Rt Hon Winston Peters

New Zealand First Leader

2 September 2013

EMBARGOED AGAINST DELIVERY
Employers and Manufacturers Association – Policy Forum
159 Khyber Pass Road, Auckland
Monday 2 September 2013, 4 – 6pm

The Challenge We Face - To Deepen The New Zealand Economy

Thank you for the opportunity to speak with you today and to share New Zealand First’s thinking on economic policy and in particular the future of manufacturing.

Let me begin by saying where New Zealand First stands on economic policy

First – New Zealand First is a centrist, common sense party. We are not blinded by ideology. Our policy is to support the mixed economy.  We take an open minded approach to economic issues – we are motivated by what works in practice.

Second - we base our economic policy on a long term and realistic view of New Zealand’s economic situation and prospects. Our policies are designed to support a diverse economy with a thriving private sector that maximises local ownership.

Third - we unequivocally put New Zealand’s interest first.

This approach is a complete contrast to the National Government.

After nearly 5 years in office what do we see?
There is no economic vision.
There is no economic plan for improving the lives of ordinary Kiwis.
Instead, all we get are deals – some slightly more ‘grubby’ than others but all image poor policy process and reek of preferential treatment and the mythical magical bullet.
You all know the deals with specific interests or lobby groups:
For example - Sky City, Warner Brothers, China Southern Airlines.
This Government has made an article of faith – a fetish - of getting back to surplus.

So they have made much of the claim that they are on track to surplus in 2014/15.

It is the centrepiece of their threadbare economic policy.

Excuse our scepticism but there is more than a little smoke and mirrors in that assertion.

They have used a myriad of ways to massage the numbers. 

Take just three examples:
1. Delays in finalising Treaty settlements. Put aside your thoughts on the Treaty industry and compare the Government’s forecast spend against its actual spend. The two don’t reconcile.
2. Under spending the foreign aid programme by nearly a $100m
3. Under spends in various government agencies such as $90m in the Ministry of Business, Innovation and Employment. 
The figures for under spending when set against forecast budgeted spending run into hundreds of millions of dollars.

These are clearly not legitimate “savings.”

There is just absolutely no coherence in the Government’s approach to the economy.

Again, here are some examples:
·         Wholesale changes to the RMA at a time when our 100% Pure boast is experiencing increased attacks
·         The selling of State Assets, at the worst time, way below previous valuations, with all sorts of inducements attached
·         Billions being poured into motorway building programmes where very few have a high, and most have a low benefit – cost ratio
·         Deals with corporates at the expense of the overall national interest
·         The relentless foreign takeover of major productive assets
·         Total annual exports, June 2013, down 2%, not up.
Manufacturing

Let’s turn to the manufacturing sector.

Late last year, we joined with other parties in holding an inquiry into the state of New Zealand’s manufacturing sector.

The inquiry report brought into sharp focus the conclusion that manufacturing has been the ‘Cinderella Sector’ of the New Zealand economy for too long.

The inquiry was a wake-up call.

It called for urgent action if our manufacturing sector is to survive and thrive.

We have lost over 40,000 manufacturing jobs in this Government’s term of office.

For years, New Zealand First has been at the forefront of those advocating policies to protect and promote the manufacturing sector.

The report of the Manufacturing Inquiry vindicates our stand.

Of course the Government dismissed the report!

It deliberately used the usual facade of statistics to defend itself.

You can prove anything with statistics.

Because food manufacturing is such a large part of the manufacturing scene, the expansion of the dairy sector has clouded the picture.

It’s given some camouflage for the Government’s complacency. 

But the inquiry report makes a compelling and comprehensive case that a strong and successful manufacturing sector is vital for improved export performance, better jobs and higher incomes. It avoids us putting too few eggs in too few baskets in too few markets.

That is consistent with the importance New Zealand First attaches to the manufacturing sector.

The report puts strong emphasis on the overvalued exchange rate as the primary challenge facing the export sector.

We have a Member’s Bill ready to address this – all set and ready to go.

The Government could agree to introduce it next week if it wanted to. 

Our Bill would give the Reserve Bank the wider legislative framework it needs to tackle the exchange rate and has already been drawn from the ballot.

It was defeated last year by just one vote, but the Bill was luckily drawn from the ballot again this year (on Budget Day!) so those 61 MPs who voted against it last time will have a second chance to right their wrong.

With some Economists opining our dollar could soar to 90 cents US next year there is clear justification for all Parliamentary parties to support the legislation.

We have a range of other policy settings designed to support a strong and diverse manufacturing sector including:
·         An accelerated depreciation regime for plant and equipment
·         A Bill that would give preference to New Zealand firms when Government agencies and local bodies buy goods and services
·         A regional development policy. This Government has no regional development programme and we will rectify that
·         A regional royalties scheme that would see some of the wealth generated from oil, gas and minerals extraction remain in the source region. That would mean that 25 per cent of the royalties generated from that extraction would remain in the region to directly benefit those who live and work there.
·         As part of our support for the regions we would ensure regional infrastructure was funded. The Napier-Gisborne line was closed because it will cost $4 million to repair the line. What sort of message does that send to potential investors in that region?
·         We will support Foreign Direct Investment (FDI) when it brings genuine investment that adds new capacity and technology to the manufacturing sector. We will never support a direct transfer of wealth to another country.
There is another serious initiative required to support the manufacturing sector.

We call it the “No Stone Left Unturned” policy.

When a manufacturing company faces a serious challenge –

For example, 
·         the sudden  loss of an overseas market
·         an episode of unfair competition
·         a supply chain disruption
or a similar crisis, the company involved would be able to approach the government for support and assistance.

Interventionist? – Yes

And we make no apology for that. Even Margaret Thatcher had to concede that it was easier and cheaper to keep an existing employer in business than to start a new one from scratch.

Every case would be treated on its merits.

But this is not an open cheque book.

We would have the Ministry of Business Innovation and Development do a national interest analysis into each case.

If the national interest were found to benefit overall from intervention, government support would help that manufacturing company to weather the storm.

New Zealand First is not hung up on theory or ideology.

And in fact this happens already if you are big enough - and overseas based!

The $30m support for Rio Tinto’s Tiwai Point smelter is a recent example.

A similar sum, applied as we propose, would have saved thousands of manufacturing jobs in recent years.

If it makes sense to help a manufacturing company weather the storm, then we say the government needs to be there.

One more topic has to be raised at this gathering.

Overseas Debt

It is a truth, universally acknowledged, that no country can indefinitely spend more than its income without some serious ill effects.

Yet we are still not paying our way.

The current account deficit to the March year 2013 amounted to 4.8 per cent of GDP.

The result is that we still deeply indebted with New Zealand’s net international debt at the end of March 2013 at $140 billion.

How we are ever going to repay that debt without a thriving and significant manufacturing sector is a mystery this Government can’t or won’t explain.

Conclusion

That brings us to finish by pointing out some unpalatable facts staring you in the face.

We get the impression that manufacturers find it hard to identify the enemy.

You might think the trade unions or stroppy workers are the problem.

But is this actually so?

Your real enemy is based in the Beehive, either blind or insensitive to what is happening out there.

The National-led government has done more to cripple manufacturing in this country than any other group.

The poverty of the present Government’s economic thinking over the past five years is abundantly clear.

Rather than building our economic base the National Government has undermined it.

In contrasts many countries in Scandinavia and Asia have proven there is an alternative to blind ideological incoherence.  And their people and businesses are growing more wealthy.

Your future lies in your own hands but not if you decide to remain silent. 

It’s time to wake up, speak out, grab that future and run with it.

ENDS

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