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PM Speech to Northern Luncheon Club

RT HON JENNY SHIPLEY
PRIME MINISTER

Address to the NORTHERN CLUB LUNCHEON
19 PRINCES STREET
AUCKLAND

FRIDAY 2 JULY 1999


Trade and jobs have been in the spotlight this week. The APEC conference has focused us on how jobs and wealth are genuinely created.

This week we have seen the contrast between a Government with plans for the future and an Opposition that opposes everything. It thinks negative, carping politics – which they've spent the first six months of 1999 obsessed with – will offer New Zealanders a choice in 1999.

It won't – selling New Zealand goods abroad is what generates our wealth.

In the next five months or so, New Zealanders will have the chance to choose between National's forward-looking programmes which offer prosperity, jobs and growth and the negative solutions of yesterday from Labour and the Alliance.

This has been a momentous week for New Zealand. I'm not talking about the silly time-wasting events raised by the Opposition in Parliament.

I'm talking about the breakthrough that was achieved at the APEC Trade Ministers' Meeting in Auckland this week.

The 21 economies of APEC well and truly got APEC on the right agenda for New Zealand's year in the Chair. The APEC Ministers have signed up to move the forum closer towards the Leaders’ goals outlined in Declarations from the Seattle, Bogor, Osaka and Manila.

To all those who claimed last year that APEC had lost its way, this is the best possible answer. APEC is firmly on-track.

Fourteen of the 21 APEC economies have announced further tariff cuts which will accelerate their progress toward free and open trade and investment ahead of the Bogor goals of 2010 for developed economies and 2020 for developing economies.

They reaffirmed APEC’s credibility and relevance as we recover from the Asian financial crisis.

That is brilliant news for APEC and brilliant news for New Zealand.

From the backroom talks and note-swapping at the meeting, one point became very evident. APEC helped many countries in concrete ways to get over the crisis.

I'm talking about the strengthening markets' goal we have set. Countries have been putting in place open, efficient and transparent mechanisms to get their markets into better shape. We've seen that strongly in Korea and Thailand. New Zealand itself was able to get over the crisis far more swiftly than it would have because we already had a robust and open market in place.

It's highly significant that APEC has continued to move towards its ambitious goals so soon on the back of the Asian crisis. We have renewed confidence in APEC, because the process has proved its worth.

Every APEC member agrees that the best way to repair the damage of the crisis and to insure against any future crisis is to make solid progress towards APEC’s trade liberalisation and trade facilitation goals. All the while we are aggressively promoting robust, transparent markets throughout the region.

Maybe for the long-term the most important outcome of the Auckland meeting was the agreement to push for inclusion of industrial products in the WTO negotiations to be launched in Seattle this year.

That would be hugely beneficial for New Zealand sectors such as fishing and forestry.

Even more fundamentally, it's vital that people like you understand and get across the message that freeing up trade is a vital goal for New Zealand. Put simply, it works. It reduces costs for consumers and for businesses.

Some people will try to tell you otherwise. But don't let them get away with it. They're fooling New Zealand.

Last month I released a study which had a simple and stunning finding – trade liberalisation has put more money in people's pockets. The study was prepared by New Zealand Institute of Economic Research for the Ministry of Foreign Affairs and Trade, so we're talking straight down the middle, neutral, non-political commentators here.

There is hard evidence to show that the process of tariff removal begun in 1987 has already delivered the equivalent of a significant wage increase to New Zealand consumers.

What's more, the study shows that the increase will almost double by 2010, four years after the current schedule for complete removal of tariffs on all goods imported into New Zealand.

The report focuses on four consumer goods that were subject to high tariffs - cars, household appliances, clothes and shoes. These items together account for about one-quarter of all household spending.

Car prices have dropped by 16 per cent since 1987. That translates into an extra $4.90 a week for each member of a typical three-person New Zealand household. If we look forward to 2010, four years after tariffs have been completely removed, that gain rises to $9.40 a week for each member of the same household.

For household appliances, tariff removal has led to prices falling by around nine per cent, meaning a gain of $1.20 a week for our average household member. By 2010 that will rise to $2.10 a week.

Clothing prices have fallen by 15 per cent, a gain of $1.10 a week for the householder. By 2010 that will have risen to $2.40 a week.

Shoe prices have fallen by five per cent, adding another ten cents a week to the householder's income. But by 2010, shoe prices will have fallen by 22 per cent.

When we add all this together, typical New Zealand householders have another $7.30 in their pockets, thanks to tariff removal in these four items alone.

For a three-person household, that’s a gain of $22 a week, or $1,140 a year.

Looking forward to 2010, the gain for the average consumer rises to $14.10 a week. That translates to an extra $42 a week, or $2,180 a year.

The figures are at the conservative end of any estimate of the total gains New Zealanders have made from trade liberalisation.

And in case you listen to the arguments that tariff reductions have meant job losses, let me tell you that during the same period, more than quarter of a million new jobs have been added to the economy. That's in the last decade. Yes there have been job shifts, and sector changes. But overall we've created more than a quarter of a million new jobs for New Zealanders.

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

Trade does mean wealth and prosperity and we're advancing it.

I challenge other parties to get off the fence and say whether they support or oppose our APEC goals.

While Mike Moore's position is clear, Helen Clark is still sitting on the fence, and Jim Anderton is trying to turn back the tide.

I challenge them to come clean.

They are either for jobs and growth for New Zealanders or against it. The Opposition can't have it both ways. They want to short-change New Zealanders.


Ends

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