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Anderton speech to the CBAFF AGM in Wellington

Anderton speech to the CBAFF AGM in Wellington

A couple of weeks ago a book about freight was released to rave reviews and an entry in the non-fiction best-seller lists. It was a book you might have heard of - called "The Box", by Marc Levinson. It's not often a volume by a New York economist - about transportation! - gets global attention. The book is about the emergence of container shipping. As the New York Times said, "One of the most significant, yet least noticed, economic developments of the last few decades [was] the transformation of international shipping.... The idea of containerization was simple: to move trailer-size loads of goods seamlessly among trucks, trains and ships, without breaking bulk."

From very modest beginnings exactly fifty years ago, when 58 containers were shipped aboard a refitted oil tanker, container shipping developed into a huge industry that made the boom in global trade possible. It transformed economic geography. Traditional ports like New York and London became almost obsolete while new ones roared. Shipping became cheap enough for industry to put factories far from customers. Unheard of low-cost products could be shipped around the world economically. Loading loose cargo onto an average ship in 1956 cost $5.86 per US ton. Container ports now can load vessels for just under 16 cents per ton.

Container terminals are booming - eleven percent growth last year, globally. They are fuelling a surge in global trade and world economic growth. As the Economist magazine said, "Without the container, there would be no globalisation." The story of containers is fascinating. But it is mostly a story about the growth and importance of freight.

New Zealand is just as much a nation dependent on freight as any other developed country. In fact, it was the emergence of refrigerated shipping over a century ago that transformed New Zealand. I wrote a book a few years ago - it was about New Zealand's unsung heroes, the pioneers who shaped our country. One of them was William Saltau Davidson, the pioneer of refrigerated shipping. Before his innovation, we exported very little meat, and no dairy. Our farms were mainly controlled by speculators and grew wool. So freight changed this country and gave us a century of prosperity.

The rise of global trade presents us with new opportunities - and new challenges - that we have to meet. And so issues around freight are vital to New Zealand. Freight in New Zealand - and around the world - is growing - partly because our economy has grown so strongly over the last 6 years. Over half a million sea containers were shipped to New Zealand in 2004-5. That's 75 percent more than five years before. Air travel is up very strongly too. There were more than four million passengers and crew who flew to New Zealand in 2004-5, a third more than in 2000. There are new airlines and new flights from Asia, the Middle East and South America. So because transport issues are so important, we have to make sure we get our systems working right. That includes our biosecurity systems.

As people and goods move in and out of New Zealand at ever-faster speeds, new threats will emerge across all sectors. Nature is not standing still. Every few years, completely new diseases appear in the world. We've seen BSE, Avian Influenza, AIDS and SARS for example. As we've seen with the Varroa Bee mite, these diseases can become major biosecurity threats.

Changing climate conditions means more pests are able to get a foothold here. These emerging pests and diseases are more likely to be resistant to current treatments. Ever since people began travelling, assorted livestock, crops, pets, weeds and pests have tagged along. Our biosecurity is under pressure as a result. That's an issue for all of us. We rely on trade and travel for out future prosperity and well-being. So we rely on our biosecurity systems. Our experts say our biosecurity system leads the world. But that's not enough. Our performance across the system needs to lift.

As the minister responsible for our primary sector I talk to a lot of businesspeople with a direct interest in biosecurity. It is mostly uncontroversial to say everyone wants to see strong biosecurity protections around New Zealand. Threats to our biosecurity are also threats to the long-term health of many primary-based businesses as well as access to markets. No one wants the biosecurity protections to be wiped altogether, and therefore there are going to be costs associated with biosecruity.

So the issue is how we ensure that we have the right amount of protection; how we ensure we get the protection we need as efficiently as possible; and the question of who pays for biosecurity protection. Protection doesn't come free, or even very cheaply. MAF recently commissioned Price Waterhouse Coopers to assess compliance costs for importers. The report found that for every $1 of product imported into New Zealand, about 0.9-1.4 cents are spent complying with biosecurity regulations to get products through biosecurity clearance. The total compliance costs are broadly comparable with amount MAF spends each year on biosecurity regulation - from developing and maintaining biosecurity systems to enforcing regulations. So there is no subsidy, nor unfair barrier.

For many importers, biosecurity compliance costs are low because they have incorporated biosecurity requirements into their day-to-day business operations. But I recognise we all have a stake in ensuring the costs are controlled. An efficient biosecurity system maximises protection for the sum we spend. There is a substantial return for every dollar we spend on biosecurity. Not only economically - though that's important.

But which of us, as New Zealanders, is not proud and excited about our unique natural environment? Our ecosystems, the native species, natural habitats and landscapes of New Zealand are not only how we earn most of our living. It's also part of our fundamental national identity. If you read our poems, look at our art and hear our stories, most New Zealand culture is linked closely to our environment. Most of us care very deeply about it. So it's worth protecting for its intrinsic merit.

Biosecurity pays off in our tourism and exports. Biosecurity also pays off in protecting human health. It helps us sustain our natural resources. Many sectors of our economy benefit from protecting our natural environment so there are immense benefits for the price we pay. How do you put a price on preventing an economic catastrophe? A disease like Foot-and-Mouth or Pine Pitch Canker, or pests like fruit flies, could cause major economic damage. For instance, an outbreak of Foot-and-Mouth Disease would seriously damage our agricultural sector. Many other sectors, including tourism, would be brutalised.

The trade and economic impact has been estimated by the Reserve Bank of New Zealand at $6 billion cumulative loss to GDP in a single year - and ten billion over two years. We can keep costs down, and standards up by ensuring biosecurity obligations are clear and stable over time. Costs increase if requirements are not consistently applied, or if they are enforced in an inflexible way, to the 'letter of the law' rather than intelligently to achieve the desired outcome.

The government wants to use technology to lift productivity and lower compliance costs in biosecurity. One innovation is to introduce a single gateway for electronic data entry for border transactions. The idea of a single gateway for electronic data entry has been around for many years now. Interim measures allow an agent to provide a single gateway (ESCRIP) that subsequently transfers data on sea cargo and containers to the MAF and Customs systems.

We are currently investigating expanding this technology to air cargo and personal effects, although this will require a lot more work. In addition, MAF and Customs have recently agreed to collaborate over the design of their software upgrades.
This will ensure the alignment necessary for a single data entry gateway. As well as alignment between the two New Zealand agencies, efforts will also be made to get alignment with international counterparts to enable data sharing and improve border transactions.

It will take a number of years to achieve the goal of a fully functional single gateway and there will need to be good will and a partnership between MAF, Customs and industry. I've been minister of all those agencies - and I know they are committed to seeing industry as partners rather than potential criminals. And I want to stress to the industry that I am committed to making a closer partnership work.

I invite you to work with me in making the improvements happen as fast and as smoothly as possible. Improving technology will help us do better, but we will need to. When we look ahead, increasing volumes of goods and passengers will cross our border. As we grow we also have to suppress the increased dangers of pests and diseases entering New Zealand. There are more flights from or through Asia, the Middle East and South America. More flights are going through smaller airports.

There's been a 40% increase over the last five years in biosecurity risk cargo assignments arriving by air. Nearly 180,000 used vehicles and machinery were imported in 2004-5. That was an increase of a third over five years. In 2005, vessel passengers increased by 66% compared with 2004. The highest risk category of mail -- large packages -- has been increasing in volume.

All these trends are likely to continue, especially as the New Zealand economy picks up again after the cyclical low at the end of last year while we went through the election season. As the risks grow, we will never be able to say, 'there is no risk.' It would be a misuse of resources to try to prevent all risk. Life is risky. We couldn't eliminate all risk if we stopped all imports and passenger arrivals. Pests and diseases can be brought in through illegally imported goods or by the wind or the tide.

The challenge is to work out acceptable levels of risk and the best way to manage them. We need to look at costs and benefits. I believe in letting facts get in the way of a good story. So decisions should be based on good information and science. We need to consider everyone affected by decisions and ensure they have their say.
Decisions should be transparent and predictable. That is the basic principle of good decision-making.

MAF has developed what it calls an 'integrated risk management framework'. It helps to identify biosecurity risks and make decisions about the priority of responding to them. We will never have all the facts, because information is never fully available. For example, we don't even know everything about what's in our harbours, or how species behave. That makes it more likely we might delay identification of new organisms in an emergency.

The Biosecurity Strategy identified that our decision-making processes and criteria needed improvement. The government is in the process of adopting a single decision-making process that will cover the end-to-end biosecurity system. This should lead to better, more consistent decisions and make the basis for MAF's policies more clear. We have limited resources and we need to make the best use of them. For example, when an Asian gypsy moth was discovered in 2003, I sat round the Cabinet table while we discussed spending $5 million to find it and kill it. The new Tom Cruise movie, Mission Impossible has just come out. We need a Mission Impossible movie for this. The challenge was to find a single moth somewhere in Hamilton. There was no guarantee it would work. But it had the potential to cause $190 million of damage over the next fifty years. We gave the go ahead - and we got the little bugger.

Sometimes the numbers don't add up. In 2004 an algae called Didymo was found in several South Island rivers. It's a tragedy. The economic impact assessment predicts it will cost between $58 and $285 million over eight years. The cost of the response so far is $6.5 million. But experts say eradication is almost certainly impossible. Above all we need to move on from the perception that the government can do everything itself. The government has a vital role to play. But we all have some responsibility for biosecurity.

As a sector with a close interest in trade and the factors affected by our biosecurity system, I would like to acknowledge the contribution your members already make.

I want to assure you the government is committed to making the system work as well as it can for all stakeholders. The government will provide as much protection as it's possible to provide for the resources it's practical to make available. And we'll ensure that the interests of businesses that rely on our biosecurity as well as those dealing with biosecurity are protected.


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