework that have been retained or reinforced.

Among them are:

 A commitment to an open and facilitative inward investment regime.

 A determination to forge wider trading partnerships, especially in the East Asian and South American theatres. We have finalised negotiations for a Closer Economic Partnership with Singapore and we have recently opened a new embassy in Brasilia.

 Expanding Closer Economic Relations with Australia

 Ongoing efforts to reduce business compliance costs.


I have indicated that I am willing to help with any legislative requirements for closer integration of the Australian and New Zealand stock exchanges, if need be.

We are making good progress on establishing a fund to meet some of the future cost of New Zealand Superannuation.

The Government is determined to help our exporters and producers and we want to reduce and where possible, eliminate barriers to New Zealand exports but we are not prepared to sell ourselves short by giving away more than we gain.

We have inherited weak external accounts. The current account deficit is currently around 8 percent of GDP and we have a legacy of over dependence on domestic consumption as the engine of economic growth.

I know there is no quick fix to the current account deficit but the Government is confident we can make significant progress over time. Our approach is multifaceted, more hands-on and consists of a broad range of interlocking policies.
We have set out quite deliberately to shift the emphasis of growth from the consumption of wealth to the production of wealth. We are actively supporting the move to what we call the 'knowledge economy' or 'info-tech' as it is known in the U.S. The health of the export sector is a top priority and we recognise that we need to put in place policies to help lift our national savings rate. In this environment the current account deficit is forecast to fall to below 5 percent of GDP by 2004.
We are encouraging New Zealand industry to become more involved in export activities and we want to attract foreign investment capital and know-how for productive export oriented industries.

New Zealand's regulations governing foreign investment are liberal by international standards.

There are no rules on the maximum level of equity interest a foreign investor may take in a New Zealand enterprise, except with respect to ownership of certain lands, domestic fishing quotas, Telecom and Air New Zealand (in accordance with international aviation conventions).

There are no restrictions on the movement of funds in or out of New Zealand, or on repatriation of profits. No additional performance measures are imposed on foreign owned enterprises.

Investors need the certainty of level playing fields. We have instigated a number of regulatory reviews to shore up the competitive environment and to make sure small investors and consumers are adequately protected under New Zealand laws. For instance, we are reviewing the regulatory regime governing the telecommunications and electricity industries.

We are moving to make sure that we have an insider trader regime that reassures investors that insider trading does not go unpunished and that the gains in the securities market are not limited to those with access to privileged information.

The Government is spending $332 million to boost industry and regional development over the next four years. A new agency called Industry New Zealand will be coordinating and delivering services and programmes. Again, the heart of these programmes is our mission to boost our export earnings by adding value to the export base and reducing our reliance on commodity export volumes.

We have implemented a number of different programmes: to support regional development, to help get good business ideas up and running and to help entrepreneurs raise finance early on in the life of a new venture.

We have launched a new proactive strategy to attract overseas investors to New Zealand.

Already we are reaping the benefits from a more co-ordinated investment strategy. Last month a new $80 million superyacht company was launched with $30 million export orders already in hand for three vessels. That demand can only grow in the lead up to the next America's Cup defence, as New Zealand's marine industry takes advantage of our reputation as a niche producer of excellence in yacht design and building.

The quick response the company received from the Investment Team at Trade New Zealand helped secured this venture for New Zealand ahead of Australia or other potential locations. The new company was not asking for handouts or government inducements. What they needed and got was immediate access to a range of central and local government services so that they could guarantee to be up and running before the next America's Cup.

Along with the removal of red tape, New Zealand's low cost structure is a significant attraction for many companies. Heinz Watties is one company that found we compare extremely well with the rest of the world.
Heinz Watties is closing its Australian factory in November to shift 39,000 tonnes of production to its New Zealand plant in Hastings. It transferred 30,000 tonnes from Japan earlier in the year. Total output from the Hastings plant will rise to 200,000 tonnes, making it one of the largest canneries in the Southern Hemisphere.

The company director said they were expanding their operation here rather than in Australia because the business environment here was "more favourable."

New Zealand has low power prices due to our deregulated, competitive environment and abundant natural resource both in hydro and geothermal energy.
The government is working in partnership with business to help New Zealand become a leader in e-commerce. We are holding a summit this year to work quickly to improve the competitive environment for the telecommunications industry, to roll out the e-government programmes and to lift education and skills in IT.

New Zealand is an attractive location for new technology industries. We are one of the most "connected" countries in the world. One in four New Zealanders use the Internet at work and eighty percent of our younger people regularly surf the Net. Three and three quarter million New Zealanders talk to each other using over one and a half million mobile phones!

The $2 billion Southern Cross Cable, which is expected to go live on November 15, links New Zealand, Australia, Hawaii and the United States and will allow for the huge volume of Internet traffic that Australasia is expected to generate.

New Zealand's widespread and enthusiastic adoption of IT has put us way ahead of many other more tentative countries. It has generated a thriving software industry. We spend 7 percent of GDP on IT – among the highest in the world.

New Zealanders create leading-edge technology. Now positioned as a global supplier of niche solutions, New Zealand software is in demand internationally.

A growing number of multinationals have already invested in New Zealand, and companies like IBM, Unisys, Digital and Fujitsu have strategic alliances with New Zealand software developers.

The electronic transportability of software makes New Zealand’s location irrelevant in the international marketplace, as modern communications and local distribution arrangements enable easy after-sales support to customers anywhere in the world.

New Zealand gets up first in the world. The dramatic growth of the "follow the sun, open all hours" call centre has seen New Zealand become an attractive option for global companies. We do the “night shift” for a number of markets as our time zone supports the Asian market yet is complementary to European and North American operations.

New Zealand has long been a world leader in agricultural and forestry research and development and continues to be so. But our R&D activities are now spreading across a wider range of industries, including electronics, telecommunications, information technology, food and beverages, environmental technology, medicine and pharmaceuticals, biotechnology and energy production and advanced engineering.

The Government strongly supports New Zealand's growing reputation as a centre for excellence in R&D. In the budget we raised public sector funding by 10 percent – the largest increase ever. Last week the Government's new $11.8 million grants scheme to help firms carry out research and development opened for business.

The government already provides over 65 percent of the country's R&D spending. We want to encourage greater private sector funding by co-funding new research projects. Currently private sector R&D is only about 0.34 percent of GDP. Most western economies spend 3 or 4 times more on private sector R&D and we need to lift our game.

A clean and green example of the sort of innovation to come out of the investment in R&D is the recent announcement of a world-first soft soap fungicide. The inventor of the fungicide, which works by making plants activate their own defences, says the product comes on the back of demand from environmentally conscious growers and customers.

Plantation forestry production is about to boom. It is already accounts for 4 percent of GDP, with an annual output of $5 billion. It is the third largest export sector and directly employs twenty-five thousand people.

Our current annual wood supply of 17 million cubic metres will double by 2015 and continue rising. It could reach 50-60 million cubic metres a year by 2025.

Some foresters call this the wall of wood. It's really a huge wave of opportunity.

Construction is under way for a new deep water Marsden Point port to cope with the huge volume of timber due from Northland forests. Complementary to this investment, Carter Holt Harvey is building an innovative high tech Laminated Veneer Lumber facility. This is a great example of the kind of added value processes we are promoting.

While tourism is one of New Zealand's largest single earners of foreign exchange and our temperate climate allows for a 12 month growing season, it is our people who are New Zealand's greatest resource.

New Zealanders are known for innovation, self-reliance and a "can-do" attitude.

New Zealand offers promising investment opportunities for international companies in the advanced technology fields of electronics, software and biotechnology. Food and wood fibre industries offer enormous growth potential because of New Zealand's comparative natural advantage.

New Zealand excels at innovative manufacturing. We have developed a specialised cluster of skills and competencies in advanced manufacturing. With most manufacturing shops employing under 10 staff, they have the flexibility to retool quickly and handle small, specialist production runs.

New Zealand is renowned for being a niche specialist in imaginative "can-do" manufacturing and design. Our ability to solve difficult problems in a cost-effective way offers significant competitive advantages for international manufacturers or investors.


We have made tertiary education more affordable and introduced a Modern Apprenticeship Programme to equip our young people with skills relevant to the new economy. It is estimated that by the age of 25 around 90 percent of the population will have participated in some form of tertiary education or training.

New Zealand's workforce is stable and adaptive. Our new labour law, which comes into effect next month, is a return to the international mainstream. The law is designed to promote collective bargaining and good faith relationships rather than the take it or leave it contracting promoted by the previous Employment Contracts Act which failed to comply with basic International Labour Organisation standards.

Our labour market is still lightly regulated by world standards, comparable in several respects to industrial legislation in parts of the United States.

New Zealand's multicultural society is the result of over 150 years of migration. Our business community reflects and reinforces this diversity and we continue to welcome talent, skill and achievement in people from other countries.

New Zealand's immigration policy is to produce social and economic benefits for New Zealand. This Government seeks to contribute to the skill base by selecting migrants who are able to match their skills with opportunities in New Zealand.

We have set the target at 38,000 residence approvals each year. We have rolled over the target so as to establish stability within the policies. Previous administrations have had a "tap-on, tap-off" approach to immigration, damaging our reputation as a migrant destination.

Business investors, professionals and entrepreneurs are welcomed under the Business Investor and General Skills immigration categories which recognises amongst other things, business experience, age, qualifications, investment funds and personal assets.

We are also focussing more on the settlement of migrants and resettlement of refugees. It is this Government's view that a successful immigration policy is only measured by the success of its settlement and resettlement outcomes.

It is important when we invite people to come to New Zealand, whether as new immigrants, investors or tourists, that we do everything we can to make them welcome.

Thank you for the opportunity to speak to you today. I would like to extend to you the same invitation that we recently gave to the richest man in the world, Bill Gates – come and visit us, we will make you welcome and I know you will like what you find.

17 September 2000
Speech Notes
Embargoed until: 10.00 pm Sunday 17 September NZ time
12 noon Monday 18 September (Frankfurt time)
Frankfurt Investors' Luncheon


Dr Cullen's speech to Frankfurt Investors' Luncheon

Thank you for inviting me here today. Frankfurt is the first stop on my itinerary for the Commonwealth Finance Ministers and the IMF/World Bank Meetings.

New Zealand is a small, island nation. International trade is vital to us. It is through our ability to trade with the rest of the world that we will take our place in the 21st century.

New Zealand has excellent, long-standing trading links with economies and organisations the world over. Our citizens are great travellers and we reflect that in our global, outward looking view of the world.

Over the years, international investment has contributed significantly to the development of New Zealand's economy. We recognise the need for overseas investment in New Zealand if our economy is to meet its long-term growth targets.

Our country offers investors the opportunity to thrive in an open, attractive business environment. This government particularly wants to encourage long haul, "greenfields" investment that contributes to the social and economic well being of all New Zealanders.

New Zealand has one of the most open economies in the world – the result of years of economic and structural reform. However this has not resulted in one of the best performing economies in the world.

This Government is taking a pragmatic approach to those reforms. The Labour/Alliance coalition government was elected to office last November in an emphatic vote for a change to rebalance social and economic policies.

We are keeping what worked of the economic reforms and taking another look at policies that did not help create high productivity and long term growth.

We are not returning to an overly regulated market but neither do we accept that a completely free market will deliver the living standards we demand for our citizens.

At the macroeconomic level, the government is continuing with a programme of fiscal conservatism and monetary policy orthodoxy.

The 2000 Budget confirmed our fiscal conservatism.

That Budget projected an operating surplus of around 0.9 percent of GDP in the current financial year, 1.8 percent in 2002, and 2.2 percent in 2003.

There are a number of other features of the economic policy framework that have been retained or reinforced.

Among them are:

 A commitment to an open and facilitative inward investment regime.

 A determination to forge wider trading partnerships, especially in the East Asian and South American theatres. We have finalised negotiations for a Closer Economic Partnership with Singapore and we have recently opened a new embassy in Brasilia.

 Expanding Closer Economic Relations with Australia

 Ongoing efforts to reduce business compliance costs.


I have indicated that I am willing to help with any legislative requirements for closer integration of the Australian and New Zealand stock exchanges, if need be.

We are making good progress on establishing a fund to meet some of the future cost of New Zealand Superannuation.

The Government is determined to help our exporters and producers and we want to reduce and where possible, eliminate barriers to New Zealand exports but we are not prepared to sell ourselves short by giving away more than we gain.

We have inherited weak external accounts. The current account deficit is currently around 8 percent of GDP and we have a legacy of over dependence on domestic consumption as the engine of economic growth.

I know there is no quick fix to the current account deficit but the Government is confident we can make significant progress over time. Our approach is multifaceted, more hands-on and consists of a broad range of interlocking policies.
We have set out quite deliberately to shift the emphasis of growth from the consumption of wealth to the production of wealth. We are actively supporting the move to what we call the 'knowledge economy' or 'info-tech' as it is known in the U.S. The health of the export sector is a top priority and we recognise that we need to put in place policies to help lift our national savings rate. In this environment the current account deficit is forecast to fall to below 5 percent of GDP by 2004.
We are encouraging New Zealand industry to become more involved in export activities and we want to attract foreign investment capital and know-how for productive export oriented industries.

New Zealand's regulations governing foreign investment are liberal by international standards.

There are no rules on the maximum level of equity interest a foreign investor may take in a New Zealand enterprise, except with respect to ownership of certain lands, domestic fishing quotas, Telecom and Air New Zealand (in accordance with international aviation conventions).

There are no restrictions on the movement of funds in or out of New Zealand, or on repatriation of profits. No additional performance measures are imposed on foreign owned enterprises.

Investors need the certainty of level playing fields. We have instigated a number of regulatory reviews to shore up the competitive environment and to make sure small investors and consumers are adequately protected under New Zealand laws. For instance, we are reviewing the regulatory regime governing the telecommunications and electricity industries.

We are moving to make sure that we have an insider trader regime that reassures investors that insider trading does not go unpunished and that the gains in the securities market are not limited to those with access to privileged information.

The Government is spending $332 million to boost industry and regional development over the next four years. A new agency called Industry New Zealand will be coordinating and delivering services and programmes. Again, the heart of these programmes is our mission to boost our export earnings by adding value to the export base and reducing our reliance on commodity export volumes.

We have implemented a number of different programmes: to support regional development, to help get good business ideas up and running and to help entrepreneurs raise finance early on in the life of a new venture.

We have launched a new proactive strategy to attract overseas investors to New Zealand.

Already we are reaping the benefits from a more co-ordinated investment strategy. Last month a new $80 million superyacht company was launched with $30 million export orders already in hand for three vessels. That demand can only grow in the lead up to the next America's Cup defence, as New Zealand's marine industry takes advantage of our reputation as a niche producer of excellence in yacht design and building.

The quick response the company received from the Investment Team at Trade New Zealand helped secured this venture for New Zealand ahead of Australia or other potential locations. The new company was not asking for handouts or government inducements. What they needed and got was immediate access to a range of central and local government services so that they could guarantee to be up and running before the next America's Cup.

Along with the removal of red tape, New Zealand's low cost structure is a significant attraction for many companies. Heinz Watties is one company that found we compare extremely well with the rest of the world.
Heinz Watties is closing its Australian factory in November to shift 39,000 tonnes of production to its New Zealand plant in Hastings. It transferred 30,000 tonnes from Japan earlier in the year. Total output from the Hastings plant will rise to 200,000 tonnes, making it one of the largest canneries in the Southern Hemisphere.

The company director said they were expanding their operation here rather than in Australia because the business environment here was "more favourable."

New Zealand has low power prices due to our deregulated, competitive environment and abundant natural resource both in hydro and geothermal energy.
The government is working in partnership with business to help New Zealand become a leader in e-commerce. We are holding a summit this year to work quickly to improve the competitive environment for the telecommunications industry, to roll out the e-government programmes and to lift education and skills in IT.

New Zealand is an attractive location for new technology industries. We are one of the most "connected" countries in the world. One in four New Zealanders use the Internet at work and eighty percent of our younger people regularly surf the Net. Three and three quarter million New Zealanders talk to each other using over one and a half million mobile phones!

The $2 billion Southern Cross Cable, which is expected to go live on November 15, links New Zealand, Australia, Hawaii and the United States and will allow for the huge volume of Internet traffic that Australasia is expected to generate.

New Zealand's widespread and enthusiastic adoption of IT has put us way ahead of many other more tentative countries. It has generated a thriving software industry. We spend 7 percent of GDP on IT – among the highest in the world.

New Zealanders create leading-edge technology. Now positioned as a global supplier of niche solutions, New Zealand software is in demand internationally.

A growing number of multinationals have already invested in New Zealand, and companies like IBM, Unisys, Digital and Fujitsu have strategic alliances with New Zealand software developers.

The electronic transportability of software makes New Zealand’s location irrelevant in the international marketplace, as modern communications and local distribution arrangements enable easy after-sales support to customers anywhere in the world.

New Zealand gets up first in the world. The dramatic growth of the "follow the sun, open all hours" call centre has seen New Zealand become an attractive option for global companies. We do the “night shift” for a number of markets as our time zone supports the Asian market yet is complementary to European and North American operations.

New Zealand has long been a world leader in agricultural and forestry research and development and continues to be so. But our R&D activities are now spreading across a wider range of industries, including electronics, telecommunications, information technology, food and beverages, environmental technology, medicine and pharmaceuticals, biotechnology and energy production and advanced engineering.

The Government strongly supports New Zealand's growing reputation as a centre for excellence in R&D. In the budget we raised public sector funding by 10 percent – the largest increase ever. Last week the Government's new $11.8 million grants scheme to help firms carry out research and development opened for business.

The government already provides over 65 percent of the country's R&D spending. We want to encourage greater private sector funding by co-funding new research projects. Currently private sector R&D is only about 0.34 percent of GDP. Most western economies spend 3 or 4 times more on private sector R&D and we need to lift our game.

A clean and green example of the sort of innovation to come out of the investment in R&D is the recent announcement of a world-first soft soap fungicide. The inventor of the fungicide, which works by making plants activate their own defences, says the product comes on the back of demand from environmentally conscious growers and customers.

Plantation forestry production is about to boom. It is already accounts for 4 percent of GDP, with an annual output of $5 billion. It is the third largest export sector and directly employs twenty-five thousand people.

Our current annual wood supply of 17 million cubic metres will double by 2015 and continue rising. It could reach 50-60 million cubic metres a year by 2025.

Some foresters call this the wall of wood. It's really a huge wave of opportunity.

Construction is under way for a new deep water Marsden Point port to cope with the huge volume of timber due from Northland forests. Complementary to this investment, Carter Holt Harvey is building an innovative high tech Laminated Veneer Lumber facility. This is a great example of the kind of added value processes we are promoting.

While tourism is one of New Zealand's largest single earners of foreign exchange and our temperate climate allows for a 12 month growing season, it is our people who are New Zealand's greatest resource.

New Zealanders are known for innovation, self-reliance and a "can-do" attitude.

New Zealand offers promising investment opportunities for international companies in the advanced technology fields of electronics, software and biotechnology. Food and wood fibre industries offer enormous growth potential because of New Zealand's comparative natural advantage.

New Zealand excels at innovative manufacturing. We have developed a specialised cluster of skills and competencies in advanced manufacturing. With most manufacturing shops employing under 10 staff, they have the flexibility to retool quickly and handle small, specialist production runs.

New Zealand is renowned for being a niche specialist in imaginative "can-do" manufacturing and design. Our ability to solve difficult problems in a cost-effective way offers significant competitive advantages for international manufacturers or investors.


We have made tertiary education more affordable and introduced a Modern Apprenticeship Programme to equip our young people with skills relevant to the new economy. It is estimated that by the age of 25 around 90 percent of the population will have participated in some form of tertiary education or training.

New Zealand's workforce is stable and adaptive. Our new labour law, which comes into effect next month, is a return to the international mainstream. The law is designed to promote collective bargaining and good faith relationships rather than the take it or leave it contracting promoted by the previous Employment Contracts Act which failed to comply with basic International Labour Organisation standards.

Our labour market is still lightly regulated by world standards, comparable in several respects to industrial legislation in parts of the United States.

New Zealand's multicultural society is the result of over 150 years of migration. Our business community reflects and reinforces this diversity and we continue to welcome talent, skill and achievement in people from other countries.

New Zealand's immigration policy is to produce social and economic benefits for New Zealand. This Government seeks to contribute to the skill base by selecting migrants who are able to match their skills with opportunities in New Zealand.

We have set the target at 38,000 residence approvals each year. We have rolled over the target so as to establish stability within the policies. Previous administrations have had a "tap-on, tap-off" approach to immigration, damaging our reputation as a migrant destination.

Business investors, professionals and entrepreneurs are welcomed under the Business Investor and General Skills immigration categories which recognises amongst other things, business experience, age, qualifications, investment funds and personal assets.

We are also focussing more on the settlement of migrants and resettlement of refugees. It is this Government's view that a successful immigration policy is only measured by the success of its settlement and resettlement outcomes.

It is important when we invite people to come to New Zealand, whether as new immigrants, investors or tourists, that we do everything we can to make them welcome.

Thank you for the opportunity to speak to you today. I would like to extend to you the same invitation that we recently gave to the richest man in the world, Bill Gates – come and visit us, we will make you welcome and I know you will like what you find.

17 September 2000
Speech Notes
Embargoed until: 10.00 pm Sunday 17 September NZ time
12 noon Monday 18 September (Frankfurt time)
Frankfurt Investors' Luncheon


Dr Cullen's speech to Frankfurt Investors' Luncheon

Thank you for inviting me here today. Frankfurt is the first stop on my itinerary for the Commonwealth Finance Ministers and the IMF/World Bank Meetings.

New Zealand is a small, island nation. International trade is vital to us. It is through our ability to trade with the rest of the world that we will take our place in the 21st century.

New Zealand has excellent, long-standing trading links with economies and organisations the world over. Our citizens are great travellers and we reflect that in our global, outward looking view of the world.

Over the years, international investment has contributed significantly to the development of New Zealand's economy. We recognise the need for overseas investment in New Zealand if our economy is to meet its long-term growth targets.

Our country offers investors the opportunity to thrive in an open, attractive business environment. This government particularly wants to encourage long haul, "greenfields" investment that contributes to the social and economic well being of all New Zealanders.

New Zealand has one of the most open economies in the world – the result of years of economic and structural reform. However this has not resulted in one of the best performing economies in the world.

This Government is taking a pragmatic approach to those reforms. The Labour/Alliance coalition government was elected to office last November in an emphatic vote for a change to rebalance social and economic policies.

We are keeping what worked of the economic reforms and taking another look at policies that did not help create high productivity and long term growth.

We are not returning to an overly regulated market but neither do we accept that a completely free market will deliver the living standards we demand for our citizens.

At the macroeconomic level, the government is continuing with a programme of fiscal conservatism and monetary policy orthodoxy.

The 2000 Budget confirmed our fiscal conservatism.

That Budget projected an operating surplus of around 0.9 percent of GDP in the current financial year, 1.8 percent in 2002, and 2.2 percent in 2003.

There are a number of other features of the economic policy framework that have been retained or reinforced.

Among them are:

 A commitment to an open and facilitative inward investment regime.

 A determination to forge wider trading partnerships, especially in the East Asian and South American theatres. We have finalised negotiations for a Closer Economic Partnership with Singapore and we have recently opened a new embassy in Brasilia.

 Expanding Closer Economic Relations with Australia

 Ongoing efforts to reduce business compliance costs.


I have indicated that I am willing to help with any legislative requirements for closer integration of the Australian and New Zealand stock exchanges, if need be.

We are making good progress on establishing a fund to meet some of the future cost of New Zealand Superannuation.

The Government is determined to help our exporters and producers and we want to reduce and where possible, eliminate barriers to New Zealand exports but we are not prepared to sell ourselves short by giving away more than we gain.

We have inherited weak external accounts. The current account deficit is currently around 8 percent of GDP and we have a legacy of over dependence on domestic consumption as the engine of economic growth.

I know there is no quick fix to the current account deficit but the Government is confident we can make significant progress over time. Our approach is multifaceted, more hands-on and consists of a broad range of interlocking policies.
We have set out quite deliberately to shift the emphasis of growth from the consumption of wealth to the production of wealth. We are actively supporting the move to what we call the 'knowledge economy' or 'info-tech' as it is known in the U.S. The health of the export sector is a top priority and we recognise that we need to put in place policies to help lift our national savings rate. In this environment the current account deficit is forecast to fall to below 5 percent of GDP by 2004.
We are encouraging New Zealand industry to become more involved in export activities and we want to attract foreign investment capital and know-how for productive export oriented industries.

New Zealand's regulations governing foreign investment are liberal by international standards.

There are no rules on the maximum level of equity interest a foreign investor may take in a New Zealand enterprise, except with respect to ownership of certain lands, domestic fishing quotas, Telecom and Air New Zealand (in accordance with international aviation conventions).

There are no restrictions on the movement of funds in or out of New Zealand, or on repatriation of profits. No additional performance measures are imposed on foreign owned enterprises.

Investors need the certainty of level playing fields. We have instigated a number of regulatory reviews to shore up the competitive environment and to make sure small investors and consumers are adequately protected under New Zealand laws. For instance, we are reviewing the regulatory regime governing the telecommunications and electricity industries.

We are moving to make sure that we have an insider trader regime that reassures investors that insider trading does not go unpunished and that the gains in the securities market are not limited to those with access to privileged information.

The Government is spending $332 million to boost industry and regional development over the next four years. A new agency called Industry New Zealand will be coordinating and delivering services and programmes. Again, the heart of these programmes is our mission to boost our export earnings by adding value to the export base and reducing our reliance on commodity export volumes.

We have implemented a number of different programmes: to support regional development, to help get good business ideas up and running and to help entrepreneurs raise finance early on in the life of a new venture.

We have launched a new proactive strategy to attract overseas investors to New Zealand.

Already we are reaping the benefits from a more co-ordinated investment strategy. Last month a new $80 million superyacht company was launched with $30 million export orders already in hand for three vessels. That demand can only grow in the lead up to the next America's Cup defence, as New Zealand's marine industry takes advantage of our reputation as a niche producer of excellence in yacht design and building.

The quick response the company received from the Investment Team at Trade New Zealand helped secured this venture for New Zealand ahead of Australia or other potential locations. The new company was not asking for handouts or government inducements. What they needed and got was immediate access to a range of central and local government services so that they could guarantee to be up and running before the next America's Cup.

Along with the removal of red tape, New Zealand's low cost structure is a significant attraction for many companies. Heinz Watties is one company that found we compare extremely well with the rest of the world.
Heinz Watties is closing its Australian factory in November to shift 39,000 tonnes of production to its New Zealand plant in Hastings. It transferred 30,000 tonnes from Japan earlier in the year. Total output from the Hastings plant will rise to 200,000 tonnes, making it one of the largest canneries in the Southern Hemisphere.

The company director said they were expanding their operation here rather than in Australia because the business environment here was "more favourable."

New Zealand has low power prices due to our deregulated, competitive environment and abundant natural resource both in hydro and geothermal energy.
The government is working in partnership with business to help New Zealand become a leader in e-commerce. We are holding a summit this year to work quickly to improve the competitive environment for the telecommunications industry, to roll out the e-government programmes and to lift education and skills in IT.

New Zealand is an attractive location for new technology industries. We are one of the most "connected" countries in the world. One in four New Zealanders use the Internet at work and eighty percent of our younger people regularly surf the Net. Three and three quarter million New Zealanders talk to each other using over one and a half million mobile phones!

The $2 billion Southern Cross Cable, which is expected to go live on November 15, links New Zealand, Australia, Hawaii and the United States and will allow for the huge volume of Internet traffic that Australasia is expected to generate.

New Zealand's widespread and enthusiastic adoption of IT has put us way ahead of many other more tentative countries. It has generated a thriving software industry. We spend 7 percent of GDP on IT – among the highest in the world.

New Zealanders create leading-edge technology. Now positioned as a global supplier of niche solutions, New Zealand software is in demand internationally.

A growing number of multinationals have already invested in New Zealand, and companies like IBM, Unisys, Digital and Fujitsu have strategic alliances with New Zealand software developers.

The electronic transportability of software makes New Zealand’s location irrelevant in the international marketplace, as modern communications and local distribution arrangements enable easy after-sales support to customers anywhere in the world.

New Zealand gets up first in the world. The dramatic growth of the "follow the sun, open all hours" call centre has seen New Zealand become an attractive option for global companies. We do the “night shift” for a number of markets as our time zone supports the Asian market yet is complementary to European and North American operations.

New Zealand has long been a world leader in agricultural and forestry research and development and continues to be so. But our R&D activities are now spreading across a wider range of industries, including electronics, telecommunications, information technology, food and beverages, environmental technology, medicine and pharmaceuticals, biotechnology and energy production and advanced engineering.

The Government strongly supports New Zealand's growing reputation as a centre for excellence in R&D. In the budget we raised public sector funding by 10 percent – the largest increase ever. Last week the Government's new $11.8 million grants scheme to help firms carry out research and development opened for business.

The government already provides over 65 percent of the country's R&D spending. We want to encourage greater private sector funding by co-funding new research projects. Currently private sector R&D is only about 0.34 percent of GDP. Most western economies spend 3 or 4 times more on private sector R&D and we need to lift our game.

A clean and green example of the sort of innovation to come out of the investment in R&D is the recent announcement of a world-first soft soap fungicide. The inventor of the fungicide, which works by making plants activate their own defences, says the product comes on the back of demand from environmentally conscious growers and customers.

Plantation forestry production is about to boom. It is already accounts for 4 percent of GDP, with an annual output of $5 billion. It is the third largest export sector and directly employs twenty-five thousand people.

Our current annual wood supply of 17 million cubic metres will double by 2015 and continue rising. It could reach 50-60 million cubic metres a year by 2025.

Some foresters call this the wall of wood. It's really a huge wave of opportunity.

Construction is under way for a new deep water Marsden Point port to cope with the huge volume of timber due from Northland forests. Complementary to this investment, Carter Holt Harvey is building an innovative high tech Laminated Veneer Lumber facility. This is a great example of the kind of added value processes we are promoting.

While tourism is one of New Zealand's largest single earners of foreign exchange and our temperate climate allows for a 12 month growing season, it is our people who are New Zealand's greatest resource.

New Zealanders are known for innovation, self-reliance and a "can-do" attitude.

New Zealand offers promising investment opportunities for international companies in the advanced technology fields of electronics, software and biotechnology. Food and wood fibre industries offer enormous growth potential because of New Zealand's comparative natural advantage.

New Zealand excels at innovative manufacturing. We have developed a specialised cluster of skills and competencies in advanced manufacturing. With most manufacturing shops employing under 10 staff, they have the flexibility to retool quickly and handle small, specialist production runs.

New Zealand is renowned for being a niche specialist in imaginative "can-do" manufacturing and design. Our ability to solve difficult problems in a cost-effective way offers significant competitive advantages for international manufacturers or investors.


We have made tertiary education more affordable and introduced a Modern Apprenticeship Programme to equip our young people with skills relevant to the new economy. It is estimated that by the age of 25 around 90 percent of the population will have participated in some form of tertiary education or training.

New Zealand's workforce is stable and adaptive. Our new labour law, which comes into effect next month, is a return to the international mainstream. The law is designed to promote collective bargaining and good faith relationships rather than the take it or leave it contracting promoted by the previous Employment Contracts Act which failed to comply with basic International Labour Organisation standards.

Our labour market is still lightly regulated by world standards, comparable in several respects to industrial legislation in parts of the United States.

New Zealand's multicultural society is the result of over 150 years of migration. Our business community reflects and reinforces this diversity and we continue to welcome talent, skill and achievement in people from other countries.

New Zealand's immigration policy is to produce social and economic benefits for New Zealand. This Government seeks to contribute to the skill base by selecting migrants who are able to match their skills with opportunities in New Zealand.

We have set the target at 38,000 residence approvals each year. We have rolled over the target so as to establish stability within the policies. Previous administrations have had a "tap-on, tap-off" approach to immigration, damaging our reputation as a migrant destination.

Business investors, professionals and entrepreneurs are welcomed under the Business Investor and General Skills immigration categories which recognises amongst other things, business experience, age, qualifications, investment funds and personal assets.

We are also focussing more on the settlement of migrants and resettlement of refugees. It is this Government's view that a successful immigration policy is only measured by the success of its settlement and resettlement outcomes.

It is important when we invite people to come to New Zealand, whether as new immigrants, investors or tourists, that we do everything we can to make them welcome.

Thank you for the opportunity to speak to you today. I would like to extend to you the same invitation that we recently gave to the richest man in the world, Bill Gates – come and visit us, we will make you welcome and I know you will like what you find.

17 September 2000
Speech Notes
Embargoed until: 10.00 pm Sunday 17 September NZ time
12 noon Monday 18 September (Frankfurt time)
Frankfurt Investors' Luncheon


Dr Cullen's speech to Frankfurt Investors' Luncheon

Thank you for inviting me here today. Frankfurt is the first stop on my itinerary for the Commonwealth Finance Ministers and the IMF/World Bank Meetings.

New Zealand is a small, island nation. International trade is vital to us. It is through our ability to trade with the rest of the world that we will take our place in the 21st century.

New Zealand has excellent, long-standing trading links with economies and organisations the world over. Our citizens are great travellers and we reflect that in our global, outward looking view of the world.

Over the years, international investment has contributed significantly to the development of New Zealand's economy. We recognise the need for overseas investment in New Zealand if our economy is to meet its long-term growth targets.

Our country offers investors the opportunity to thrive in an open, attractive business environment. This government particularly wants to encourage long haul, "greenfields" investment that contributes to the social and economic well being of all New Zealanders.

New Zealand has one of the most open economies in the world – the result of years of economic and structural reform. However this has not resulted in one of the best performing economies in the world.

This Government is taking a pragmatic approach to those reforms. The Labour/Alliance coalition government was elected to office last November in an emphatic vote for a change to rebalance social and economic policies.

We are keeping what worked of the economic reforms and taking another look at policies that did not help create high productivity and long term growth.

We are not returning to an overly regulated market but neither do we accept that a completely free market will deliver the living standards we demand for our citizens.

At the macroeconomic level, the government is continuing with a programme of fiscal conservatism and monetary policy orthodoxy.

The 2000 Budget confirmed our fiscal conservatism.

That Budget projected an operating surplus of around 0.9 percent of GDP in the current financial year, 1.8 percent in 2002, and 2.2 percent in 2003.

There are a number of other features of the economic policy framework that have been retained or reinforced.

Among them are:

 A commitment to an open and facilitative inward investment regime.

 A determination to forge wider trading partnerships, especially in the East Asian and South American theatres. We have finalised negotiations for a Closer Economic Partnership with Singapore and we have recently opened a new embassy in Brasilia.

 Expanding Closer Economic Relations with Australia

 Ongoing efforts to reduce business compliance costs.


I have indicated that I am willing to help with any legislative requirements for closer integration of the Australian and New Zealand stock exchanges, if need be.

We are making good progress on establishing a fund to meet some of the future cost of New Zealand Superannuation.

The Government is determined to help our exporters and producers and we want to reduce and where possible, eliminate barriers to New Zealand exports but we are not prepared to sell ourselves short by giving away more than we gain.

We have inherited weak external accounts. The current account deficit is currently around 8 percent of GDP and we have a legacy of over dependence on domestic consumption as the engine of economic growth.

I know there is no quick fix to the current account deficit but the Government is confident we can make significant progress over time. Our approach is multifaceted, more hands-on and consists of a broad range of interlocking policies.
We have set out quite deliberately to shift the emphasis of growth from the consumption of wealth to the production of wealth. We are actively supporting the move to what we call the 'knowledge economy' or 'info-tech' as it is known in the U.S. The health of the export sector is a top priority and we recognise that we need to put in place policies to help lift our national savings rate. In this environment the current account deficit is forecast to fall to below 5 percent of GDP by 2004.
We are encouraging New Zealand industry to become more involved in export activities and we want to attract foreign investment capital and know-how for productive export oriented industries.

New Zealand's regulations governing foreign investment are liberal by international standards.

There are no rules on the maximum level of equity interest a foreign investor may take in a New Zealand enterprise, except with respect to ownership of certain lands, domestic fishing quotas, Telecom and Air New Zealand (in accordance with international aviation conventions).

There are no restrictions on the movement of funds in or out of New Zealand, or on repatriation of profits. No additional performance measures are imposed on foreign owned enterprises.

Investors need the certainty of level playing fields. We have instigated a number of regulatory reviews to shore up the competitive environment and to make sure small investors and consumers are adequately protected under New Zealand laws. For instance, we are reviewing the regulatory regime governing the telecommunications and electricity industries.

We are moving to make sure that we have an insider trader regime that reassures investors that insider trading does not go unpunished and that the gains in the securities market are not limited to those with access to privileged information.

The Government is spending $332 million to boost industry and regional development over the next four years. A new agency called Industry New Zealand will be coordinating and delivering services and programmes. Again, the heart of these programmes is our mission to boost our export earnings by adding value to the export base and reducing our reliance on commodity export volumes.

We have implemented a number of different programmes: to support regional development, to help get good business ideas up and running and to help entrepreneurs raise finance early on in the life of a new venture.

We have launched a new proactive strategy to attract overseas investors to New Zealand.

Already we are reaping the benefits from a more co-ordinated investment strategy. Last month a new $80 million superyacht company was launched with $30 million export orders already in hand for three vessels. That demand can only grow in the lead up to the next America's Cup defence, as New Zealand's marine industry takes advantage of our reputation as a niche producer of excellence in yacht design and building.

The quick response the company received from the Investment Team at Trade New Zealand helped secured this venture for New Zealand ahead of Australia or other potential locations. The new company was not asking for handouts or government inducements. What they needed and got was immediate access to a range of central and local government services so that they could guarantee to be up and running before the next America's Cup.

Along with the removal of red tape, New Zealand's low cost structure is a significant attraction for many companies. Heinz Watties is one company that found we compare extremely well with the rest of the world.
Heinz Watties is closing its Australian factory in November to shift 39,000 tonnes of production to its New Zealand plant in Hastings. It transferred 30,000 tonnes from Japan earlier in the year. Total output from the Hastings plant will rise to 200,000 tonnes, making it one of the largest canneries in the Southern Hemisphere.

The company director said they were expanding their operation here rather than in Australia because the business environment here was "more favourable."

New Zealand has low power prices due to our deregulated, competitive environment and abundant natural resource both in hydro and geothermal energy.
The government is working in partnership with business to help New Zealand become a leader in e-commerce. We are holding a summit this year to work quickly to improve the competitive environment for the telecommunications industry, to roll out the e-government programmes and to lift education and skills in IT.

New Zealand is an attractive location for new technology industries. We are one of the most "connected" countries in the world. One in four New Zealanders use the Internet at work and eighty percent of our younger people regularly surf the Net. Three and three quarter million New Zealanders talk to each other using over one and a half million mobile phones!

The $2 billion Southern Cross Cable, which is expected to go live on November 15, links New Zealand, Australia, Hawaii and the United States and will allow for the huge volume of Internet traffic that Australasia is expected to generate.

New Zealand's widespread and enthusiastic adoption of IT has put us way ahead of many other more tentative countries. It has generated a thriving software industry. We spend 7 percent of GDP on IT – among the highest in the world.

New Zealanders create leading-edge technology. Now positioned as a global supplier of niche solutions, New Zealand software is in demand internationally.

A growing number of multinationals have already invested in New Zealand, and companies like IBM, Unisys, Digital and Fujitsu have strategic alliances with New Zealand software developers.

The electronic transportability of software makes New Zealand’s location irrelevant in the international marketplace, as modern communications and local distribution arrangements enable easy after-sales support to customers anywhere in the world.

New Zealand gets up first in the world. The dramatic growth of the "follow the sun, open all hours" call centre has seen New Zealand become an attractive option for global companies. We do the “night shift” for a number of markets as our time zone supports the Asian market yet is complementary to European and North American operations.

New Zealand has long been a world leader in agricultural and forestry research and development and continues to be so. But our R&D activities are now spreading across a wider range of industries, including electronics, telecommunications, information technology, food and beverages, environmental technology, medicine and pharmaceuticals, biotechnology and energy production and advanced engineering.

The Government strongly supports New Zealand's growing reputation as a centre for excellence in R&D. In the budget we raised public sector funding by 10 percent – the largest increase ever. Last week the Government's new $11.8 million grants scheme to help firms carry out research and development opened for business.

The government already provides over 65 percent of the country's R&D spending. We want to encourage greater private sector funding by co-funding new research projects. Currently private sector R&D is only about 0.34 percent of GDP. Most western economies spend 3 or 4 times more on private sector R&D and we need to lift our game.

A clean and green example of the sort of innovation to come out of the investment in R&D is the recent announcement of a world-first soft soap fungicide. The inventor of the fungicide, which works by making plants activate their own defences, says the product comes on the back of demand from environmentally conscious growers and customers.

Plantation forestry production is about to boom. It is already accounts for 4 percent of GDP, with an annual output of $5 billion. It is the third largest export sector and directly employs twenty-five thousand people.

Our current annual wood supply of 17 million cubic metres will double by 2015 and continue rising. It could reach 50-60 million cubic metres a year by 2025.

Some foresters call this the wall of wood. It's really a huge wave of opportunity.

Construction is under way for a new deep water Marsden Point port to cope with the huge volume of timber due from Northland forests. Complementary to this investment, Carter Holt Harvey is building an innovative high tech Laminated Veneer Lumber facility. This is a great example of the kind of added value processes we are promoting.

While tourism is one of New Zealand's largest single earners of foreign exchange and our temperate climate allows for a 12 month growing season, it is our people who are New Zealand's greatest resource.

New Zealanders are known for innovation, self-reliance and a "can-do" attitude.

New Zealand offers promising investment opportunities for international companies in the advanced technology fields of electronics, software and biotechnology. Food and wood fibre industries offer enormous growth potential because of New Zealand's comparative natural advantage.

New Zealand excels at innovative manufacturing. We have developed a specialised cluster of skills and competencies in advanced manufacturing. With most manufacturing shops employing under 10 staff, they have the flexibility to retool quickly and handle small, specialist production runs.

New Zealand is renowned for being a niche specialist in imaginative "can-do" manufacturing and design. Our ability to solve difficult problems in a cost-effective way offers significant competitive advantages for international manufacturers or investors.


We have made tertiary education more affordable and introduced a Modern Apprenticeship Programme to equip our young people with skills relevant to the new economy. It is estimated that by the age of 25 around 90 percent of the population will have participated in some form of tertiary education or training.

New Zealand's workforce is stable and adaptive. Our new labour law, which comes into effect next month, is a return to the international mainstream. The law is designed to promote collective bargaining and good faith relationships rather than the take it or leave it contracting promoted by the previous Employment Contracts Act which failed to comply with basic International Labour Organisation standards.

Our labour market is still lightly regulated by world standards, comparable in several respects to industrial legislation in parts of the United States.

New Zealand's multicultural society is the result of over 150 years of migration. Our business community reflects and reinforces this diversity and we continue to welcome talent, skill and achievement in people from other countries.

New Zealand's immigration policy is to produce social and economic benefits for New Zealand. This Government seeks to contribute to the skill base by selecting migrants who are able to match their skills with opportunities in New Zealand.

We have set the target at 38,000 residence approvals each year. We have rolled over the target so as to establish stability within the policies. Previous administrations have had a "tap-on, tap-off" approach to immigration, damaging our reputation as a migrant destination.

Business investors, professionals and entrepreneurs are welcomed under the Business Investor and General Skills immigration categories which recognises amongst other things, business experience, age, qualifications, investment funds and personal assets.

We are also focussing more on the settlement of migrants and resettlement of refugees. It is this Government's view that a successful immigration policy is only measured by the success of its settlement and resettlement outcomes.

It is important when we invite people to come to New Zealand, whether as new immigrants, investors or tourists, that we do everything we can to make them welcome.

Thank you for the opportunity to speak to you today. I would like to extend to you the same invitation that we recently gave to the richest man in the world, Bill Gates – come and visit us, we will make you welcome and I know you will like what you find.

ENDS

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