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Anderton: The Importance Of Being Partners

Hon Jim Anderton Speech Notes

The Importance Of Being Partners

Economic Development Association of New Zealand
10:30AM Thursday, 15 March 2001
Rydges Hotel,
Rotorua


When I became economic development minister, the government finally became a partner in economic development.

Central Government has been the missing partner for twenty-five years.

Local authorities and organisations like Economic Development Agencies have known the urgency of the challenge. They have been pioneers.

When I came into Government it is fair to say there wasn't much economic development expertise anywhere in central government.

Economic development agencies around New Zealand in many cases were far ahead of our capabilities.

During the 1990s, your organisations were the main proponents of economic development in New Zealand.

The length of your experience means that you are in a good position to take a leadership role in economic development at a regional level.

The challenge is to ensure that, as leaders, you adopt a broad and inclusive approach to the future of your regions.

From now on, central government will be standing alongside your efforts and helping out wherever we can.

When I came into office I set off around New Zealand visiting every region. I talked about regional development needs and ideas about economic development.

I picked up ideas from economic development agencies, local authorities, local communities and from businesses.

Those ideas helped to shape the approach the Labour-Alliance Coalition Government has taken to economic development.

There is no doubt in my mind that we need a new approach.

We have to transform New Zealand's industrial base.

New Zealand is slipping behind other developed countries.

Compared to the average of developed countries, our average per capita income has been dropping for thirty 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.

But, 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. We are good at it – and commodity prices are high right now. But over the full economic cycle, commodity prices are falling.

We are using our returns from commodities to buy complex manufactured goods. 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.

And not enough of our firms are exporting.

Only 8,500 businesses out of 259,000 in the whole of New Zealand are exporting.

Just thirty companies earn half of our entire foreign exchange.

We have a very narrow, and shallow, export base, highly dependent on a relatively small number of large exporters.

I believe everyone here knows we have to do better.

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

There are still vast numbers of New Zealanders stuck in the past. They still believe that hands-off policies can succeed.

I believe you have a role in changing their minds.

Your primary role is to foster economic development.

But if we are going to be successful, there has to be a culture change as well.

Debate over economic direction in New Zealand should centre on our economic development priorities.

There should be debate within regions. There should be widespread discussion over the top priority for regional development.

Instead, there is far too much time being wasted questioning whether there should be a developmental dimension to economic policy at all.

That debate is being led by political opponents of the government and lobby groups stuck in the past.

There are simple questions for them:

Do you want more jobs and higher incomes?

Do you want New Zealand to have a future as a developed country, or not?

If we leave it to the market, New Zealand will fall steadily behind.

There are still far too many people around who are saying that Governments should be hands-off.

They want a warehouse economy. An economy where we produce raw commodities and ship them out for the lowest possible cost.

That is an economy characterised by low skill jobs and low incomes.

It is the track New Zealand has been on for at least twenty-five years.

Yet that is the inevitable outcome of those who argue that the top economic priorities for New Zealand are tax cuts and a return to the Employment Contracts Act.

The consequence of that approach is falling incomes, and fewer and fewer jobs and opportunities for New Zealanders.

A weaker economy means we will increasingly struggle to provide the essential social services New Zealanders expect.

It's not that long ago that nearly every business lobby group in the country warned the Government not to increase the top tax rate, increase spending or pass the Employment Relations Bill.

They claimed the economy would be plunged into recession.

In fact the opposite has happened.

This government has a good economic story to tell.

Unemployment is lower than it has been for twelve years.

There are more jobs. Job ads are twelve per cent higher than last year.

I'm starting to get complaints about skill shortages wherever I go.

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

Dairying is flourishing.

Tourism is booming.

Merchandise trade exports for the year ended January were up 25% on the previous January 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 there'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.

The economy is growing.

The Government is running a prudent fiscal ship.

Net debt is continuing to fall.

We are putting aside contributions towards the future cost of superannuation.

The Government's operating balance is projected to steadily improve.

The Reserve Bank cut the official cash rate yesterday by a quarter of a per cent and mortgage rates are already headed downwards.

Businesses will begin to pay a bit less for their overdrafts.

The outlook is good.

The Institute of Economic Research predicts that the economy will stay on track for the next couple of years.

BERL has predicted growth peaking at 3.5%.

I don't think it's enough.

I want the economy to do better even than that.

And I'm not saying that 'the economy is going well, so we can all relax.'

We can't. There is much more to do.

The point is simply to highlight that we have been able to achieve some economic success.

And I remember not that long ago the prophets of doom were everywhere.

They focussed on short-term financial advantage for themselves.

The problem with that approach is that when the overall economy does better, it lifts everyone up.

Higher incomes are much more important than lower taxes.

We are not going to generate higher incomes and more jobs by slashing taxes for the rich.

We are only going to get wealthier by developing the economy.

But if we want to change the economic base of New Zealand, there has to be widespread commitment to doing it.

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.

This Government is taking a partnership approach.

There is still a lot of misunderstanding about industry and regional development policies.

Is not about giving one group a leg up at everyone else’s expense.

It’s about building our international competitiveness.

It's about creating job-rich, high-tech, high-value, high-skill new industries.

It's about higher incomes and more jobs.

We have to work with entrepreneurs and designers, with individual businesses and industries to identify opportunities.

We have to work across the whole of New Zealand to develop the skills or help communities respond to opportunities.

Everyone has to be involved.

The private sector. Tertiary institutions. Local authorities. Iwi. Unions. Anyone with something to contribute.

The Government's role is crucial.

Government's can provide leadership.

We are a small country, with small firms, small regions and small markets.

The leadership of government can help to overcome some of those disadvantages.

Being smaller should make us more flexible.

I'm not sure we always achieve that.

Certainly at the government level there is still too much silo behaviour.

We need to do much better at taking a whole of government approach.

There are many ways the government can make a contribution.

That means that if someone comes to us with a good idea, we can help them finance it.

If someone needs help with managing a rapidly growing business we can give them advice.

If stakeholders in a region work together, we can encourage them to see a brighter future.

One of the most under-valued ways that we have been able to help businesses get off the ground has been to help them purchase advice.

Last week I visited a small sheetmetal firm in Auckland called Metal Skills.

It manufactures high quality components in small and medium production runs.

Metal Skills is ready to grow. But it could be held back because it's run by engineers – not marketers and strategic planners with experience in running a multi-million dollar business.

The company recognised its limitations and asked Industry New Zealand for help.

We're helping them to develop strategic plans and improve their management skills.

If the company reaches its growth targets it will take on forty extra staff and earn an extra $5 million each year in sales. Most of those sales are to export markets including the UK and the US.

The Government stands to recover its investment many times over as the company grows, in extra jobs and boosted exports earnings.

It's a valuable example of the partnership the Government can provide to produce more jobs and export earnings for New Zealanders.

We urgently need to broaden and deepen the export base.

Providing advice is one example of how we can do it.

We are also working to make stronger partnerships work between central and local government, industry organisations and individual enterprises.

We're trying to make central government more responsive.

In February I went to Hobsonville airforce base in West Auckland to announce a new super-yacht facility there.

It's being set up by an expatriat New Zealander who is going to invest millions of dollars.

That investment is going to generate up to 400 jobs and $600 million in exports.

It will generate jobs in an area that needs them. It will earn us valuable foreign exchange.

Yet I've heard complaints that it “cost the taxpayer tens of thousands of dollars”.

And I’ve heard suggestions that the super yacht investment should have been turned away, because other firms don’t want to compete for skilled workers.

Are these people for real?

New Zealanders need to decide whether they want high-skill new jobs.

They have to decide whether they want the prosperity that comes with selling high-tech, high-value new products to the rest of the world.

Businesses will get short shrift from me if they think they can succeed by stopping high-value competition from starting up.

Businesses that are thriving should welcome competition.

The more innovative export companies that New Zealand can generate, the better.

The answer to skills shortages is not to turn away new investment.

It is to ensure that people have the opportunity to train for the skills required. It is to ensure that jobs pay well enough to attract people with the skills. It is to ensure that industries are prosperous enough to attract young people into acquiring new skills.

The Hobsonville super-yacht project was an excellent example of Government working in partnership to promote development. Taking a whole-of-government approach to remove obstacles and realise opportunities.

Yet I’ve heard suggestions that our approach was outside due process.

There is one process we acted outside of: The old, failed, hands-off process.

The Government refused to sit back and wait for Sovereign yachts to fix all the problems itself.

I'm going to release a pile of papers this week about the Hobsonville project under the Official Information Act.

They will show that the process was completely transparent.

Transparency can only improve understanding of the new approach to economic development.

This is exactly the way the Government should work.

You may have heard of the Eco Challenge.

It's an international endurance multi sport event held in a different country each year.

It is the subject of an annual documentary screened to an audience of 80 million US homes.

Eco Challenge came to Industry New Zealand for assistance.

Industry NZ assessed the case.

It asked whether the venture had the capacity to bring more tourists to NZ.

Could it enhance our reputation as a venue for outdoor international sports?

Would it complement or enhance existing initiatives?

Did it have a sound business case?

The answers were all yes: Almost 1000 extra tourists calculated to contribute an extra $6-8 million dollars to the economy. Huge international exposure, as well as opportunities to promote other local industries such as the film industry.

It complemented existing events and strengthened New Zealand in this niche in the sports tourism market

Again, there were pockets of opposition.

Some felt their own businesses were threatened.

The opposition to bringing an event like Eco-Challenge to New Zealand makes me think that one of the biggest barriers to success is our own attitudes.

We will not become internationally competitive if we fear competition.

This economy will not grow if we don’t seek out new businesses and major events. .

Sometimes it’s small things that help make a difference.

Safe Air in Blenheim undertakes a number of aircraft repair and maintenance jobs with some assistance from the New Zealand airforce. It is a long standing commercial relationship.

Safe Air came to me a few weeks ago saying it had the opportunity to bid for a contract to refurbish nine of the Brazilian airforce’s fleet of 12 Orions.

It wanted government approval for the RNZAF to participate in the bidding process.

It was really an extension of the existing commercial relationship that didn’t actually need government approval.

We decided we could help by sending to Safe Air a joint letter from me and my colleague the Minister of Defence.

The letter simply endorsed in principle the RNZAF’s involvement.

This was a small but important gesture that will help Safe Air put its case for high tech work worth up to $220 million and the creation of up to 30 new jobs.

These are some of the ways that the Government can assist in economic development.

This government is committed to a new approach to economic development based on partnerships.

Government is committed to strong vibrant regions.

You can't have a strong national economy unless the regions of New Zealand are strong.

To have strong regions, we need strong partnerships and we need people who understand the links between the public and private sector.

Your organisations are in a strong position to meet that need.

Economic Development Associations have a significant role to play in the partnerships we need to develop.

I encourage you to see yourselves as the primary link between local government, business and other sectors in our communities, including iwi and community groups.

You are well placed to fulfil this role because of the strong relationships that you have with business networks, such as chambers of commerce.

You will need to share your knowledge and expertise in local economic development with all levels of government.

Economic Development Associations have an important role to play in the work of regional partnerships.

Your experience will be valuable to regional partnerships in looking ahead to the future economic development of their regions.

Here in Rotorua, the Economic Development Agency is already actively participating in the work of the regional partnership.

As one of the first partnerships to receive funding from Industry New Zealand, the EDA here in Rotorua can feel justifiably proud of its role.

There are clear opportunities for EDAs with the industry and regional development initiatives delivered through Industry New Zealand.

With the BIZ programme, for example, Industry New Zealand is seeking lead regional providers to coordinate the delivery of training and other upskilling services.

Some EDAs will be well placed for this role.

But it is important to emphasise that we want the most appropriate and capable organisations to work with us in this role.

It will be up to EDAs to show that they fit the bill.

In some cases, EDAs may not be the most appropriate organisations to be lead providers.

But I would expect that they would still wish to work closely with other lead providers.

We should all be focused on sustainable economic development.

The choices we make now should take into account the long-term consequences of our actions, and should create sustainable jobs.

We’re not aiming for a boom and bust mentality.

We understand the value of strategic planning, and we support it through regional partnerships.

I encourage you to play an active part in the strategic planning exercises that take place in your region.

The challenge is to build on your role in working towards the visions and goals in regional strategic plans.

Regional development is about developing a shared and inclusive vision for a region, and working progressively towards that vision.

Developing an inclusive vision requires ownership by the community, business, iwi and local government of the future direction of their region.

Economic Development Associations can help to guide this vision by facilitating links between the public and private sector.

They can help by ensuring that their activities are coordinated with those of other organisations focused on economic development, such as chambers of commerce and industry associations.

Having a shared future means pulling together to work in the same direction, rather than competing with each other to make use of the same public resources.

If you live in Rotorua, your region has a future. That future doesn’t have to be through competing with another major city.

You as Economic Development Associations should contribute to the process of identifying the comparative advantages of your region.

I want to see strong and enduring regional partnerships, that have a clear vision for the future of regions. I want every region to be taking tangible steps towards those realising their visions.

We want thriving and vibrant regions that are diverse and resilient to help them respond to our rapidly changing world.

We need as many stakeholders as possible with an eye on the road ahead and a hand on the wheel.

I urge you to be leaders in achieving a vision for economic development for your regions. A vision that is broadly based, inclusive and enduring.

It will mean a change of attitude for many in New Zealand.

I am convinced that Economic Development Associations are well placed to challenge the old hands-off attitudes of the past.

I want to close by saying that I have enormous belief in New Zealand. In what we can achieve.

It is a matter of great urgency that we lift our economic performance now.

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.

…Ends

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