NZ manufacturing – why still treated as a sunset industry?
Rt Hon Winston Peters
New Zealand First Leader
Member of Parliament for Northland
9 NOVEMBER 2016
Speech by New Zealand First Leader and Northland MP Rt Hon Winston Peters
Employers and Manufacturers Association (Northern)
4.30pm, November 9, 2016
NZ manufacturing – why still being treated as a sunset industry?
Manufacturing has been in the headlines for some time.
Yesterday another factory, this time Masterton’s Sliderite shut down
Cheap Chinese imports were blamed.
The owner Dave Revell said:
“Basically most of the things we used to make, a lot of zips and bits and pieces for clothing, well of course most of that comes in already made up from China these days.
“In the early days of course everyone wanted quality, but in the end price rules.
“And like a lot of manufacturing in New Zealand, in the end you just can’t compete.”
Another headline stated yesterday:
“Manufacturers’ confidence collapses”
The story said a survey of business conditions by the NZ Manufacturers and Exporters’ Association has reported confidence in the sector falling to its lowest level in more than two and a half years.
The survey showed export sales fell 12 percent while domestic sales rose 17 percent compared to September 2015.
You don’t have to be an expert to work out what this means.
We are spending more than we earn.
This puts one in mind of that famous character Mr Micawber from the Charles Dickens novel, David Copperfield.
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.
“Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."
Mr Micawber was an eternal optimist.
He asserted a faith that said "something will turn up".
The National government is like that.
They have continued opening New Zealand up to the full onslaught of the global marketplace and live in hope that “something will turn up.”
The general way for a country to expand its economy and grow is
1. Require the people to work harder.
2. Produce more with the same effort
3. Increase immigration.
Of these three criteria you can see the plan of the National government rests in large measure on No. 3 – immigration.
In New Zealand we have seen the strange picture emerge with the number of jobs increasing, but in general unemployment remaining the same.
Statistics New Zealand revealed last week unemployment fell to 4.9 percent in the September quarter which has been the lowest since the Global Financial Crisis in December 2008.
But they revealed also the number of unemployed rose by 1000 to 128,000 over two years and the number of New Zealanders aged from 15 to 24 who are not in employment, training or education rose by 3000 to 74,000.
We have that strange mix:
More jobs – more unemployment.
Most of the jobs, comparatively, are going to recently arrived immigrants.
There has been no concerted effort to get those 74,000 young out of work Kiwis into training and work.
The future of those young New Zealanders is precarious to say the least – and what will be the ambulance at the bottom of the cliff paying all the bills for the social problems that will result?
The answer is – the New Zealand taxpayer.
Productivity flat - and Global Volatility
One major concern is our productivity – the means by which we make our way in the world and which determines our standard of living.
New Zealand’s productivity is stagnant and flat.
Any growth that is occurring in our economy is only through consumption, mass immigration, importing more workers, and working more hours per person. We work the second longest hours in the OECD.
But we are not increasing our output.
At the same time the world is up to its eyeballs in debt.
The IMF’s recently released Financial Stability Report revealed global debt has reached $150 trillion.
A staggering amount.
The global economy and the world financial markets are in unchartered waters.
Having New Zealand immigration running at unprecedented, record levels at this time is totally irresponsible and dangerous.
Immigration is the biggest factor in the Auckland property bubble which is putting the entire economy at risk.
Some commentators are speculating that it is not if, but when, the property bubble bursts in Auckland.
And should that happen our entire economy will be at risk and the consequences dire.
Bogus economic growth
The government has boasted of growth in nominal GDP at a rate of 2.8 percent for the year ended June 2016.
They claim New Zealand has the third highest growth rate in the OECD.
When they quote this figure they do not mention that New Zealand’s population is now growing at 2 percent annually.
That 2 percent has to be deducted from GDP figures before any real growth can be claimed.
Unless this adjustment is made the numbers are deceptive and bogus.
Another figure the government sidesteps is the current account deficit.
This is now running at $7.4 billion for the year ended June 2016.
Behind that figure is New Zealand’s net international investment position – what we owe the rest of the world.
That number is now a negative $163 billion.
Now, who calls this a rock star economy?
There are numerous statistics the government won’t talk about. For example, the appalling increase in homelessness - up 25 per cent in New Zealand in eight years.
It has become so embarrassing Paula Bennett came up with a four-year $300 million package this week which won’t be nearly enough.
This is the latest in a flow of rapid fire “solutions” from a Minister totally out of her depth.
We had pop-up houses, bribes for people to leave Auckland, night-time flying squads, the belittling of a marae head who was just trying to provide beds, and the re-announcement of a $43 million social housing package that both John Key and Bill English didn’t know about.
Now we have National planning to loan money to Housing New Zealand to build emergency rental housing, controlled by private landlords, and they are going to sell state houses to pay for it.
So, in summation, some are going to have to leave their state house, become homeless to then qualify for an emergency rental, which is being paid for by the sale of the house they were once in.
What a devious exercise in financial deception to get over a political embarrassment.
We have stagnant incomes.
Auckland’s roading and public infrastructure is a complete mess.
More and more Aucklanders are finding they will not be able to own their own home in the city they were born and grew up in.
And that is beginning to spread around the country.
Due to record immigration, in which we are bringing in every year a population the size of New Plymouth, most of whom go to Auckland, we have over-crowded and under-staffed schools.
- Hospital and medical services are under enormous pressure.
- Junior doctors at our DHBs are being worked off their feet and going on strike as the health sector is grossly under-funded.
- Elderly New Zealanders who have paid taxes all their lives are being left to go blind waiting for treatment.
Tourism is being touted as the great hope of our economy but much of that could disappear in the blink of an eye.
The government is pulling in $1.1 billion in GST from international tourism and at the same time is only giving councils around the country $12 million over four years to pay for infrastructure that is urgently needed to cope with the demand.
Resource Management Act
The government’s Resource Legislation Amendment Bill is in disarray.
Today’s forked tongue announcement by Nick Smith doesn’t change anything.
There has been huge opposition, and massive incompetence from the government.
The parliamentary select committee has been unable to revise the draft bill – as a result it will go before parliament not fit for purpose.
New Zealand First has pledged 12 votes for RMA reform on one condition - that is the removal of separatist and race-based proposed laws.
We are being asked to sign up to planning laws where rights are based on the colour of one’s skin. That is, race based.
We are one nation. Separatist laws have no place here.
Planning and environmental law, just like our judicial system, must be colour-blind.
Ethnic parallel development
We recently opposed the Taranaki Iwi Claims Settlement Bill, because it would hand power to unelected Iwi representatives.
It required the local authority to give them six decision-making roles without being elected.
We’ve been vocal on Whanau Ora funding, and the millions of dollars the government hands over to Iwi without any checks, scrutiny and auditing.
Where does manufacturing stand in all this?
Does the government give manufacturing its due importance?
Where is the government support for manufacturing?
Have they ensured there are relevant training programmes to provide the skilled staff you need?
Or do they go for the quick fix-solution and opt for immigration?
Three years ago a Parliamentary Inquiry into Manufacturing was told by Talbot Technologies director Steve Wilson that the Government had stopped thinking manufacturing was an asset to the nation.
At the same time Reserve Bank Governor Graeme Wheeler described New Zealand’s manufacturing sector as a sunset industry, in terminal decline due to globalisation, competition from low wage countries, and a shift to a service intensive economy.
New Zealand First’s challenge is – why is that thinking still around today?
You are under-valued and under-rated.
Primary products account for 70 per cent of our exports, while manufactured goods account for 25 per cent.
That is a very valuable 25 per cent which becomes even more important at times such as this with global dairy prices low and primary produce prices so uncertain.
NZ First policies
NZ First would give manufacturing the due importance it deserves.
And our policies reflect that importance.
· We would change the Reserve Bank Act so it reflects we are an export dependent economy.
• New Zealand First supports an accelerated depreciation regime for plant and equipment. This will improve cash flow for small businesses
• New Zealand First has a Bill that would give preference to New Zealand firms when Government agencies and local bodies buy goods and services. For example, we will not have New Zealand army, navy and air force uniforms being manufactured overseas.
• New Zealand First supports Foreign Direct Investment (FDI) when it is genuine investment that adds new capacity, new technology and new employment to the manufacturing sector.
New Zealand First does not support misnamed foreign investment in the form of buy outs of local companies and the transfer of their businesses overseas. In the form of “buyouts”
• We would reform the tax system. We are going to ensure real simplification of taxation on SMEs. Manufacturers and employers should not be fighting their way through a mountain of paperwork
• We support value adding to raw materials. For example, a lower domestic log price to enable wood processors to add value in New Zealand.
• We support a lower 20 per cent corporate tax rate for exporters to better reflect their critical contribution to the real economy.
• We would tax the international corporates operating here the same tax rate that the real wealth creators are paying here.
• We would ensure New Zealand has a strong road-rail-shipping transport network to allow the rapid transportation of goods ensuring our highways are not clogged up with heavy trucks and unsustainable roading costs.
• We would support development of Northport as the most logical and viable option as Auckland’s back-up port – thinking not five or 10 years ahead, but for the next 50 to 100 years.
We think using “Auckland Port as a car yard” is lunancy.
• We would introduce our regional royalties scheme so that some of the wealth generated from oil, gas and minerals remain in the source regions from which they come.
New Zealand First would also hold other governments to account on the volume of non-tariff barriers (NTBs) our exporters must compete against.
The World Trade Organisation (WTO) has warned the number of reported NTBs is steadily growing.
New Zealand must demand our exports can trade on a level playing field.
That includes taking on China and some of our other trading partners.
New Zealand should not be a dumping ground for China’s rubbish.
We do not want their unsafe, substandard steel, about which the government has done nothing to stop the flow of.
They don’t want to upset China.
They are doing things differently in the European Union.
Last month the EU slapped tariffs of up to 73.7% on Chinese steel after manufacturers were forced to cut jobs due to falling prices and demand for the material amid an influx of cheap imports from Asia.
New Zealand does not want trade that is heavily weighted to suit the overseas country instead of us.
There must be a balance and a fairness for both trading nations.
New Zealand sawn timber exporters say the import value-added-tax (VAT) differential between logs and sawn wood in China has a major impact on their ability to compete in China.
It is happening in other markets also.
The import tariff on sawn timber going to India stands at 26 percent, compared with logs at 5 percent.
In negotiating future bilateral and multilateral trade agreements, New Zealand trade negotiators must work aggressively for New Zealand’s best interests.
They must take into serious consideration the impact of non tariff barriers, which, if they are removed can benefit the New Zealand economy more than the removal of tariff barriers.
The Government should be a key informer to our exporters as to the nature of trade barriers and difficulties they will encounter in key markets.
New Zealand First encourages business and enterprise.
The only way we will ever pay our way is by making more, exporting more and importing less.
We cannot place our total reliance on primary sector exports and the often fickle tourism industry.
New Zealand manufacturing is not a sunset industry.
It is an industry that used to shine bright in New Zealand, has been forgotten in the neo liberal experiment of the last 32 years and allowed to whither slowly away.
That need not be so. Any study of enlightened nationalistic economics proves that – Taiwan, Singapore, Scandanavia.
Manufacturing can have a bright future.
New Zealand First offers your sector a practical, realistic and measurable way to make that happen.