Rt Hon Helen Clark
Prime Minister

Address To Economist Roundtable

AT

PARK ROYAL HOTEL, WELLINGTON

9.15 AM
THURSDAY 10 AUGUST 2000

The government welcomes the opportunity to take part in this roundtable.

I know of no other business forum which gives such an opportunity not only to hear from many key government ministers, but also to have an open dialogue around the issues.

Today, 10 August, is exactly 8 calendar months since the ministers in this new government received their warrants from the Governor-General.

The time has flown – we are now two thirds of the way through the first year of only a three year term.

To achieve anything in 3 years, governments have to get moving, and we have. Year one is the major action year, year two is one of consolidation on work begun, and year three is dominated by the forthcoming election campaign.

I believe this government had two key tasks on taking office.

The first was to move New Zealand away from the policy extremes of neoliberalism, and to develop a new direction for the nation and a new role for government in the 21st century.

The second task was to keep our word and thereby restore public faith in the democratic process.

It is impossible to overstate just how jaded and cynical many New Zealanders had become about the political process. There had been just too many broken promises for too long.

That’s why Labour went into the election campaign with a short set of moderate and achievable core commitments which we were determined to deliver on – and are now delivering on.

Those commitments were set within an overall vision, of building a sustainable growing economy, which is capable of producing ever more sophisticated goods and services, and which can guarantee us high standards of living. That stronger economy is needed to support better health and education services, a first class infrastructure, a clean and green environment, and a strong creative identity through our arts and culture which will mark us out as a unique nation with a high quality of life.

The new government has certainly brought some changes. None of them came as a surprise to anyone who followed the political process. The changes were carefully signalled well in advance, and were consistent with Labour’s desire to bring about a correction in public policy.

It is important too to stress what hasn’t changed, given the overblown rhetoric of our opponents, which tends to find an echo in some circles at home and abroad.

 The Reserve Bank Act has not changed.

 The Fiscal Responsibility Act has not changed.

 The government is running a tight fiscal policy and budgeting for good surpluses over the forecast period.

 Government spending is actually decreasing as a proportion of GDP.

 The government welcomes foreign investment to grow the economy, and

 The government is committed to promoting open world trade.

What the government has given a lot of thought to is the role of the state in the 21st century.

In my political lifetime, New Zealand has made a huge transition from having a powerful state with a large role in the economy and the society, to having a shrunken state which has failed to act proactively in the national interest and has been reluctant to accept responsibility for social breakdown and despair.

There had to be a middle way – and we are taking it, as neither the past nor the status quo of 1999 was suitable for 21st century conditions.

The globalised world in which we live and work requires smart, active government, prepared to go the extra mile to get leverage for its citizenry.

Few, these days, look to government to do everything for them. But many look to government to lead and inspire, to facilitate and co-ordinate, to be a broker, and to fund and provide where necessary.

Our government acknowledges the severe limitations on what governments can achieve on their own.

That’s why we are actively seeking partnerships across the sectors and the society.

There are so many challenges we are facing us as a nation which can only be met effectively by working partnerships between stake holders and government.

That applies as much to our need to transform our economy and boost the value of our exports as it does to working out how to reach our climate change objectives and reduce the disparities which have grown between ethnic groups in our country.

On its own the state can’t find the answers or implement the solutions. Indeed its capacity to do so has been greatly weakened by the shrinking of the core public services. This year we have been working to restore the capacity of the public service to give the government practical rather than theoretical advice. We are challenging it to move beyond the high flown statements of objectives which flow so easily from the pen to the nitty gritty of how to make things happen. There are pressing problems demanding practical solutions.

But we are stressing that the solutions need buy in from stakeholders and may well be delivered by stakeholders. The “closing the gaps” work is a good example of that. We are on a journey to reduce over time the disparities which have grown between Maori and Pacific peoples and other New Zealanders in employment, health and housing status; educational achievement; and crime rates. The programmes to achieve that are likely to be most effective if they are driven by Maori organisations which are in tune with Maori needs and aspirations. The state's role will often be a funding one, and one of supporting the development of capacity within Maori organisations to perform effectively.

Another example of a partnership approach can be found in the work taking place this year on a national tourism strategy. The industry has been calling for the development of such a strategy for years, but couldn’t get government buy in. Now it has, and today the industry and the Minister of Tourism are jointly announcing the membership of the New Zealand Tourism Strategy Group to take the industry forward. The group is genuinely a partnership between the private sector, central and local government, regional tourism organisations, and Maori. The process being followed could well become a model for that in other key sectors where the public and private organisations can and should co-operate to our mutual benefit.

Then there are key policy challenges which will be the subject of specific consultation and engagement. One of the biggest is that of meeting our obligations under the Kyoto Protocol on Climate Change. The government has set a target for ratification by mid 2002. That means we must find a way of stabilising our greenhouse gas emissions at 1990 levels, on average, over the period 2008-2012.

That is a tall order! Our gross carbon dioxide emissions, for example, have actually risen 19.2 percent since 1990. Carbon dioxide, however, represented only 34 per cent of our emissions in 1995, while methane and nitrous oxide from the agricultural sector represented 62 per cent.

This means that the challenges facing New Zealand in reducing greenhouse gas emissions are rather different from those facing other first world and more industrialised nations.

We have established a ministerial group under the leadership of Pete Hodgson to guide us towards ratification. The government will be seeking input from across our industries, local government, scientists, and ecologists on how we can plan a strategy which we can afford and which will enable us to wear the badge of a good international citizen with pride. We do place great store on being good international citizens.

Let me return now to the issue of economic transformation and how to boost our economic performance.

The government believes that the economy has to be taken upmarket so that it is increasingly driven by knowledge, skill, science, research, technology, and innovation.

To that end we have:

 begun lowering the cost of tertiary education. This year we have made the student loan scheme fairer by no longer charging interest while full time and low income part time students are studying. For next year we have budgeted to stabilise the cost of fees across the tertiary sector after years of steady rises.

 introduced a new Modern Apprenticeship Scheme to boost the numbers in trade and technical training and tackle the skills shortages which are impeding our economic growth.

 greatly increased science and research funding, both to the long range, blue skies research which has a long term benefit and to the private sector.

 established a Science and Innovation Advisory Council made up of successful, high achieving New Zealanders and asked them to give us free and frank advice on how we can drive the new economy more effectively.

 new funding is going into identifying and promoting major investment opportunities in New Zealand. We intend to be much more proactive in head hunting the firms and the sectors which can make a big difference to New Zealand's future.

Exporting and trading is also a major preoccupation for us.

The government will use every bit of leverage it can to improve access to world markets for New Zealand exporters.

I have myself been knocking on doors from Singapore to Latin America and Turkey to get our products and services better access. I plan Prime Ministerial-led trade missions to parts of the world where that will make a difference.

In April a small trade mission accompanied me to Turkey, and I hope for a larger one next year when I travel to Latin America to open a new embassy in Brazil.

We are continuing our quest for a new World Trade Organisation round which will give priority to trade liberalisation in agriculture.

But in addition we are pushing hard to conclude a bilateral free trade agreement with Singapore, and would like to extend it to Chile, and indeed to the United States and Australia as well.

We also want to ensure that our exporters get the back up they need to perform successfully in overseas markets. The lack of adequate export credit guarantee, financing, and bonding services has been an impediment particularly to our smaller and medium sized companies. That is a gap the government wants filled. We have asked Trade New Zealand to come up with proposals to fill it.

Small countries at the end of the world's trade routes have to make their luck. If we don't, then our role in this globalised world will be that of an incubator for bright people and their businesses who then leave for greener fields elsewhere.

In the 21st century, New Zealand needs to rebrand itself. We are a sophisticated, upmarket, first world nation in a superb natural setting. We must aim to be simply the best : the smartest, the best educated, the most innovative, and the most productive. It is economies with these characteristics and with first class infrastructure which are thriving. That future is within our grasp – and I advocate a New Zealand Incorporated approach to achieving it. The business sector has a big part to play in that and we look forward to continuing to work with you to achieve it.

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