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Economic report shows heading in right direction

2 February 2005

Economic report shows heading in right direction

A comprehensive analysis of New Zealand’s economic performance benchmarked against the OECD was released today by Finance Minister Michael Cullen and Economic Development Minister Jim Anderton.

Jointly prepared by the Treasury and the Ministry for Economic Development, Economic Development Indicators 2005 updates and expands upon an earlier report published in August 2003 and is part of a planned series of regular reports.

“The government wants to lift growth not as an end in itself but to improve the living standards and life opportunities of all New Zealanders. Our approach is pragmatic not dogmatic and reliant upon continuous evidence-based evaluation not blind faith,” Dr Cullen said.

“Although as a result of the economy’s relatively strong growth in the last few years we have now overtaken Spain to move to 20th place among the 30 nations in the OECD in terms of per capita income, there is still some distance to go to restore New Zealand to the top half of the OECD league table.

“The government has never suggested, however, that this objective would be achieved either easily or early. But the good news is that the direction of change identified in the data is in virtually every case positive and in some cases markedly so.

“This achievement reflects the individual actions and decisions of thousands of New Zealanders and New Zealand enterprises. It is not the government’s alone nor even primarily. But it does indicate that the government’s policies are well-designed and appropriate to the purpose,” Dr Cullen said.

Mr Anderton said the report’s findings confirmed that the government’s focus on “working smarter” was right and that the areas where New Zealand needed to lift its game were precisely those targeted through the Growth and Innovation Framework – innovation, international connections and connectedness, skills and talent.

"The government's constructive 'can-do' approach to economic development has also played a part. By working in partnership with firms, sectors, regions, tertiary and research institutions the government is helping address the special challenges facing New Zealand's businesses.

“The report tells us that the emphasis must now be on lifting labour productivity which, although it has been growing faster since 1998, is still at the lower end of the OECD and about 20 per cent below Australia and Britain.

“The government already has a number of strategies in place to achieve this, including the work programme around the recommendations of the Workplace Productivity Working Group’s Report of last year and initiatives to raise the skills of the workforce.

“Skill levels are improving with both the proportion of adults with a tertiary qualification [30 per cent] and the expected number of years in education of New Zealand students [18.3] above the OECD average. We have also been successful in attracting positive flows of skilled migrants, particularly in recent years.

“But despite all this, a number of industries are now experiencing severe skills shortages so there is clearly more work to do.

“Similarly, although there has been an encouraging increase in spending on research and development, it remains relatively low by OECD standards. New Zealand does, however, rank well in terms of entrepreneurialism reflecting a supportive regulatory environment and the fact that this is one of the easiest countries in the OECD in which to set up a business,” Mr Anderton said.

Economic Development Indicators 2005 can be found at http://gif.med.govt.nz/aboutgif/indicators-2005/

ENDS

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