Business and Enterprise Culture vital

Anderton address to: NZ Centre for SME Research Seminar

I used to say that one bad day in Government was worth about 1000 good days in opposition.

I think that three years in ministerial office has been worth almost all of the years I spent in the political wilderness.

I can remember thirty years of going up and down the country meeting people, seeing their very real pain and hearing their concerns about where New Zealand was going.

There was persistent and high unemployment.

Everyday it seemed that medium and large businesses went to the wall or shifted overseas.

Small businesses stayed small.

Many of our school leavers went straight onto the dole.

For a good many of our young people if you left school between 1975 and 1999 your choices were limited

If you were over 50 and you lost your job then your chances of finding new employment were significantly less than for younger workers.

In nearly all of our regions business and employment was declining.

Gisborne had an economic performance almost as bad as that of Fiji after three military coups.

Then in 1999 things changed.

Sometimes I have to pinch myself to make sure I haven’t dreamt it all.

In a very short space of time it seems like the world has turned upside down.

Many of the problems we face today are different to those I listened to New Zealanders talk about in community halls from Kaitaia to Gore.

Previously, when I was in both government and opposition, one of the major problems facing the regions of New Zealand was a shortage of jobs.

Today, less than three years since this coalition government was elected, we have the lowest unemployment in 14 years.

We have unfilled jobs and unemployment sitting, ironically, side by side while we have had to rebuild industry training and apprenticeship system.

Increasingly, employers will need to value both knowledge and experience and hire older workers.

Companies will need to make the commitment to training young as well as unemployed people whereas before they had the luxury of simply hiring employees in a ‘buyers market’ for labour.

Yesterday I heard a prediction from a bank economist that wages will have to go up and employment conditions will need to improve.

I am pleased that we now have comprehensive industry and regional development programmes that I remember proposing in the 1980s.

Things have changed almost beyond recognition.

I have visited all regions of New Zealand many times in the last three years and the growth and optimism is unlike anything I have seen in the last 40 years.

The regions of New Zealand are all in positive growth mode, most at over four per cent.

There have been over 100,000 new jobs created in the last three years.

There are at the same time significant skills shortages.

There are now 3,000 new apprentices, and 68,000 people in industry training.

The Labour Progressive Government has committed to returning New Zealand’s GDP per capita to the top half of the OECD and maintaining it there.

Venture Southland has launched a campaign to attract skilled South Africans and was excited to get 170 replies before their recruitment team even left New Zealand.

The manager of Venture Southland didn’t want to go to the UK where there was a migration fair because, he said, “I just didn't want to get lost in the noise of every other region in New Zealand".

In September Westpac said the major barrier for our economy is the lack of skilled workers. Their economist said that “The difficulty in attracting and keeping skilled labour, especially rural workers. is dragging the economy down.”

In late October the Wellington Regional Economic Development Agency was reported as saying that Immigration laws need to be changed to allow for the problem of "serious skill shortages", noting that a lack of highly trained engineers, tradespeople and technicians was restricting growth among Wellington companies.

The West Coast has sent people to London, Ashburton is short of skilled labour, the freezing industry is short of labour for the first time in many years.

New Zealanders have real choices for the first time in a generation.

Not since the 60s and early 70s have there been the opportunities we have today.

The challenge is to ensure that New Zealanders have the choice to take up well-paying, high-skilled and satisfying work opportunities.

I particularly want to see starting a business as a positive option for more of our talented New Zealanders.

Increasingly people do not need to spend their whole lives working for others.

Our businesses are, on average, smaller than in the past.

The average number of FTEs per enterprise has fallen from 6.5 in 1995, to 5.9 in 2001.

I don’t need to tell you the statistics, but New Zealand is clearly a nation of small and medium businesses.

I think that New Zealand’s competitive advantage lies in our good ideas.

Our ability to be creative and innovative.

This is driving our current growth and up and down New Zealand I see examples of just how creative New Zealanders are: Hamilton jet boats Britten Motorcycles Tauranga Motor Mowers Blokart Angus Tait Hi Tech health care development Alan McDiarmid – Nobel Prize winning NZ Chemist, small companies with venture ideas.

Most of our good ideas become commercial ventures through small and medium enterprises.

We face many challenges to harness our talent.

I believe that encouraging talent is not just the role of Industry New Zealand but all of us here.

The challenges we face are to create a stronger business and enterprise culture, provide world class support for people in business, and foster clusters and networks which allow access to resources that small businesses simply can’t manage by themselves.

This is despite issues such as our small population, skills shortages and the tyranny of distance that we face.

Industry New Zealand has already embarked on helping to promote business and enterprise culture.

We need to ignore those politicians and media who want New Zealand to fail and are continuing to predict and encourage economic downturn.

We need to identify our future business leaders and work with them.

We need to start working to improve the quality of New Zealand managers.

And we need to identify other key barriers that are preventing our businesses from growing.

In a few weeks the Ministry of Economic Development will release the Business Practices Study “Firm Foundations”.

This provides further insights into the dynamics of small business and the strategic decisions they make.

I understand Claire Massey has already outlined some of the results of this study.

I am looking forward to the final report as it will help us to better understand businesses.

Over the next few years the average age of the workforce will continue to climb.

Increasingly we will have business start-ups by people who are older.

We will have more flexible business arrangements where a small number of small companies come together to work on projects.

We will have more Maori and Pacific Island businesses.

We need to recognise and embrace these changes.

One important issue in the equation is that in 50 years time up to half New Zealand’s population will have Maori or Pacific island origins. Current birth rate trends already ensure this is what will happen.

Without Maori and pacific island economic development there will be no satisfactory New Zealand economic development.

The New Zealand of tomorrow looks like the make-up of the All Blacks in 2002 not like the New Zealand rugby team of the 1950’s.

It means though, that as we look to the future and create training and business opportunities, we need to be very aware that our Maori and pacific Island youth are an important part of our future.

We need to ensure that we are prepared and able to work with businesses at different stages in their lifecycle - start-up, high growth, mature, beginning to employ staff, of a size where they require a formal management structure and so on.

We need to capitalise on technological development which is making international competition more accessible for smaller firms.

New Zealand is already at the forefront in adopting the new technologies and we need to take the knowledge built up by our leading edge businesses and transfer it to other businesses.

It is also clear that the majority of New Zealand small and medium enterprises have limited internal resources and limited time and can least afford outside expertise to assist in meeting regulatory and legislative requirements.

The Ministerial Panel on Business Compliance Costs provided a number of solutions to compliance cost issues that came from the business community itself. The compliance costs reduction strategy will ensure that those recommendations agreed to by the government are implemented.

One issue that businesses have raised is that we need to have better integration of business assistance.

The forthcoming integration between Industry NZ and TradeNZ will reduce the number of government organisations that companies will need to approach. At the same time Industry NZ, Tech NZ, FoRST and the new Tertiary Education Council are working closely together to co-ordinate the delivery of their services.

This is a new century as well as a new age.

Small and medium enterprises are the backbone of our economy and we need to support and build on them.

Our economic future depends on how well we do this.

We have the opportunity to create a strong and sustainable business and enterprise culture.

We can make the most from the flying start of the last three years favourable economic conditions and the economic development partnerships supported by this Government.

This requires more commitment to succeeding than we have had in the past.

It also requires greater understanding of our businesses and how to make them flourish.

We still have a long way to go

I can say this Government is committed to working with you to keep learning how we can do better.

If we keep our eye on moving forward, the economy we look at in three years time will be light years ahead of where we are today.

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