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PM Speech: "Breaking the Advantage Line"

Embargoed until delivery
May be subject to change at delivery

RT HON JENNY SHIPLEY
PRIME MINISTER

Address to

APEC BUSINESS SYMPOSIUM

"Breaking the Advantage Line"

Auckland Town Hall

7.25 pm Friday 25 June 1999


I'm a sports-lover. And I also love business. The stars of both fields are heroes.

In recent weeks we have been treated to a feast of high quality sport with New Zealand teams showing their prowess.

The Silver Ferns netball team and the All Blacks rugby team have both proven too strong for their opponents.

The Black Caps cricket team also did New Zealand proud by reaching the semi-finals of the Cricket World Cup in England.

The Tall Blacks Basketball team, the Women's Hockey team and the All Whites Soccer team have also done us proud.

I have raised the topic of sport because there is a lot in common between sport and business between sport and business.

A lot of lessons on the sports field can be applied to business; such as the right game plan, focus, strong leadership, team players and gamebreakers.

In sport there's also a concept called the "Advantage Line". It is the mid-point between two opposing teams.

The ability of a team to break the advantage line sets the platform for scoring opportunities. It's the same in business.

Whether it's breaking into a new market, or trying to win over new investors or new customers, businesses are always is consciously or unconsciously working to break the advantage line.

Many of the businesspeople represented here are stunning role models of how to break the advantage line.

People such as:

· Brilliant young New Zealand fashion designer Karen Walker;
· Stephen Tindall, chief executive of the Warehouse;
· Innovative clothing company entrepreneur Peri Drysdale of Snowy Peak;
· Craig Meek, CEO of leading edge technology company Terabyte.

The APEC process is all about trying to create the conditions to allow people in business to flourish, and economies to grow.

This Government is working through APEC to push you over the line by reducing the obstacles in your way.

Cutting import tariffs and other barriers to business are central goals in our term as Chair of APEC.

When New Zealand began to lower tariff barriers, many businesses complained they could never survive the influx of cheap competition. And I know it was tough for many.

But the ones with enough foresight and fleet of foot, learned to thrive in the new environment by giving customers exactly what they want - whether in New Zealand markets or internationally.

That is why AEC is committed to eliminating tariffs - by 2010 for developed economies and 2020 for developing economies.

New Zealand's own experience shows that tariff liberalisation works both to cut business costs, and to put more money and choice in the hands of consumers.

In recent weeks some commentators and political parties have argued that reducing trade barriers is bad for this country.

I simply don't agree.

Let's be clear. There's no doubt that removing import duties - taxes levied on imports- does cause adjustment problems for industries that are having such cost protection removed.

But over the whole economy, the long-term benefits are very clear.

More than quarter of a million new jobs has been added to New Zealand's economy during the last decade - the same period that tariffs have been steadily lowered.

Total employment has grown from 1.3 million in early 1989 to around 1.6 million in late 1998.

Real wages - the purchasing power of what you and I earn each week- have increased by around eight per cent in the same period.

More New Zealanders have jobs than ever before, and they are earning more than before- and all this over the same period that we- and Labour before us- have cut import taxes.

What's more, people like me and you are getting a better deal for each dollar they earn and spend.

I was pleased, earlier today to release a study that shows, for the first time, just how much better off we are.

This study, carried out by the New Zealand Institute of Economic Research, shows beyond any doubt that tariff removal has put extra money in New Zealanders' pockets.

The report focuses on four types of goods - cars, household appliances, clothes and shoes. These items are in every home in New Zealand and account for about one-quarter of all household spending.

They are also products where we have traditionally imposed very high import duties.

Take clothing. Just ten years ago the Government added 55 cents onto every dollar of clothing imported into New Zealand

We taxed cars at 45%, footwear at 39% and electrical goods at almost 30%.

Tariff cuts have put money and choice back into people's pockets.

Cars are now 16 percent cheaper than they would have been with import tariffs. Clothing is 15 percent down.

The best gains still lie ahead. By 2010 cars will be one third cheaper, shoes down 22 %, clothes a massive 34% and appliances 16%.

That's real money back in your pockets for you to spend or save how you wish - and I can tell you that in my experience individuals would rather have the choice than have government tell them how to spend their money.

These tariff cuts mean that each household in New Zealand had additional $22 each week in their hands. That means an extra $1,140 a year or about $7.30 for each New Zealand consumer every week.

These gains will double between now and 2010 when all the benefits of tariff reduction flow through. By that time each household will have an extra $42 each week - equivalent to an 8 % pay rise in take home pay.

The evidence, then, is quite clear. In terms of jobs, prices and disposable income New Zealand is winning from trade liberalisation. This government has every intention of continuing down this path

That's why New Zealand has set itself three goals as Chair of APEC this year:

· to expand opportunities for doing business throughout the APEC region;

· to work with other economies to strengthen the functioning of markets; and

· to broaden support for and understanding of APEC in our respective communities.

Governments can help build a better environment for business, but it will be you- as business- not us- as the public sector- that creates the wealth and incomes we need for economic and employment growth.

Your success means more growth, and better lives for the hundreds of millions of people living in the APEC region.

Liberalising trade is not enough on its own. We need to facilitate trade as well.

A good example is our work to harmonise standards. We want to reduce the time and money that businesses such as yourself have to spend on complying with different regulations in different economies.

We're working through APEC to align electrical and electronic equipment standards among developed economies by 2004, and by 2008 among developing economies.

If you're a manufacturer of those goods it means in five years your New Zealand standard will be good for the US, Canada or Japan.

In nine years, it'll be good for Russia, Vietnam or even Papua New Guinea.

It should become easier over the next few years for you to get your products through the ports and airports of APEC economies.

It should also be easier to get yourselves in and out of APEC economies with the APEC Business Travel Card scheme, reducing the need for visas and providing you with fast-track processing on arrival.

The benefits of these initiatives all add up.

With different standards and Customs procedures right now, it has been estimated that the average international transaction involves between 27 and 30 parties.

You need 40 documents, 200 data elements and you'll need to re-type 60 to 70% of all your data at least once.

That's according to the APEC Business Advisory Council.

In response, we politicians intend to cut paperwork down so that your transactions can be completed much more simply.

The next level of APEC work is focused beyond the border, on domestic economies if you like.

We call it strengthening markets.

At the most basic level, advice can be provided to improve competition in telecommunications, electricity and transport, to ensure a better and cheaper service.

There is work, which New Zealand is leading, on competition policy.

We're aiming to get agreement on a set of competition principles to eventually achieve an easier, cheaper and more certain environment for business.

Other work will involve encouraging economies to put in place modern accounting standards.

Much of this work to strengthen markets is backed up by technical assistance to developing economies if required.

I've likened this work to the development of a tool-kit of approaches which countries can put in place to improve the functioning of their economies.

There is no one single answer.

But there are lessons we can learn and apply across our national borders.

You, the businesspeople, must challenge Governments all around APEC to keep the momentum rolling.

Remember, APEC is fundamentally about improving the lives and livelihoods of our people.

That's the standard by which APEC should be judged over coming years.

Over one-third of all the people in the world live in an APEC economy.

It represents half of world production and half of world trade.

There is an extraordinary diversity of people, language, culture and economic development.

Major powers such as the US, China, Japan and Russia are all involved, and 17 other Pacific Rim economies.

And they are all publicly committed to the goal of free and open trade and investment in between 11 and 21 years.

APEC means growth and jobs - and they are what matter to new Zealanders.

We need to fix ourselves on those gains and focus on the areas that need change.

If the political leaders are not moving fast enough for you, the onus is on you to demand the changes that will help your business.

I exhort you all to work for change. Then get out there and exploit the opportunities APEC offers.

ENDS

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