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PM Poland Speech - NZ, A Dynamic Partner

New Zealand - a dynamic partner

PM Helen Clark Address to Warsawy Business Centre Club

President Goliszewski, members of the Business Centre Club. Thank you for inviting me to address you today.

This morning, my task is to tell you about the New Zealand economy, its evolution over the past few years, and the strategies my government has developed to ensure its continued strength. I would like to update your perceptions of New Zealand, and to leave you with some thoughts about how our two countries might co-operate in the future - to our mutual benefit.

Let me begin, however, with some history. It is more than 160 years since the first Polish settlers arrived in New Zealand. By general agreement, this was the Subritzky family, who settled north of Auckland and played a key role in the economic development of New Zealand's Far North. Their descendants now number more than 3000. They were followed by more Polish families in the 1870s. Many of them became farmers, and small Polish settlements were established in both the North and South Islands.

Three distinct groups of Polish migrants arrived during and after the devastating experiences of the Second World War. After the war New Zealand accepted war veterans and displaced persons, but the largest migration was in 1944, with the arrival, at the invitation of the New Zealand government, of a group of 734 refugee children, many of them orphaned, and 103 adults. They came via the Soviet Union and Iran, and had endured terrible hardships and tragedy after their deportation from their homeland. Their hope was to return home at the end of the war, but for most that did not prove possible. Many of those children, and their descendants, have renewed their links with Poland, and some of them joined me this morning as we opened the New Zealand Embassy here in Warsaw.

The decision to open an embassy here was made in recognition of Poland's status as the largest of the new members of the European Union. The European Union is a key economic partner for New Zealand. It takes more than sixteen per cent of our exports, and accounts for nearly twenty per cent of our imports.

The EU is also an important source of investment flows, tourists, and educational, scientific, and technological co-operation. We enjoy strong political, cultural, and historic ties with Europe, and those ties will be enhanced by strengthening the relationship with Poland.

Our current trade relationship with Poland is limited, although relatively balanced. In 2003 we sold Poland around 10.5 million Euros worth of goods, but that dropped last year to about seven million Euros. Your exports to us, in contrast, have risen to around 12 million Euros last year from seven million Euros the year before. Exports of motor cars - which Poland began sending us last year - make up nearly all of the increase in Polish exports to New Zealand.

There has been no such dramatic change on the New Zealand side. We continue to export to Poland a range of primary products, including wool, fish, meat, and dairy products, as well as some agricultural and telecommunications equipment. The foundation for a larger economic relationship was laid yesterday, with the signature of the Double Tax Agreement between Poland and New Zealand.

New initiatives have been taken to encourage a greater flow of people between New Zealand and Poland. As of 1 April, Polish citizens wishing to visit New Zealand for up to ninety days will not require a visa, reciprocating a Polish decision made last year. Yesterday it was agreed that New Zealand and Poland will soon start negotiating a Working Holiday Scheme. This will allow young people from Poland and New Zealand to live and work for periods of up to a year in each other's country and experience each other's way of life.

The Polish economy underwent dramatic change with the end of the communist regime in 1989, and entry into the EU has brought more change. From 1984, the New Zealand economy also went through difficult years of restructuring. In that year the Government's budget deficit stood at some eight per cent of GDP, the agricultural export sectors were heavily subsidised, and there were high levels of protection for our manufacturing industries. All that changed rapidly in the 1980s and 1990s, but with little effort being made to ease the transition. Unemployment rose to levels unprecedented since the great depression, peaking at over ten per cent in the early 1990s.

The past few years have seen a dramatic turn-around. New Zealand's GDP growth per capita has been running ahead of the OECD average for the last five years. Our growth rate in 2004 was 4.8 per cent, up from 3.4 per cent the previous year. Unemployment now sits at 3.6 per cent, the lowest in the OECD. The government runs a healthy budget surplus, and government debt, at around 25 per cent of GDP, is the lowest it has been since the 1970s. Inflation last year was 2.7 per cent.

The New Zealand economy is small - that of Poland is three and a half times its size, although our population is one-tenth the size of yours. We are a long way from our principal markets - even Australia is 2000 kilometres away, equivalent to the distance from Warsaw to Madrid. We have few natural advantages, apart from our ability to grow grass all year round.

But small can be beautiful. New Zealanders are smart and enterprising. Our government has adopted the objective of growth through innovation, and aims to move all our industry sectors up the value chain. We believe New Zealand's prosperity will be sustained by creating and injecting new knowledge, innovative design, technology and branding, and entrepreneurship into all aspects of our economy.

Our key objective is to keep moving our economy up market, and to reduce its exposure to price, climate, and currency fluctuations. Businesses with innovative products and services, well tuned to market needs, will be the price makers of the future. Those selling commodities will remain price takers.

Our strategy has been to identify where the government can add value to the economy, and to promote the partnerships and make the key investments to carry us forward.

Education and skills are a priority - we make big investments in education and work-based training, and are close to doubling the number of industry trainees in the workforce compared to five years ago.

Investment in research and development has taken off, with government leading the way. Government's spending on science and research is up by 45 per cent over the past five years, with a good proportion of it going out to the private sector in grants and collaborative projects. Private sector research and development has also risen significantly since 2000.

Business, industry and regional growth initiatives are central to our growth strategy. Our trade and enterprise agency, Trade and Enterprise New Zealand, has programmes to nurture new exporters and to support accelerated growth by medium-sized companies.

Government and its agencies are working in partnership with industries which are looking to add value to products and services - from food and beverages, and tourism and wood processing, to niche manufacturing, textiles, clothing and footwear.

We are also making good progress in developing new sectors such as biotechnology, ICT, and the creative industries. These sectors have been singled out because they will add to the overall capacity of the New Zealand economy to grow. Sophisticated use of information and communications technologies is vital to a modern economy. Advanced biotechnology is important in lifting the performance of the primary sectors at both the production and processing levels, and in the development of new products.

The creative sector plays a significant role in the development of New Zealand's national identity, brand, and image. Many of you will be familiar with New Zealand as the home of "Lord of the Rings". You may not know, however, that we have a growing fashion industry, which sells high-fashion garments in New York, London and Paris, or that we have a fine tradition in world-class opera singers, from Kiri Te Kanawa and Donald McIntyre to emerging star Jonathan Lemalu.

Getting higher value goods and services out to world markets is critical for New Zealand's ongoing prosperity - along with getting the best possible terms for access into those markets. Clearly a successful Doha Round is our top trade policy priority, but we also have significant bilateral and regional initiatives underway.

We have a free trade agreement with Australia which dates back to 1983 and which is one of the most open and comprehensive in the world. More recently we have signed FTAs with Singapore and Thailand, and we are currently working on a trans-Pacific agreement between New Zealand, Chile and Singapore. We are in FTA negotiations with ASEAN, with China, and now with Malaysia.

I hope these comments have conveyed to you something of the dynamism and energy of the New Zealand economy. I hope too, that they have stimulated your interest in exploring areas where New Zealand and Poland could work together to our mutual benefit.

For example we have a world-class wine industry, and I understand New Zealand wine is beginning to appear in the Polish market. It may surprise you to know that New Zealand is the largest exporter in the world of farmed venison, and that 85 per cent of those exports go to Europe. It will certainly surprise you to learn that New Zealand produces award-winning vodka, which we are hoping to sell here in Poland.

At the same time, we have much to offer in areas of the new economy - innovative manufactures, information technology applications, agricultural and bio technologies, rural services, and environmental management. These are areas which are bound to be of interest to Poland as it continues upgrading its infrastructure and modernising its economy.

Young Poles keen to learn or study in English should also look at New Zealand as a possible destination. Those interested in doctoral research may wish to apply for one of the New Zealand International Doctoral Research Scholarships, for which Polish citizens will become eligible next year. Our Education Minister led a delegation of New Zealand educationalists to Poland two years ago.

I know that some sectors of Polish agriculture were somewhat apprehensive about entering the EU and being exposed to competition from elsewhere in Europe. You may find the New Zealand experience of interest.

New Zealand removed subsidies from agriculture in the 1980s; agriculture now contributes a greater share of our GDP than it did twenty years ago, up from 14 per cent to 16 per cent. New Zealand farmers have become highly market oriented. I understand that Polish agriculture is also responding to the new market opportunities created by membership of the EU, for example exporting mushrooms to the United Kingdom and increasing beef exports significantly.

I understand that a Polish trade mission will be visiting New Zealand later this year. Members of that mission, and others visiting New Zealand to promote Polish exports, will discover that the New Zealand economy is among the most open in the world, with around 95 per cent of imports by value entering free of tariffs. Your success in exporting Opel cars from Poland to New Zealand is based on this open market; New Zealand has a zero tariff on imports of motor vehicles. I am sure that there will be many other products in which Poland will be competitive in our market.

Thank you President Goliszewski and members of the Business Centre Club for giving me the opportunity to speak to you today. I hope I have stimulated interest in our market, and I hope we can find ways of linking the New Zealand and Polish economies more closely in the future.


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