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Cullen Speaks To The Northern Chamber Of Commerce

Northern Chamber Of Commerce

A'Fare Restaurant, 197 Lower Dent St, Whangarei
Dr Michael Cullen Speech To The Northern Chamber Of Commerce

Good afternoon. Thank you for inviting me to speak with you today. It is a pleasure to be here at such an exciting time in Whangarei's economic history.

This city and region have been through some hard years and your commitment to last through those tough times is a credit to you all. Whangarei has been a news-maker lately for the very best of reasons. Today I want to celebrate and applaud Whangarei's revival.

The announcement this week of the city's new $80 million superyacht facility - creating 120 new jobs - is an excellent example of government and community partnership working together to fuel economic development.

This brand new company, New Zealand Yachts didn't ask for hand-outs or special Government inducements. What the company needed and got was immediate access to a whole range of central and local government services so the facility could be up and running before the next America's Cup.

The project already has export orders worth $30 million for three superyachts with further investment planned depending on demand. And that demand can only grow as this venture helps position New Zealand's marine industry as a niche producer of excellence in building and designing superyachts.

One of the really special things about this is that Allen Jones has come back to New Zealand to set up this venture and that he is committed to attracting skilled Kiwis who are now working overseas to come back home. They will then train the next upcoming generation of skilled craftspeople.
This will complement the steps already being undertaken by the Industry Training Federation to prevent a shortage of skilled labour in the boat building industry.

I was extremely heartened to hear Mr Jones saying it was the quick response he received from the Investment Team of Trade New Zealand that helped swing the decision to choose New Zealand over Australia or other countries.

The government is not taking credit for this development. It is not government owned or funded. It is a private investment that various government agencies, by working together with a commitment to succeed, were able to fast track and get up and running within just ten days.

It is the "what can we do to help?" approach that I hope will define this government's attitude to economic development.

We know that a modern economy, in order to compete in the global market, a market that evolves, changes and transforms from one moment to the next, needs active and co-ordinated government support.

We are in the moving from a recovery based on wealth consumption to a recovery based on wealth creation. But our export base is still too narrow. Only 8500 out of 259,00 businesses in the whole of New Zealand are exporting. A mere thirty companies earn over half of our foreign exchange.

It is critical that we grow our small and medium sized exporters into larger companies. We need to encourage more small and medium sized companies to become successful exporters.

New Zealand's future lies in our ability to compete with the rest of the world. Improving and expanding our export base is absolutely fundamental to the Government's economic growth strategy.

The people of Northland well know the potency of the export market. I welcome, as I am sure you do, the construction of a new $65 million deep- water port at Marsden Point due to begin next month. That's another $15 million a year boost to the local economy.

The Northland Port Corporation won the argument that a new port was critical if Northland is to cope with the huge volumes of timber due from Northland's forests during the next decade.

Carter Holt Harvey, third shareholder in the venture, has made a further major commitment to the region with its $132 million Marsden Point Laminated Veneer Lumber facility. This is the kind of investment that benefits the whole country: innovative; high-tech; and adding value to our primary products. This processing facility is expected to boost our export earnings by $70 million. But of course for Whangarei, most importantly, this significant greenfield investment means good jobs for local people.

This is a co-ordinated effort that will clearly reap great rewards. Joint ventures and partnerships are the hallmark of successful economies both locally and nationally. A growing, sustainable economy and vibrant society are produced by sound education and health systems, solid government infrastructures, appropriate education and skills, the ability to produce goods and services to pay our way in the world and innovative business players who can compete in the global market place.

This Government rejects the assumption that the financial system alone is enough to get economic results. The pure market system to economic development failed New Zealand as a nation.

We know that it is not that simple. For a start global capital has, literally, all the options in the world.

If other countries offer inducements and enticements to investors then no matter whatever positive local factors we have, they will not be enough to encourage or keep that investment here.

Similarly, the protections for investors here are must be seen to be adequate compared to what other countries offer.

We cannot turn back the tides of global capital flows. The Government can, however, make a difference with the quality of local capital markets. We can help do that by working in partnership with and complementing the private sector.

This Government is putting the effort in to building sustainable relationship with key stakeholders – local government, private enterprises, communities and iwi.

A new organisation – Industry New Zealand – will co-ordinate the delivery of services to business. We are not paying lip service to economic development. Industry NZ has been allocated secure funding of almost $332 million over the next four years. It will take a leading role in identifying resources and opportunities for economic and regional development and it will initiate programmes that capitalise on identified strengths.

The first of these programmes, Regional Partnership Programme has already been announced. It will help revitalise provincial economies by boosting employment and helping to promote sustainable growth.

Regions can apply for funding for:
 Up to $100,000 for strategy development
 Up to $100,000 for building capacity
 Up to $2 million for major regional initiatives.

Regional development is NOT about the government subsidising poor performing regions.

It is about assisting regions as they develop their own strategic vision to maximise the opportunities and skills and natural advantages that already exist.

This is not about giving handouts for one-off projects. Any proposal for funding must be part of a well thought out strategy, drawn up in consultation with a wide range of business, government and community groups. Proposals have to contribute to long term growth in the region.

Another programme we have got up and running is the Industry New Zealand Enterprise Awards Scheme.
This is the one that helps good business ideas become reality. Small businesses and entrepreneurs can apply for 50% of the total costs of a project, and the scheme will fund up to $10,000 in any one year. Funding can cover such things as feasibility studies; prototype design; business planning; market research; business appraisal; and mentoring.

The third programme that you may have heard of already is the Industry New Zealand Up and Ready Scheme. This is designed to improve innovative small businesses and entrepreneurs’ chances of raising finance in the early stages of development.

We’ve all heard too many stories about really good ideas which didn’t get off the ground because of a lack of start up finance. This scheme will give applicants the skills to know how and when to access funding, likely criteria for funding, how to assess risks and returns, and how to present a proposal.

I have outlined three of the first initiatives to come out of Industry New Zealand. This is the first lot of new programmes to be put in place and there are more to come, including:
 Industry Specialist Support aimed at helping firms with high growth possibilities to realise their potential.
 Strategic Investment Support Services which will identity major New Zealand investment opportunities; and
 The Angel Network where experienced business people mentor up and coming businesses.

This is all part of the holistic policy programme we are putting together to build a sustainable growing economy.

We want to work together with businesses and other groups to put flesh on the bones of our policies. We want to work smarter, more strategically so that New Zealand attracts more greenfield development and we experience real gains in productivity in line with higher living standards.

Thank you for the opportunity to speak with you today. Whangarei appears in good heart.

The latest National Bank business confidence survey shows business sentiment on the mend. Most encouraging is the finding that a net 16 percent of respondents now expect their own businesses to increase in activity over the next 12 months. This is a sharp turnaround on two months ago.

A net 14 percent are still pessimistic about the general business environment but - again - this is vastly improved on the last two months. In July the pessimists outnumbered the optimists by 36 percent, in June by 56 percent.

The steady improvement in business sentiment reflects strong corporate profits and solid growth in the export sector and in tourism.

The survey suggests more improvements are likely and that is good for New Zealand businesses. It is also good news for the Government. We know that there is only so much a government can achieve on its own. Your success is crucial to the success of New Zealand.

Thank you.

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