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Mallard: NZTE Local Competitiveness Symposium

Where New Zealand needs to be

Duxton Hotel, Wellington


Where New Zealand needs to be - you have asked me here today to speak about a subject that is right at the heart of the government's priorities.

You've no doubt heard us talk a lot about economic transformation since we were re-elected to government last year.

Can I first say that we do not see economic transformation as the just the latest meaningless buzzword or fad - we view it as a serious goal that we are committed to achieving.

We absolutely need to continue the transformation of the New Zealand economy into a high-value, high wage export-led economy - an economy that continues to grow at a rate sufficient that can generate the wealth we need and the wealth we aspire to.

To raise kiwis' standards of living we are going to need a substantially larger economic cake - and the way we are going to get there is through more exports, and through being competitive in international markets. We'll also get there through higher productivity, and through innovation.

Simply put, economic transformation is about learning to do new things well so we build on and diversify our economy. It's about playing on our existing strengths, doing more with our existing knowledge and capabilities so that we are tapping into and succeeding in new and innovative business areas.

The latest economic thinking indicates that economies learn and master new things by either refining their technologies, growing products adjacent to the existing output mix, or by expanding in new markets by leveraging the strengths of what they are already doing well.

With this in mind, as part of the government's economic transformation agenda we have some key aims.

We are working to grow more globally competitive firms.

We are aiming for higher productivity, higher business investment, and skill levels, and more innovation in the economy.

We are doing this through initiatives you will have witnessed in the budget - such as the substantial increase in investment in research and development, the expansion of investment in assistance for fledgling firms with high growth potential via the Venture Investment Fund, and an expansion in the market development assistance scheme that will help firms enter world markets, and grab the attention of international customers.

A specific change has also been made in the criteria for access to the scheme to make it easier for clusters of businesses to collaborate and tap into the support.

Having a world-class infrastructure is also a key. The Labour-led government has demonstrated our clear commitment to investing in and addressing key infrastructure issues after the inaction of our predecessors - in areas such as roads, broadband, and initiatives underway that will ensure a sustainable and robust energy infrastructure.

On Monday my colleague Lianne Dalziel announced a sweeping review of regulation affecting different sectors. It will look at issues in existing regulatory frameworks that may be unnecessarily constraining business development and economic transformation.

More globally competitive firms of sufficient size and scale are essential for the growth of our export industry. The figures are stark. According to the most recent figures, just 151 firms are responsible for 78 percent of our exports. Only 590 firms export more than $5 million per annum.

Around 45 percent of our exports are land and sea based products, 29 percent
are service exports, 17 percent are manufactured goods, and six percent
are industrial raw materials and metals.

The key challenge will be scaling-up existing export activity, moving nimbly into adjacent areas and diversifying into new markets.

Our existing export activities will remain critical. We are a country of vast natural resources, and sectors like agriculture and horticulture will continue to be a cornerstone of our export industry.

However we also need to branch out into highly innovative, creative industries. We need to look at how we can add value to our existing exports, and we need to play to our natural strengths.

To a large extent it will be up to innovative, creative New Zealand business people to make this economic transformation possible, but the government will be right there supporting this to happen.

The government's economic development agency, New Zealand Trade and Enterprise (NZTE), plays a role here by working to build the capability of businesses and regions and also by facilitating their sustained and profitable participation in overseas markets.

The key challenge for government is to get smarter with the business assistance programmes that NZTE delivers. That is why I launched the review of business assistance programmes in February.

We need to ensure that government support is what firms need, that it is going to where we can get the most impact, and that firms can access it at the right time in their development.

The recently released evaluation of the Growth Services Range found that nearly 70 percent of firms who were surveyed had indicated improvements in capability.

Projects supported through the Regional Partnerships Programme speak for themselves as well.

The Waikato Innovation Park is contributing to the development of a growing cluster of agri-tech companies and science providers in and around Hamilton, the Centre for Applied Engineering in Taranaki is linking a network of engineering firms to the local polytechnic, and of course post-production work on King Kong was undertaken at Stone Street Studios - the Wellington Major Regional Initiative.

As well as the review of business expenditure programmes, you will be aware that I have also taken some decisions based on the scheduled evaluations of programmes. We have decided to cease the cluster development programme on the basis of its evaluation.

There were several reasons for this.

We had reached a point where we had well over 40 programmes offering support to businesses. As well as being confusing - the programmes were not well targeted.

The clusters programme was one of the smallest programmes, and while some of you had achieved good results with this funding, it was not going to have a large impact overall.

We also found duplication between the clusters programme and other programmes.

I want to make it clear that this decision does not mean that the government will stop funding the development of clusters.

This is because support for collaborative projects, such as clusters, is still available in a range of other programmes.

Some clustering is regionally based and we believe that regions are best placed to prioritise and work with these clusters.

Regions can still support clusters through accessing Major Regional Initiatives such as the Waikato Innovation Park that I mentioned earlier, or the Food Hawkes Bay concept, which is linking food companies with each other and with education providers.

The government is also supporting sectorial clusters and company collaboration in offshore markets through initiatives such as the $64 million budget expansion of market development assistance scheme. As you all know, China represents a huge opportunity for New Zealand exporters and NZTE is encouraging our companies to enter the market with an 'NZ Inc approach.'

Based in Shanghai, the New Zealand Wood innovation Centre builds relationships with targeted Chinese companies, key government contacts and authorities, and facilitates enquiries on behalf of New Zealand companies.

It also performs an educational function, offering technical information on the properties of New Zealand wood so that designers, builders, developers and architects can learn first hand, innovative ways of using New Zealand Pine in their work.

The Wood Innovation Centre is run by NZTE but is supported by a partnership between industry and government. Six companies have formed an incorporated society and are founding partners in this initiative, alongside NZTE.

NZTE's China Agriculture Transformation Technology project is designed to assist New Zealand agritech and biotech companies to take advantage of commercial opportunities in China.

These opportunities centre around the growth in the Chinese dairy sector as it develops and makes greater use of technology.

Through its Club China consortium, NZTE is assisting thirty New Zealand companies to enter the Chinese market by matching them with significant opportunities there.

Taking a coordinated approach, New Zealand dairy, dairy technology and agbio industries are entering into commercial agreements with Chinese organisations. The Club China consortium is focused on ensuring these are mutually beneficial with long-term gains for New Zealand as a partner in the development of land use patterns in China.

As I said earlier, the real responsibility for economic transformation lies in the main with business but we all have our part to play in transforming the New Zealand economy.

The government remains committed to supporting New Zealand firms to lift their levels of productivity and to access offshore markets, and we will continue to look to sharpen our focus to ensure funding for economic development is well targeted.

Thank you, and all the best for the rest of the conference.


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