Rt Hon Helen Clark
Prime Minister

Rt Hon Winston Peters
New Zealand First Leader

30 November 2006 Media Statement

Export year launched - major boost for exporters

Prime Minister Helen Clark today announced a $33.75 million boost to the Market Development Assistance Scheme which supports New Zealand exporters breaking into offshore markets.

This funding boost is a key feature of Export Year 2007, which is also being formally launched at the New Zealand Trade and Enterprise Export Awards tonight.

Helen Clark and Winston Peters said that Export Year 2007 is a key part of the confidence and supply agreement negotiated between Labour and New Zealand First.

Helen Clark, Winston Peters, Trade Minister Phil Goff, and Economic Development Minister Trevor Mallard today visited tapware manufacturer and exporter Methven Ltd’s Avondale premises to make announcements about initiatives for Export Year 2007.

"Improving our country’s export performance is critical for the future prosperity of all New Zealanders. For the economy to develop and transform, it is essential we have more globally competitive, high value firms and increase our export returns,” Helen Clark and Winston Peters said.

Helen Clark said a key part of Export Year 2007 is the one-off funding boost announced today to the Market Development Assistance Scheme.

“The funding will be spread over fifteen months from January. That means that support for the scheme will go from $27.1 million to $40.6 million in the 2006/07 financial year, and from $25.4 million to $45.6 million in 2007/8.

“This scheme is a vital component of our efforts to crack key markets overseas. It has already been very successful, and very popular, with about 320 firms currently receiving assistance.”

Helen Clark said the boost to the Market Development Assistance Scheme would enable many more businesses to use it to develop their export markets.

“The scheme has been heavily over-subscribed in both years of its operation. The 2006 funding round closed a month after it opened owing to excess demand, despite Budget 2006 providing extra funding of $19.8 million in 2006/07, and $14.8 million in outyears.”

Helen Clark and Winston Peters also launched the Export Year logo today, and the Export Year website www.exportyear.co.nz which provides information, how-to guides, checklists, and resources for exporters and which goes live today.

As part of the lead up to Export Year 2007, a conference in being held in Auckland tomorrow for the CEOs and founders of more than 50 export companies to brainstorm what the business sector can do to lift export performance. Other initiatives to be rolled out next year include:

- Targeted trade missions led by ministers.

- Beefing up the mentoring programme with people who have “real world” export experience to work with up-and-coming exporters and increasing access to exporter education courses.

Helen Clark said that Economic Development Minister Trevor Mallard and Trade Minister Phil Goff will be heavily involved in Export Year initiatives.

New Zealand First Leader Winston Peters said export growth was critical to New Zealand's long-term economic sustainability.

"As a country, we face two inconvenient truths when it comes to exporting. The first is that this is not a choice -- our exports must grow or our economy will falter. That means making structural and practical changes that will provide incentives for businesses to begin exporting, or to export more. We are confident that as Export Year 2007 unfolds, this will occur.

"The second is that this must be a long-term project. The initiatives and policies unveiled as part of Export Year 2007 must pay a dividend over the next decade and beyond. The success of Export Year 2007 will not be measured in 2008, but in a much stronger economy in 2017 that offers greater business profitability, higher wages, and better social services," Winston Peters said.

More information on Export Year and the Market Development Assistance Scheme is available in the attached questions and answers, and at www.exportyear.co.nz .

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Questions & Answers: Export Year 07

What is Export Year?
The government has designated 2007 Export Year in line with its confidence and supply agreement with New Zealand First.

Export year provides a focus on New Zealand exporters and the challenge New Zealand faces in improving its export performance and increasing exports as a percentage of GDP. It is focused on increasing New Zealand’s sustainable export base, through supporting both new and existing exporters.

Export Year 2007 will run through the duration of 2007, though many of the initiatives will go on beyond that.

What will happen during Export Year?
The Export Year website www.exportyear.co.nz provides information on Export Year 2007 initiatives, including links to other agency and partner websites and their Export Year 2007 activities. To date, Export Year 2007 initiatives include:

EVENTS
- A conference for the CEOs and founders of more than 50 export companies to brainstorm what the business sector can do to lift export performance.
- New Thinking Week in March. This is a NZTE initiative that includes private sector partners.
- Export breakfasts throughout the country run by Export New Zealand and NZTE.
- Export focused events and forums by chambers of commerce, economic development agencies, commercial banks, and others throughout the country.
- The NZTE Export Awards in 2007.

EDUCATION
- The development of export focused resources for use in primary and secondary schools from term one of 2007.
- Beefing up the mentoring programme with people who have “real world” export experience to work with up-and-coming exporters
- Increased access to exporter education courses.
- Scoping the potential for developing a tertiary export diploma.

INFORMATION
- A dedicated website www.exportyear.co.nz to provide information, how-to guides, checklists and resources for exporters
- Preliminary work by New Zealand Customs on developing a portal to enable exporters to find and process all their documentation online.
- A communications campaign targeted at business to raise their aspirations and inform them about events, resources and assistance that will help increase their exports.

OFFSHORE ASSISTANCE
- A $33.75 million increase in the market development assistance scheme (also known as the market component of the Enterprise Development Grant programme), spread over the 15 months to March 2008.
- Investigating extending NZ Trade and Enterprise’s presence in Asia, including potential extension of the Beachheads programme and Focus Centres;
- Targeted trade missions led by Ministers and the Prime Minister.
- Expansion of NZTE’s Path To Market pilot programme that supports new exporters into Australia.

POLICY
- Ongoing review of business taxes, including the possibility of a tax credit for market development.
- Finalising a revised Tourism strategy for New Zealand.
- Reviewing Government strategy to get more value out of international education opportunities.
- A new trade strategy for New Zealand’s after the Doha round of trade negotiations.

What private/public sector agencies are involved?
A Private Sector Reference Group has been established to advise the government agencies and includes Business NZ, Export NZ, Economic Development Association NZ, Employers and Manufacturers Association (Northern) Inc, NZ Council of Trade Unions, NZ Pacific Business Council, Auckland Chamber of Commerce, Canterbury Employers’ Chamber of Commerce, Wellington Chamber of Commerce

Ken Stevens, Executive Chairman of Glidepath, has been appointed as Export Year Business Champion. The key government agencies are Ministry of Foreign Affairs and Trade, Ministry of Economic Development and New Zealand Trade and Enterprise.

Questions and Answers: Expansion of Market Development Assistance Scheme

What is the Market Development Assistance Scheme?
The market development assistance scheme is also known as the Market Development Component of the Enterprise Development Grant. The scheme is delivered by New Zealand Trade and Enterprise. As a result of the extra funding, annual funding for this scheme will increase from $27.107 million to $40.607 million for 2006-07, and from $25.351 million to $45.601 million for 2007-2008. From 2008-09 annual funding will be $27.6 million a year.

The scheme is aimed at encouraging the integration of more New Zealand businesses into global markets through market development projects.

Improving international linkages in this way can benefit a small economy as it:
- helps firms access new markets and take advantage of new opportunities
- allows firms to develop market niches and exploit economies of scale
- exposes firms to international competitive pressure, ideas, knowledge and technology that drive innovation and productivity improvements
- provides firms access to global production networks, which can act as conduits for the transfer of knowledge, technologies, skilled labour, foreign direct investment and work and management practices
- builds management capability through experience gained in operating in global markets.

For more information see www.nzte.govt.nz/edg

How does the grant work?
It provides financial assistance for eligible New Zealand businesses to undertake new international market development activity or market development in a new market.

The scheme covers up to 50 percent of a firm’s eligible market development expenditure. Eligible projects and costs include market visits, in-market representation, advertising/promotion/marketing materials, exhibiting at trade fairs and events, and market research.

To be eligible, there must be a proposed change in the current business model – eg a change of geographical market, client base, product line, distribution/partner channels or marketing mix. The strategy needs to be aimed at significantly improving the business situation of the applicant, and achieving an increase in revenue growth.

What companies are eligible for the scheme?
Currently, firms need to be registered in New Zealand for tax purposes with annual turnover of no more than $50 million. Firms must also demonstrate that they are committed to and capable of undertaking significant and sustainable market development activity.

Firms with turnover greater than $50 million can access the fund if they collaborate to help the smaller firms undertake sustainable market development activity.

How much funding can applicants apply for?
The Export Year funding is spread over 15 months from 1 January 2007. Companies applying to this pool will be able to apply for one-off funding of up to $100,000 in eligible costs for the 12-month period from which the funding is granted. As a minimum, the smallest amount a firm in the scheme must spend on its market access activities is $40,000 – of which $20,000 may be reimbursed by NZTE under this scheme.

When can firms apply for a grant under the expanded scheme?
From December 1 firms will be able to register their interest in the scheme and request an application form from NZTE’s website (www.nzte.govt.nz/edg).

Applications will be accepted from 1 February, 2007 and approved from 1 March. This will give firms time to start identifying market development opportunities and to prepare their application forms.

ENDS

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