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Partnership And Economic Development - Speech

8 March 2001 Jim Anderton Speech Notes

Address to the Hamilton Business-to-Government Forum

Coming to the Waikato at the moment, in a time of relative prosperity for provincial New Zealand, it seems difficult to explain that New Zealand has to transform the economic base of our economy.

After all, our agri-businesses are enjoying unusual economic strength. Dairying is the strongest sector of all. And the heart of the strong economy is right here in the Waikato.

Let me give you some quick examples of how well the economy is going right now.

The most recent National Bank economic survey reported that, “As the world is having palpitations, New Zealand’s heart is beating stronger. Good cash-flow in the primary sector, strong employment growth and rising confidence is providing substantial momentum for the economy…”

Commodity prices are high.

Exports were 25% higher for the year ended January 2001 than they were just one year ago.

Horticulture exports hit $1.7 billion last year.

The Dairy Board's pay-out this season is up by $1.2 billion, and the agriculture sector is forecast to increase its export returns by 25% over the next five years.

Tourism is flourishing. Visitor arrivals increased by 180,000 in the year to December. That's up 11%.

The unemployment rate is 5.6 per cent of the workforce – the lowest rate in 12 years. The number of jobs for the December quarter is up 36,000 on the same quarter a year ago.

Job ads are twelve per cent higher than last year.

Even the Coalition Government's political opponents concede how well the economy is going.

We had some fun in Parliament last week discussing the state of the economy.

From up in the North, John Carter said three's a lot of positive feeling from a 'fabulous' farming season, tourism and Northland's growth as a retirement centre.

Down in the South, Gavan Herlihy said it’s very positive out there in rural New Zealand and rural Otago at the moment.

In Taranaki-King Country, Shane Ardern said a dairy farmer friend of his had told him he would be $150-180,000 better off under this Government than he was a year ago.

So if even our opponents are saying that everything looks rosy, what's the problem?

The problem is that the economic conditions we are experiencing now are unusual.

This year we're doing better. But we need to take the long view.

New Zealand is slipping behind other economies that we like to compare ourselves with.

Our average per capita income has been slipping behind the average income of other developed countries for thirty consecutive years.

Our overseas debt is monumental. The last time we earned more overseas than we spent was in 1973.

Our economy is still largely dependent on commodities for our export income.

Commodity prices are good right now. Climatic conditions have been favourable. The dollar has been very competitive.

However, over time we cannot hope that all of those favourable conditions will be maintained.

We sell products to the rest of world that are largely undifferentiated from the products of our competitors. Although we are good at it, and commodity prices are high right now, they are actually falling in real terms over the full economic cycle.

At the same time we buy complex manufactured goods that command prices set by sellers. New Zealand is the lowest exporter of high-tech products in the OECD. We import five times as much high-technology production as we export.

If our incomes are derived ultimately from commodities, then over time our incomes will fall, too, relative to other countries, even if we have good years every now and then.

We need to do much more than hope the sun shines, the rain falls and the grass or trees grow.

Four per cent of our companies are exporting. That’s only 8,500 businesses out of 259,000 in the whole of New Zealand. 127 companies account for 73% of our total merchandise exports. Just thirty companies earn half of our entire foreign exchange.

This adds up to a very narrow, and shallow, export base, highly dependent on a relatively small number of large exporters.

I believe everyone in this room knows we have to do better. I'm sure you're giving your time to come here because you want New Zealand to do better.

New Zealanders are the only people in the world committed to security and opportunity for New Zealanders. No one else will do it. The days are over when the New Zealand Government should or could sit back and take a 'hands off' view.

That is what today's discussions have been about.

We have a small population and the luck to have extraordinary natural resources. So a significant proportion of our exports will probably always come from that rich base.

But that does not mean that we cannot produce highly innovative, complex products or services for the world market.

To move forward we have to create advantages for ourselves. We need to support good ideas and remove the obstacles that prevent them from flourishing.

We already have some important competitive advantages. New Zealanders are quick to adapt to, and to use, new technology. We have significant natural resources and an exciting natural environment. We have a competitive cost structure.

I want New Zealand to be the best small country in the world.

That will require a strong, diverse economy. One where skills, talent and creativity can be developed. We have to produce, retain and attract the people we need.

The challenge for New Zealand is to be a country that is attractive to skilled and talented individuals. Attractive enough for them to invest their energy and resources and attractive enough to live in. Where there will be rewards for success and for skills. Where working people can look forward to rising real incomes.

But incomes alone will never be enough. There are important quality of life issues as well.

Individuals need to feel personally secure. We need a country that is confident in its own unique culture. We need a country that offers world class education and health care. One of the singular quality-of-life advantages New Zealand can offer is the physical beauty of our natural environment.

The Government is taking a partnership approach to implement our vision for the country and the economy.

We're working with local communities, iwi, unions, local government and the private sector.

The Ministry of Economic Development and Industry New Zealand have been set up as the partnership agencies.

They won't create advantages and unlock New Zealand's potential on their own. They will be partners – with you and with the rest of New Zealand.

Industry New Zealand will help good ideas to get off the ground.

For example, it has an Investment Ready Scheme bringing together people with good ideas and venture capital to fund those ideas. It helps innovators get their ideas up to a level where they are ready for investment.

A team of industry specialists within Industry New Zealand is working with high growth potential companies. They identify barriers to their growth and help find ways past them.

A Regional Partnership Programme is under way to help regions realise their potential.

The Ministry of Economic Development provides co-ordination and leadership.

For example, on the East Coast of the North Island we identified constraints on wood processing capacity as a key economic development issue -- not only for that region but elsewhere in New Zealand. So we are working with the forest industry on a wood processing strategy. It's looking at issues like infrastructure development - roads and ports, the supply of skilled labour, and investment promotion and marketing. We need dozens of industry initiatives like this.

Last month the Prime Minister and I announced a major development at the Hobsonville Air Force Base in West Auckland. $600 million of new export earnings over five years, and 350-400 highly skilled new jobs. The project required committed work from the MED, working in partnership with the local Government and the private sector and providing co-ordination across multiple Government departments.

So the Government has some initiatives under way. I know there are other ideas about the contribution that Government can make and many of them were discussed today.

After I spoke to a business audience in Auckland recently, I received a letter from someone who wrote 'If only you had some idea of what it was like to run a business. If you only knew what it is like to know people and their families depend on you for their livelihoods.'

Well I do know. I have been an employer and I have established and run a not insignificant manufacturing engineering company.

One of the lessons I've learned is that we can achieve the most by working together, in partnership. We must also use our small size and coherence as a nation to be flexible enough to make things happen that are to our advantage.

This Coalition Government is full of pragmatists. I'm one of them. If ideas work, I'll support them. If they don't work, I support throwing them out and trying something else.

I want to conclude by saying that there is no shortage of innovation and good ideas in New Zealand.

There are many reasons why the economy has not flourished as well as it might have done. It is also a matter of great urgency that we lift our economic game now. But it is indisputable that government has been a missing partner in economic development. We are now attempting to ensure that the government plays its part. It's not a matter of the government doing it all. It is a matter of working together.

That co-operative partnership will be a powerful weapon as together we build a better future for all New Zealanders.


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