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Anderton Speech: Investment can boost growth

Jim Anderton Speech: Investment can further boost growth

Keynote address 1:15 pm Monday, 10 February 2003 Investment Regatta Hilton Hotel, Auckland

Don Christiansen (CEO, Investment NZ) John Hood Overseas guests

I want to welcome you all here today to this investment regatta.

I am hoping the title regatta means I win the best of the nine or more starts when I meet face to face with some of you here today.

Investment is a crucial issue for New Zealand’s economic future and this regatta is an excellent way to highlight the role that investment will have in the progress New Zealand makes in the 21st century.

We know, however, that investment is only one part of the equation.

Last year I talked about the possibility of New Zealand becoming the Pacific Tiger.

I think New Zealand could well be on the verge of a significant and prolonged period of economic development and prosperity.

If we harness our skills and talent, and capitalise on three years of considerable progress, there is no reason why New Zealand can’t grow at an average annual rate of over four per cent for the next eight to ten years.

Optimism in New Zealand is unlike anything I have seen in the last 40 years.

Dr Michael Cullen, our Minister of Finance used the term ‘cautious optimism’ to describe his view of New Zealand’s economic future.

Experience suggests that the use of the word optimism from a Minister of Finance is such a rare occurrence that it indicates an extraordinary confidence in being able to actually ‘deliver’ the goods.

In 2002 New Zealand’s isolation, an historical barrier for our economy, became a strength as we managed to sidestep the worst effects of global turbulence.

The flow-through effects of high export prices and increased production volumes supported an exceptionally strong level of economic activity.

Indeed, the recent OECD report put the annualised growth rate for New Zealand around four per cent for the September year (2001-2002).

Last year every region of New Zealand grew. Most of them at over four per cent and only one recorded growth of under two per cent.

Recently, I asked my Ministry, the Ministry for Economic Development, to calculate the benefit to New Zealand if we had had an additional one per cent growth per year since 1970.

In 1970 we were ranked 9th in per capita income in OECD countries, on a par with Australia.

Australia is now ranked 12th while we are currently 20th.

That additional one per cent growth per year would have had us ahead of Australia right now and better able to afford significant increases in funding for essential social services such as health and education as well as increased investment in economic infrastructure, industry, regional and economic development.

That is why this last three years of economic growth is of such importance.

As the Minister for Economic, Industry and Regional Development I can promise you I am doing whatever I can to ensure that our business environment supports sustainable economic development in New Zealand.

We have some advantages.

We are a stable democratic nation, free from public sector corruption.

New Zealand has modern transport networks, information communication equal to any first world nation and a literate and educated population.

The government is ensuring our economic development agency Industry New Zealand and investment agency Investment New Zealand are working together to maximise our economic development opportunities.

Trade New Zealand, our overseas trade developmental agency is being integrated with Industry New Zealand to ensure a one stop shop for business development both out of, and in, New Zealand.

I was pleased to see recent comments from Sergio Arzeni, head of the OECD’s local economic development and employment programme endorsing our economic development approach.

He said that “the economic development programmes and strategies of Industry New Zealand since its conception in 2000 are on the forefront of best practice internationally.”

He highlighted our focus on small and medium enterprises, on decentralised programmes, and on innovation as important elements of our strategy.

Nearly all the people I met wanted to see a growing economy creating more high wage and high skilled jobs.

However for us to achieve this we need to do more than just rely on the grass growing, the rain falling and the sun shining. We need to add value and make our products and services the best they can be.

From my visits up and down New Zealand I can tell you that the one outstanding quality New Zealanders have is creativity. Our ability to innovate.

Bruce McLaren Weta Workshops/LOTR Hamilton Jet Tristyle homes (wood from Northland being made into houses for Japan) Formway chairs

The Innovation framework announced by the Prime Minister in February last year identified three key industry sectors, Information and Communications Technology (ICT), biotechnology and the creative industries (including Design and Screen Industries), as those on which the government will focus to help lift New Zealand’s international competitiveness.

What is exciting about these industries is that they all positively affect other industries and developmental opportunities. Strong information technology advance and excellent design will boost all of our industries.

Our creativity is evident in all we do. Our yachts, buildings, computer graphics and manufactured products are all world class.

At the end of last year the New Zealand Herald ran a story about a New Zealand Institute of Economic Research report under the headline “Survey reveals economy at full steam.”

It started with the “technical” description of an upturn in growth; it read “the economy is going like the clappers….”

I don’t believe, however, that the New Zealand economy is yet moving at anything like full steam.

It is certainly growing.

That Economic Research Institute report went on to say that our economy is running into ‘capacity constraints’.

Currently much of our growth has been using spare capacity, such as the long-term unemployed and under-utilised capital equipment.

Real growth in productivity, however, can only come as we improve our infrastructure, train more New Zealanders in areas where skills are desperately needed, and work together in partnership to develop our economy.

We also need increased levels of investment from both within and outside New Zealand, as well as the international expertise and technology which appropriate direct foreign investment can bring.

As Minister for Economic, Industry and Regional Development I have helped form partnerships with overseas investors in key industries such as forestry, and the wood industry as well as within regions and a wide range of industries to address infrastructural obstacles to sustainable development.

As an example forestry has the potential to be New Zealand’s largest export earner. Wood processing Task Force and significant new investment in linking wood processors with forestry owners Regional roading, ports, rail, skills development.

Partnerships and investment are essential to the future challenges I know New Zealand can meet.

Not only do we gain increased capital from foreign direct investment but we must also seek to benefit from additional expertise, access to international markets and stronger networks in major global industries.

This government is partnering with the private sector to commercialise the research being undertaken in NZ and the internationalisation of NZ companies. We have a wide range of world class Centres of Research Excellence as well as Research Consortia in New Zealand. In forestry, biotechnology, film graphics, scientific research and development, not to mention boat building and design – including America’s Cup yachts.

I know that compliance costs are important to all businesses and I assure you that the Government is willing to work through issues with you as they arise as well as make our standards of Resource Management, more consistent nationwide.

Many overseas companies have found NZ to be an ideal testing and development environment particularly in high technology sectors. Geovector (feasibility study under the Strategic investment fund) Allied Telesyn EDS (working with EDS on several projects)

New Zealand with the (up to recently) “tyranny of distance”, has made a greater impact on the world than our small size and isolation would lead one to believe possible.

From sports such as yachting, rugby and athletics, through to nuclear physics, chemistry, jet boat engines, and a range of other sectors and professions.

We invented refrigerated shipping, our Lord Rutherford first split the atom, CWF Hamilton invented the jet boat engine, New Zealand was the first nation to give women the vote, created the first comprehensive welfare state, we were foundation members of the UN, legislated New Zealand to be nuclear free, won the America’s cup and now have become the home of the Lord of the Rings.

Our innovation and new ideas punch well above our weight in world terms.

I look forward to working with many of you as you consider possible investment in our innovative and creative nation as we meet the challenge of being the best we can possibly be.

Thank you.

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