Anderton: NZTE/INZ New York City
Hon Jim Anderton Minister of Economic Development
NZTE/INZ hosted cocktail reception
Function Room, 301 W 57th Street (at 8th Avenue). New York City 6.30PM 24 May 2005.
Acknowledgements: Iain Hill from NZ Embassy in Washington D.C. New York-based Advisory Board, Other distinguished guests
I know many of you are already very familiar with New Zealand. You will know our economy has been performing very well recently.
If you have been watching the New Zealand economy for a few years, you might be surprised at how much it has improved. It’s performance over the last five or six years has been as strong as for any comparable time in the working life of just about anyone in the workforce today.
Growth has averaged four per cent a year over the last six years. That has clearly out-stripped the OECD average of 2.5 percent. Unemployment fell at the end of last year to its lowest level since we started collecting household labour force data in the mid-eighties. Economic growth in the last few years has been particularly strong – 4.8 per cent in the year ended December 2004. The New Zealand economy has grown by 23.0 per cent since the March quarter of 1999 and real per capita income by around 16 per cent.
These are signs that we are on our way to achieving our main objective: an inclusive, high wage, high value-added, high growth economy, enabling a higher quality of life for all New Zealanders.
There are – of course – a number o reasons for the success of the economy. I’m not going to rehearse all of them here. But highlights include strong a strong fiscal position, low inflation and a very positive environment for business. According to Doing Business in 2005: Removing Obstacles to Growth, a publication from the World Bank, New Zealand has the best regulatory conditions for doing business in the world.
Another dimension that is helping to address the strengths of our regions and the innovation of our enterprises is the introduction of a developmental dimension to economic policy. This has meant an emphasis on increasing the level of research and development in our business, increasing our skill levels, and increasing our links to the world.
New Zealand’s relationship with the United States is very important because of this factor. We recognise we need to be open to ideas and best practice from the world, in order to succeed. And we recognise that modern production processes increasingly require a global perspective. For example, modern production processes might involve research and development in one (or several) countries, design in another, financing from another, and the manufacture of components in several more. These global value chains are an opportunity that New Zealand is particularly well-suited to. Some of these examples emphasise the importance of our links with the US, in particular.
Swiss food group Nestle and New Zealand's dairy cooperative Fonterra produce and distribute dairy products in North and South America through a joint venture called Dairy Partners Americas.
Living Cell Technologies is a company that develops cells for therapeutic replacement for treatment of diabetes, haemophillia and Huntingdon’s disease. It is a truly global operation. It does its R&D in Auckland, it is listed on the Australian Stock Exchange, and its product development and regulatory units are in Perugia, Italy and Providence Rhode Island.
HITLab was originated in Seattle at Washington University by Professor Tom Furness. Many call him the ‘grandfather of virtual reality’ for his work in VR systems for military pilots. Tom Furness calls New Zealander Mark Billinghurst one of his best-ever students. Mark is now the director of HITLab NZ in Christchurch (HIT – Human Interface Technologies) It has an ongoing R&D relationship with HITLab Seattle and commercial relationships between the NZ and US corporates who are members of the associated Virtual World Consortia in both the USA and New Zealand. HITLab NZ and HITLab Seattle recently won a contract with NASA and Lockheed Martin to develop a computer interface to help astronauts collaborate with robotic helpers in space. This project was among five selected for support, among 3,500 applicants.
HITLab has a great development model. A local consortia of businesses collaborate with the research lab. Building on that are international linkages amongst the researchers and among the pockets of local consortia.
These are great examples. I expect there to be many more in the future. There is current interest from a number of North American companies about increasing their footprint in New Zealand. Why? Because New Zealand was the first western country to enter FTA discussions with China. This will be a launching pad for importing into China with low or reduced tariffs.
New Zealand and the US have a well-developed and mature relationship. Although there is already a high level of two-way trade and investment flows between New Zealand and the US, both countries would benefit from an even closer economic partnership. Businesses and the government have been making the case for a bilateral trade agreement to the Administration, the US Congress and the US commercial sector. The recent formation of the Friends of New Zealand Caucus in the US Congress, co-led by Representatives Jim Kolbe of Arizona and Ellen Tauscher of California, is a positive development for the bilateral relationship, including New Zealand’s interest in a trade agreement.
The US-NZ Council in Washington also helps strengthening bilateral relations by promoting a trade agreement between the two countries. In February, the US National Association of Manufacturers released an extensive analysis. It identified New Zealand as one of five countries best suited in the near-term for bilateral trade agreements with the US. The report says it is the most open market of the entire group. New Zealand imported $1.7 billion of US manufactured goods in 2003 and the report estimates that will rise to about $US2.5 billion in 2010. It says this growth could an eighth faster if tariffs on US manufactured goods were eliminated.
So there are real gains to be made from a trade deal. But I want to emphasise that we are already a good place for a strong business relationship.
Companies like those I mentioned are examples of the readiness of our innovative companies have to enter global partnerships. To say that any growing company must have a global perspective to their business strategy is not rocket science. New Zealand’s successful businesses have always had a global focus. The domestic market is too small to sustain companies with an appetite for real growth. To grow to become a $100 million company, you probably don’t have to leave New York, and certainly not the United States.
But by the time any company reaches that size in New Zealand, they are already an exporter. So we always have an international perspective. The government has recognised there is a role we can play in partnership with business. We work with focused parts of the private sector to determine long-term plans for growth and to put growth strategies in place.
For example the recent Better By Design conference is an important step in the development of more design-centered business in New Zealand.
The government of New Zealand is encouraging international linkages at all levels of R&D collaboration, trade and investment.
We are reaching out to connect and engage with the diaspora of talented New Zealanders. We’re looking to the friends of New Zealand who have senior positions in a large number of US corporate and organizations.
We’re working to change perceptions about New Zealand to help our businesses.
The world knows New Zealand is a beautiful place. We want the world to also know New Zealand as the home of some of the most creative and talented people in the world. We want the world to know us not just for the Lord of the Rings, but for the technological savvy behind it, and to see that we use technology across our economy.
New Zealand is a nation of problem solvers. I don’t think that’s a brag; I think there is a good cultural explanation. Because we are small and a long way away, we have never had access to much money. We’re used to having the freedom to try things out. So we are innovative, and adaptable.
You can experience this in your relationships with the successful NZ businesses that excel in their niches in global business. It is the quality that overseas people remark on to me all the time.
As the world demands more uniqueness in production, and as the premium for creativity rises, I believe our global partners will come to value the skills of New Zealanders more in the future. I urge you to deepen your involvement with New Zealand with confidence that we are headed your way the right way. And I offer you my confidence that New Zealand is an excellent place to find and grow partnerships that connect to global niches, global value chains and successful global businesses.