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PM address to MIA annual conference

Rt Hon Helen Clark
Prime Minister

ADDRESS TO

the annual conference of the
Meat Industry Association


Inter-Continental Hotel
Wellington

10.15 am

Monday, 24 September 2001

Thank you for the invitation to address your annual conference today.

You meet against the background of the industry's highest ever overseas returns, approaching five billion dollars in the year to June 2001. This achievement is especially significant because of the importance of the meat industry within the economy.

Agricultural exports make up fifty per cent of our total exports, and meat and meat product exports constitute about thirty per cent of the agricultural export total.

The returns in your sector and in other primary sectors have combined to boost our regional economies considerably. Those parts of the urban economies which are export-oriented have also done well.

The return to export-led growth has brought big dividends to our economy in recent times.

Unemployment stands at its lowest level since 1988. Indeed in many parts of regional New Zealand, labour shortages, not unemployment, are now the issue.

The current account deficit has been shrinking steadily as our exporters have brought home the bacon.

Our economy has maintained modest levels of growth, even while the economies of our three major trading partners, Australia, the United States, and Japan have been sluggish.

Effects of the terrorism crisis

Had we been meeting here two Mondays ago, we would all have been confidently predicting continued favourable growth levels for the immediate future.

The terrible events of twelve days ago, however, have caused all forecasters to pause. It is simply too early to tell how long lived the blow to international confidence caused by the terrorist attacks on the United States would be.

Brian Lynch, your executive director, has observed that global slowing-up normally affects commodity prices first. He also notes the potential for trade to the Middle East to be affected by any increased tension.

Obviously these are all factors beyond our control, which we all – government and industries alike – are left to manage the effects of as best we can.

What can be said is that we enter this period of uncertainty in a better position than many other countries. As well as the improving balance of payments and employment levels, we also enjoy low inflation, low government debt, and a strong government fiscal position. The exchange rate has become more competitive again over the past week and a half.

In addition, the Reserve Bank's move last week to lower the official cash rate was a very welcome response to the new international conditions.

Regulators in the United States are also using the tools at their disposal to try to minimise the effects of the blow to confidence on their economy, and that has a beneficial flow on to the world economy.

Economic Transformation

In the years leading up to the 1999 election and since, the Labour Party articulated its concern that New Zealand's economy had failed to move upmarket to the extent necessary to sustain high living standards for our country.

In office, we have been very aware that a significant part of the nation's recent export success story has been driven by good weather on the farm which has boosted production; good commodity prices; and a very competitive dollar. These factors, like the current international crisis, are also beyond our nation's control.

Our objective is to support the movement of New Zealand's exports and economy overall upmarket, so that its success is driven less by good luck and more by educated and skilled people; science, research and technology; innovation and productivity; and entrepreneurial skill.

Some champions of the new economy see it leaving New Zealand's agricultural sector behind as part of our past. That of course cannot be. The challenge we have is to see that our land-based industries are as much a part of the new economy of the future as are information and communications technology and biotechnology.

Indeed our biotechnology future looks bright, partly because of so many decades of public and industry funding in scientific endeavour in the agricultural industries, and, in turn, biotechnology can be expected to benefit those industries' development in the future.

I note that your chairman, Bill Falconer, in his foreword to your annual report, credits part of the meat industry's success over the past year to the demand for its added value products.

The meat industry, like all other industries, will be able to make its own luck by constantly innovating, improving its productivity, investing in new technologies, and through entrepreneurial flair in its marketing.

New Zealand's modern history has seen government styles of economic management lurch from one extreme to another. I have myself described our pre-1984 status as not unlike a Western Albanian. Everything could be regulated, and with the 1982 freeze on wages, prices, interest rates, and dividends, it was.

The correction when it came was radical. The economy was deregulated quickly and without adequate commercial and taxation law to cope with the consequences. Some of the law necessary to deal with the changed economy is only being passed this year with the new competition regimes under the amendments to the Commerce Act, and in the telecommunications legislation currently before Parliament; in the Takeovers Code which took effect on 1 July; and in the proposed changes to the law governing insider trading.

Labour takes the view that neither the excesses of hands-on nor of hands-off have served New Zealand well. That's why we have articulated a third way for the state in the economy. That third way sees government as a leader, a facilitator, a co-ordinator, a broker, and a partner. It is a strategic role which also sees us apply funding where there is a public interest and/or market failure.

New programmes to promote business, industry, and regional growth and development, have been introduced. Business incubators attached to research-based institutions are being supported. $100 million has been provided for seed and start up capital – to be deployed in partnership with the private sector.

Target sectors with high growth potential where New Zealand can develop world class skills and capabilities are being identified, with a view to attracting greenfields foreign direct investment into those sectors.

Immigration policy has been changed to give priority to recruiting the talent needed to drive the new, upmarket economy and make it easier for industry to recruit the skills it needs in the short term.

The overwhelming importance of education, training, science and research, in our future is fully recognised and we are investing in those areas as fast and as heavily as we can.

Significant changes are being made to both the funding and the structure of tertiary education and training to improve its quality, and encourage specialisation and collaboration. New centres of research excellence are being funded in the universities.

The tax treatment for research and development has been improved, and government funding for science and research has been lifted significantly.

Above all what we aim to do is create and communicate a compelling vision for New Zealand, as a place to live, to work, to visit, to invest in, and to do business in.

On the world stage we want it known that New Zealand is open and ready for business, looking to embrace the opportunities which flow from globalisation and technology development, and that New Zealand is creative and enterprising.

Let me touch briefly on five matters of particular interest to the meat industry.

The way is clear for establishing the integrated food agency which is essential for the future of food administration. It will be a semi-autonomous agency based in the Ministry of Agriculture and Forestry and will combine the relevant functions of that Ministry with those of the Ministry of Health.

As you will know, our government has given top priority to biosecurity policy. Following the foot and mouth epidemic in the United Kingdom we funded the equipment and personnel necessary to screen all incoming baggage to New Zealand. We will do everything humanly possible to prevent the introduction of unwanted diseases and pests to New Zealand. The first ever New Zealand biosecurity strategy is being developed.

The report of the Royal Commission on Genetic Modification was presented almost two months ago. Our government gave itself three months to produce a considered response. I myself have read the report. We agree with its central theme of preserving opportunities. That cuts both ways. New Zealand, for example, will want to safeguard its clean, green image, and it will want to produce food which people want to consume. We will also want to maintain our scientific edge. I am confident that a pathway will be found through these complex issues which achieves all that.

The government has worked very hard at the international level to get the Kyoto Protocol on climate change into a ratifiable state. We believe that the negotiations in Bonn in July got it to that state. We like other nations, have urged the United States to continue to be part of the Kyoto process. We do want to ratify the Protocol. Indeed it would be unthinkable for New Zealand to stand outside such a major international convention. We will be working very closely with all sectors interested in, and affected by, the changes which ratification of the Protocol will require over time.

Finally to trade. Labour is putting enormous effort into opening doors for New Zealand exporters through export missions, new trade agreements, and active open trade policy.

I was delighted to have Bill Falconer accompany me as a member of a senior business delegation to Japan in April. Our eyes there were opened to new business opportunities and the enormous potential of the high value Japanese market even in its current sluggish state. Business delegations were also with me in China and Korea this year, and will be with me in Latin America in November. Jim Sutton is also travelling with business delegations in Asia and Latin America this year.

We continue our efforts to deepen and broaden New Zealand's close economic relationship with Australia. We have successfully concluded an open trade relationship with Singapore, and are working on one with Hong Kong. We have been promoting an open trade agreement with the United States and have attracted significant Congressional support for that.

A great deal of effort is going into our participation in the World Trade Organisation meeting in Qatar in November, which we hope will succeed in launching a new round. Jim Sutton will address you on that later this morning. We continue to invest a lot of time and governmental resource in APEC.

Thank you once again for the opportunity to address this opening session of the conference.

Despite the uncertain outlook caused by the events of almost two weeks ago, I remain very positive about New Zealand's future. The meat industry has a big part to play in our country's future, just as it has played a big role in our past. May your future role see your industry successfully meeting the challenges of constantly innovating and achieving the highest levels of quality and price, to the benefit of your producers, processors, and our whole economy.

ENDS

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