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BUDGET 2001: Economic opportunity package

24 May 2001

Economic opportunity package

Fifteen new or expanded economic development programmes will help to transform the economy and provide security and opportunity to New Zealanders, Economic Development Minister Jim Anderton said today.

Programmes worth $34.352 million a year in new spending will be directed to individuals, small businesses, high growth industries, local communities and entire regions.

New programmes and expanded initiatives announced today include:
- Three programmes to identify, network with and develop innovative New Zealanders, both within New Zealand and overseas.
- Three programmes to help develop and commercialise good ideas at the early stage.
- Four programmes involving partnerships between government, regions and industry.
- Two programmes focusing on high growth initiatives, involving mid-sized companies and major investments.
- Two 'smart government' initiatives to ensure government works better with industry.
- A 'Jobs for Students' initiative.

"These policies are designed to build on our strengths and unlock potential at all levels. The Government is working in partnership with New Zealanders to produce more jobs and rising incomes," Jim Anderton said.

"The brain gain initiatives invest in talented individuals. Networks will be set up to take advantage of links with successful New Zealanders around the world. New Zealanders are highly creative and innovative people and we have developed ideas to unlock that potential for our economic benefit.

"There is no shortage of good ideas in the community. But we need to make it easier for those ideas to succeed commercially. In Budget 2001 the government is expanding programmes aimed at getting good ideas going at all levels."


Summary of new and expanded programmes

Total funding

Total funding for Vote Industry and Regional Development in 2001-02 is $96.183 million, up from $49.492 million in 2000-01.

Funding for these initiatives comes from the $331.875 million set aside by the Government over a four year period from 2000-01.

New or expanded economic development programmes announced today come under six headings

1. Building Future Capability

$6.2m per year from 2001-02. $24.8m over four years.

Three initiatives to use the talents and networks of New Zealanders, both in New Zealand and overseas.

- World Class New Zealanders
"New Zealanders are the most creative and innovative people in the world."

A 'brain gain' initiative designed to identify and network with New Zealanders who are world class thinkers.

Real and virtual networks will use existing business connections and New Zealanders overseas to access international markets and promote New Zealand.

The initiative will help to lift the level of business expertise in New Zealand, share innovative ideas and expose New Zealanders to international best practice. It will expand the availability of world class technology and help to attract new investment to New Zealand.

$2.250 million a year to cover project management, advice, and other services.

- Celebrating a culture of success.
"New Zealanders are almost embarrassed to talk about their achievements. We need to be more enthusiastic about celebrating our successes instead of dwelling on our failures."

$2 million a year to promote a culture of enterprise and increase the number of New Zealanders willing to turn their ideas into commercial ventures.

It will build on programmes such as the Great New Zealand Business Venture, the Young Enterprise Scheme, and outreach programmes of the Ministry of Research Science and Technology and Trade NZ.

New initiatives will be developed and targeted at students, teachers, universities and businesses at the national and regional level.

- Supporting Promising Individuals
"We have to produce, retain and attract the people we need. The challenge for New Zealand is to be a country that is attractive to skilled and talented individuals."

A further $1.95 million a year to support the development of promising individuals in science and innovation. It will:
- Increase the number of Science, Maths and Technology Teacher Fellowships [$750,000];
- Increase the number of science and technology post-doctoral fellowships [$1 million]; and,
- Increase the number of Tuapapa Putaiao Fellowships, which aim to increase the number of Maori with post-graduate degrees in science and technology. [$200,000].

To kickstart these programmes, the Government has approved two projects.

- Talented New Zealanders

This project will involve developing a series of proposals for retaining talented New Zealanders in New Zealand, maintaining/establishing contacts with those who are currently overseas and attracting talented people to live and work in New Zealand. The project was recommended by the Government-Business forums. $259,000 has been allocated from 2000-01 appropriations.

- Developing more highly-skilled New Zealanders through adult literacy
The Government will pilot a range of approaches in regions and workplaces to improve adult literacy and therefore improve economic performance. $500,000 has been allocated from 2000-01 appropriations.

Over 40 per cent of New Zealand adults have weaknesses in reading, writing and numeracy that prevent them from realising their full potential. People with low literacy are often in communities where unemployment and low-paid jobs are a major problem. The initiatives will complement the government¡¦s Adult Literacy Strategy.

2. Building the base of business

$5.107m per year. $20.428m over four years.

Three initiatives designed to identify businesses with good ideas at the very early stage and support them to grow.

- Incubator support.
"We need to be prepared to have a go and if necessary risk failure. We need to be prepared to try things. New things. Test out the innovative ideas for which we are famous."

Associate Industry and Regional Development Minister Pete Hodgson is announcing an expansion of the Incubator Support Programme. Incubators improve development of fledgling companies.

The programme will advance partnerships between tertiary institutions, industry and government.

- Support for the commercialisation of intellectual property
"New Zealand's ideas are as good as, and in many cases better than, any in the world."

$1.125 million in 2001-02 and following years for an increase in the number of Technology in Industry Fellowships [TIFs]. They will support research and development in enterprises focussed on high-value, new and emerging opportunities.

The fellowships expose tertiary students and R&D professionals to commercial R&D environments.

More TIFs will:
- Increase the sophistication of R&D in business.
- Increase the number of R&D professionals moving between firms and research organisations.
- Boost collaboration and technology transfer between research institutions and business.
- Make New Zealand a more attractive place for scientists and technologists.

A further $100,000 has been allocated from 2000-01 appropriations for a project to identify ways to make better commercial use of New Zealand's intellectual property. The project was recommended by the Business-Government forums.

- Enterprise Awards scheme
"When we have a good product we should make it the best it can be because we can then sell it with pride to the rest of the world."

Enterprise Awards assist innovative small firms to develop early stage business concepts and projects.

The scheme was introduced as an interim programme last year. 141 awards have been made since September 2000, and the Government has decided to continue the programme into 2001-02 and following years.

Funding of $2.813m per year will be available to help:
- Develop business projects with high growth potential.
- Develop innovative businesses.
- Reduce the failure rate of early stage businesses.
- Encourage environmentally sustainable business initiatives.

3. Strategies and partnerships

$9.117m in 2001-02. $8.073m in following years. $33.336m over four years.

Four programmes to enable the government to work in partnership with regions and industry by assisting industries with high growth potential, identifying bottlenecks affecting development, and assisting regions to unleash their potential.

- Sector strategies
"The Government has actively identified job-rich, high-skill, high-value industries with the potential for growth."

Development of strategies for the wood processing, manufacturing, fashion, apparel and textiles, tourism and creative industries [particularly film and music.]

Scoping work with aquaculture/fishing, light alloys and casting, and biotech.

$2.08m in 2001-02 and $2.170 million in each of the following three years for co-ordination, expert advice, project management and research needed to develop and implement sector strategies.

- Regional capacity development
"We cannot have a strong New Zealand economy if we have weak regions. We have to unleash the potential of regions by building on their strengths."

The regional partnerships programme helps regions to identify local opportunities and respond to them. Expanded initiatives to build on this programme include:
- Assisting regions to build their own planning capacity;
- Providing expertise, training and networking to assist participation in economic development planning [including cluster development];
- Contributing to the cost of a national conference on regional development.

The regional partnerships programme expands from $5.625 million in 2000-01 to $11.25 million in 2001-02 and $16.875 million in 2002-03 and the following years.

In Budget 2001 a further $1.631 million in 2001-02 and $1.903 million in each of the following three years has been added for training, advice and analysis to provide further support for regional initiatives.

The Government will also engage more fully with regions with acute needs, including Tairawhiti, Northland, Eastern Bay of Plenty and South Waikato. Initiatives for acute regions announced in Budget 2001 include:

- A soil climate survey [$200,000]
- A grant to assist economic development by opening up access to the Kaipara Harbour [$100,000]
- An integrated transport study.

Eastern Bay of Plenty
- The Opotiki Development Project to participate in the Regional Partnerships Programme [$10,000]
- Research into aquaculture and marine farming [$25,000].

- Economic analysis of integrated transport solutions report [$75,000].

Far North and Southland - Digital Divide

- Improve the level of Information and Computer Technology Services [$100,000].

- Community Financing
"The smallest communities have a sense of place. They know who they are. And they say to me, 'even if you don't help us, we will be here and we will succeed'."

$1.406 million for pilot programmes in Northland and in Rangitikei/Wanganui/ Ruapehu.

In Northland, the proposal is to work with others to seek to re-establish a credit union.

In Wanganui, the funds will be used in partnership with community and private funding to investigate creating a community reinvestment trust and a mutual guarantees scheme.

The schemes will make funds available for new small business formation and expansion, and allow small and medium enterprises to offer collective guarantees through pooled savings.

Feasibility studies will be completed before any commitments are sought from government for on-going involvement.

Strategic Regional and Sectoral Initiatives
"As a nation we have to realise that lifting our nation up is over to us. We need to work together to create the New Zealand we want."

Two funds of $2 million per year each. The funds will enable Ministers to act quickly and flexibly as priorities for industry and regional development are identified.

The Regional Initiatives Fund will assist with projects such as community computer hubs and infrastructure feasibility studies.

Examples of projects the Sectoral Initiatives Fund will assist with include:
- A body to co-ordinate transport infrastructure for wood processing;
- Co-ordination of the primary processing sector;
- Initiation of co-operative research centres.

4. High Growth Potential

$845,000 in 2001-02. $1.231m in following years. $4.538m over four years.

"We need to broaden and deepen our export base. We need to grow more ¡V far more ¡V of our small companies into successful, large export companies."

Expansion of two successful schemes that assist businesses with high growth potential.

„X Business Growth Service
This scheme began in October last year and has already identified and assisted many firms with excellent growth potential.

The scheme helps to build strong, internationally competitive mid-sized companies that could grow into the large New Zealand enterprises of the future.

Funding will expand from $3.375 million in 2000-01 to $6.75 million for 2001-02.

In Budget 2001, a further $625,000, increasing to $831,000 in following years, has been added to provide improved operating resources to expand the programme.

- Major Investment Service

Works with Trade NZ to develop major investment projects in New Zealand. Successful projects underway this year include Ericsson/Synergy and Sovereign Yachts.

The Major Investment Fund increases from $1.688 million last year to $3.375 million for 2001-02.

In Budget 2001, a further $220,000 this year and $400,000 in following years of new expenditure is provided to meet growing demand for this service.

A further $209,000 has been allocated from 2000-01 appropriations for a project identifying opportunities to improve New Zealand¡¦s potential for greenfield investment for job-rich new enterprises. The project was recommended by the Business-Government forums.

5. Smart Government

$1.315m in 2001-02. $1.763m in following years. $6.604m over four years.

Two initiatives that build partnerships between Government, business and the community.

- Industrial Supplies Office
Economic Development Under-Secretary John Wright is announcing an expansion of the Industrial Supplies Office. Business will have the opportunity to capture more purchases by the New Zealand and Australian Governments.

- Major Events
Major events deliver economic and other benefits to local, regional, and national communities. These include increased visitation and spending and industry promotional opportunities [e.g. showing yacht building to America¡¦s Cup visitors].

Operational funding of $495,000, rising to $563,000 in following years, will be provided to:
- Attract and promote events;
- Research and identify new event opportunities;
- Coordinate private and public sector participants to ensure that maximum economic benefit is captured from events and their audiences.

Events will be targeted in line with sectoral strategies [e.g. wood processing, creative industries].

A further announcement on additional events support will be made in June.

6. Jobs for Students

Funding from unallocated Industry and Regional Development appropriations.

"Jobs, not benefits, are the key to the future for young New Zealanders."

Economic Development Minister Jim Anderton and Social Services and Employment Minister Steve Maharey will announce in July an initiative to develop new proposals for high quality work experience programmes for students over the summer holidays.

The initiative will include:
- A campaign to improve business understanding of options and benefits from employing students over the holiday period;
- Better links between agencies such as student job search and Industry NZ to identify opportunities;
- Pilot programmes to match students to jobs in selected regions, industries and specific business projects.

The scheme is being developed to improve students¡¦ job prospects during summer holidays and increase student opportunities to gain work experience.

At the same time it will help businesses to grow by facilitating partnerships and building capability


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