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Speech To Auckland Business Chamber: Growth Is The Answer

Hon Nicola Willis

Minister of Finance

Tēna koutou katoa. Greetings everyone.

Thank you to the Auckland Chamber of Commerce and the Honourable Simon Bridges for hosting this address today.

I acknowledge the business leaders in this room, the leaders and governors, the employers, the entrepreneurs, the investors, and the wealth creators.

The coalition Government shares your ambition for what New Zealand can be.

We see our country’s abundant natural resources, our safe borders and stable rule of law, our trade ties to the fastest growing countries in the world and our unique opportunities to create more, our smart people, our mastery of food production, our world-beating firms harnessing technology in clever ways, our capacity for abundant renewable energy, our diverse, growing population, our desirability as a destination for the world’s wealth, and our history of resilience, tenacity and drive.

But we also see the years of thwarted projects, grindingly slow and costly processes, and the just-say-no attitude that has held back too many go-getters, too many great ideas, and too many exciting possibilities.

The obstruction economy and the “Vetocracy” that rules over it have held you back and they’ve held our country back.

We share your frustration at the potential going untapped, the opportunities lost and the weakening economic fundamentals.

We know New Zealand can be so much wealthier, so much more productive, and so much smarter than it is today.

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New Zealand - once a relatively rich nation - has slipped on almost every measure that matters.

Global competitiveness, labour productivity, capital intensity, real incomes, student achievement, infrastructure sufficiency, housing affordability, all have slipped relative to the countries we like to compare ourselves with.

While the past six years have been especially bad, in reality New Zealand’s low-growth predicament is the product of several decades of slide.

Today I want to share our Government’s aspiration for stopping the slide and getting New Zealand’s momentum back.

We want our country to be a better place to do business, to invest, to innovate, to take risks, to build things, to make things, to hire people, to grow and to raise our children.

And we want you, New Zealand’s businesses, on board the mission.

The Starting Point

We’re realistic about the starting point.

In recent years, Kiwis have endured a prolonged cost of living crisis, interest rates have risen sharply, the Government books have dived into the red, debt has soared and growth has slowed. Times are tough.

Kiwis elected our Government knowing we’d responsibly steer you through this rough economic patch.

That we’d deliver cost of living relief by getting inflation under control and lowering taxes.

That we’d repair the Government’s finances, driving greater value from spending so we can deliver better public services and build infrastructure faster, while paying down debt.

That we’d strengthen the fundamentals of our economy with sensible, practical policy reforms to make this a better place to invest and grow.

In our first 100 days of office we acted swiftly on first steps to deliver this cost of living relief, fiscal repair and economic reform. We’re keeping up the pace.

The Outlook

In two weeks, we will publish the Government’s Budget Policy Statement.

That statement will update you on the Treasury’s growth forecasts for the economy.

The numbers haven’t been finalised, but I know enough to say they won’t make happy reading.

Treasury last published growth forecasts in December, and they weren’t flash.

Since then, due to factors outside the Government’s control, Treasury has become even more pessimistic about the growth outlook.

GDP revisions released by Stats NZ just before Christmas indicated that the economy is smaller and slowed more rapidly in 2023 than had previously been thought. Data released since has continued to be weaker than Treasury had forecast.

Taken together, these developments tell us New Zealand’s productivity growth has slowed. This, in turn, has caused the Treasury’s forecasters to reassess future productivity and economic growth.

Treasury is now warning me that growth over the next few years is likely to be significantly slower than it had previously thought.

How will our Government respond?

I’m conscious of the speculation about what this worsening picture might mean for the Government’s upcoming Budget.

Let me respond to that.

As I see it, we have a few options.

One approach would see us break major commitments to New Zealanders, drastically cut-back on Government investment, give up on overdue tax reduction, downsize our ambitions, and hunker down to weather the storm, hoping it will pass in time.

We’re not going to do that.

An over-reaction of that sort would be bad for the Kiwi families depending on us, bad for your businesses and, ultimately, bad for the New Zealand economy.

Another approach would see us simply carry on as usual, meekly accepting the lower-growth fate predicted for New Zealand, doing things the way we’ve always done them and passively watching while Kiwi’s real incomes fall, the books weaken further and our national debt soars.

That’s not the answer either.

Our Government’s answer is threefold.

One, we will stick to our commitments to lower personal incomes tax, to drive more resources into frontline services and to invest in infrastructure. This is essential to support New Zealanders’ confidence: not just their confidence in our Government but their confidence in their own prospects.

Two, we will work even harder to drive more value from Government spending, to stop waste and to make decisions now that will make New Zealand more fiscally sustainable in the medium term.

Three, and, possibly most importantly, we are going to drive much harder for real economic growth.

Growth is the Answer

The way I see it, New Zealand’s economy is giving us all a wake-up call.

Our Government’s promised programme of lower inflation, cost of living relief and fiscal repair is essential, and we will stick to it, but it’s not going to be enough.

With low-growth forecasts bearing down on New Zealand, now, more than ever, we must double-down on the drive for real economic growth.

We must pull out every stop to beat the gloomy forecasts and get this country growing faster, more productively and more sustainably.

We must work smarter to activate our entrepreneurial spirit - particularly with younger New Zealanders who have a growing appetite for building small and medium-sized enterprises.

Bending New Zealand’s real growth trajectory upward is the most powerful thing our Government can do to drive greater incomes, revenue, choices and opportunities for our country next year, and every year after that.

I’m not talking about sugar-rush economics, with inflationary growth fuelled by money printing and surging government-spending.

Nor am I talking about short-sighted growth - growth that looks okay in the government books today but that stores up problems for tomorrow, with the infrastructure deficit widening, social challenges ignored, and the pressing need for emissions reduction kicked down the road.

Instead, I’m talking about real, productive, sustainable growth.

Growth born from our country producing more products and services, of greater value, and of seeking out new buyers around the world who will buy those products and services for higher prices.

Growth born of newer industries, like space and biomedical engineering, and also of traditional sectors where we’re already world-beating - like farming, fishing and tourism, but yes, done better, done smarter than before.

Growth that taps deeper into the potential of every New Zealander, equipping them with a stronger foundation of skills at school and more relevant training when they leave, and growth that won’t tolerate so many people becoming trapped in cycles of welfare dependence.

Growth that is ambitious, worldly and generous enough to welcome talent and capital from around the globe, and that does it with market and policy settings that we improve so they are better at delivering the houses, schools and hospitals needed to support a growing population.

Growth born of a country producing more while also being more efficient, competitive and sustainable than before; the kind of growth that happens when you spend less time bogged down by regulation, when new developments once destined for years of litigation instead get fast-tracked in the national interest, when people earn more because they can contribute more, when decent transport connections make it quicker to get around and where decarbonisation is made easier with abundant renewable energy.

Growth that makes the most of our special Kiwi gifts: that celebrates the treasure of our conservation estate, that unlocks the abundance of our oceans, that honours the many taonga of our physical environment and that allows iwi to make the most of their natural, financial and cultural capital.

Growth that fires up the Māori economy and builds on successful, collectively-owned enterprises like Tainui Group Holdings in Waikato, PKW Incorporation in

Taranaki and Whangarā Partnership on the East Coast.

That’s what real growth looks like.

Dismantling the Obstruction Economy

My sense is that New Zealanders are up for this bolder growth mission.

They are eager for the Government to break down the obstruction economy that’s drained the spirit of some of even our most experienced business leaders and our most plucky entrepreneurs.

So many Kiwis I meet are completely over the go-slow spaghetti of red tape that seems to get in the way of every good idea they’ve ever had. They are sick of go-nowhere projects, irrational rules and wasted time and resources.

What am I talking about?

  • It’s the consenting nightmare you face when you go to build a granny flat on your back lawn
  • it’s the big city-changing infrastructure projects endlessly talked about but that never get off the ground
  • it’s the farmer up into the night responding to the latest slope regulations
  • it’s the big investor who wants to build a business here but gets scared off by the regulatory marathon investors are asked to run first
  • it’s the port that can’t expand because it can’t get consent and it’s the port that can’t expand because it can’t raise capital
  • it’s the mussel processing factory that struggles to find workers
  • it’s the iwi who has an awesome tourism proposition but can’t seem to get it past the Department of Conservation; and
  • it’s the conga-line of consultants, lawyers and box-tickers who add cost, complexity and time to even the most seemingly simple project.

Driving the Make It Happen Agenda

Our Government is determined to fix all that.

The three parties of our coalition are resolutely, pro-growth, pro-development and anti-red-tape. Our coalition agreements set out dozens of specific policy commitments designed to drive growth.

Our approach is not focused on writing endless glossy documents, transformation agendas, vision statements and the like.

Nor are we a Government that thinks the way to help business is to dole out increasing amounts of corporate welfare and well-meaning subsidies. New Zealand can’t afford that approach.

Instead, our Government is focused on the big enablers and the big barriers that we can shift to make New Zealand a better place to live and do business.

We have a long list of commitments. I think of them in terms of five key themes with each theme containing big-rock policies to drive change. Let me run through them.

  1. Building Infrastructure for growth and resilience

We will start fixing our longstanding infrastructure problems by:

  • delivering a one-stop shop fast track permitting and consenting regime and ultimately replacing the Resource Management Act
  • electrifying New Zealand and setting out to double New Zealand’s renewable energy capacity
  • building roads of national significance to unlock congestion and enable housing growth with the help of private funding and financing
  • establishing a National Infrastructure Agency that develops a 30-year infrastructure plan and that supports our ambition to enable more housing much faster
  • forging regional and city deals; and
  • establishing a Regional Infrastructure Fund.
  1. Improving educational achievement and growing skills

In order to grow Kiwi’s skills, attract talent and drive productivity we will:

  • refocus our schools on improving student achievement across the core competencies of reading, writing and maths
  • refine our immigration settings to attract the talent we need when we need it; and
  • redesign vocational training to make it more responsive, efficient and relevant.
  1. Strengthening trade and investment

So we can boost the value of exports, grow international markets and attract investment for our firms we will:

  • drive new Free Trade Agreements with India, the United Arab Emirate and others
  • support capital investment with a refined overseas investment framework
  • increase the scale and pace of the development of mineral resources; and
  • help drive greater value of our agricultural exports.
  1. Promoting innovation, science and technology

To boost uptake of innovation we will:

  • shake up the state-funded science system to focus it better on work that will drive commercial value
  • deliver enabling biotech regulation and establish a pro-science biotech regulator; and
  • develop tools to reduce agricultural greenhouse gas emissions.
  1. Better regulation

To remove regulatory barriers we will:

  • charge David Seymour’s new Ministry of Regulation with seeking and destroying problematic regulation with a programme of specific Regulatory Sector Reviews
  • streamline the building consent system
  • pursue strong competition for the grocery and banking sectors
  • improve labour market regulation
  • reduce on-farm regulation; and
  • refine Māori land legislation so it can better enable Māori land development.

Taken together, these five themes and the reforms that sit under them represent a significant economic change agenda.

The Prime Minister is determined to see our Cabinet drive that agenda at pace.

We will be actively monitoring our progress on our economic growth agenda to ensure we are making change with the speed New Zealand needs.

We know you’re not interested in talk; you’re interested in delivery. So are we.

A challenge to business

As you have seen from our first 100 days, this is a Government committed to delivering what we said we would, and what New Zealand asked us to.

And, as we move now beyond the first 100 days to the next 100 days, the next 500 days and into the future we are committed to driving and delivering even more progress. But we can’t do it alone.

This is where you come in.

Our Government needs business to be walking right alongside us on our growth mission.

We want you at the table, leaning in, helping us dismantle the obstruction economy, taking risks, investing, hiring, innovating and making things happen.

Although our Government already has a big action agenda, we don't think we have all the answers.

We know you have ideas about what would make a difference for your industry. So we want to hear from you.

We want to hear your asks of us – how can we better work with you to drive growth?

Our Ministers are listening and your views matter to us. But here’s the catch. We also want to hear what you have to give.

It’s time now for business to step up to the table alongside Government and play your part in helping New Zealand grow faster.

I’ve spoken with many in this room about the problems you see in our country. Many of you have given me tips on where our Government should focus and what we should fix. Keep doing that.

But I’d also ask you to do this: tell me what contribution you can make. Before you describe the problem to us, think also how you’re going to help fix it.

Here’s a couple of examples. Financial literacy education. This is something many businesses have shared their concern with me about.

I share your view that we need to do better here. If you are a financial institution my question is; what role can your business play?

Or if you’re interested in declining education performance more generally, how could your business or industry lend its expertise to help get better results out of our schools and training institutions?

Here’s another example, the leadership of Government enterprises and entities.

Before you complain about their woeful underperformance, consider offering yourself up for a governance role where you can help make them better.

We need top quality people on public sector boards. Taking on a Government directorship is a public service; it’s also a contribution to a better performing economy.

It goes without saying that many in this room are already stepping up to the plate. Supporting good work in your community, offering your talent and resources to good causes.

My point is that if you’ve ever thought you could do more, then this is the time to do it. Your country needs you and our Government is eager to work with you.

Before I finish my remarks today let me take us back to where this speech started.

With the promise of what New Zealand can be.

This is an incredible country, but we’re under-performing and we have been for some time.

The obstruction economy we’ve built up in recent decades has failed this country.

Our Government is determined to drive a new growth story for our country.

Achieving real growth will require an aspirational mindset, big policy reforms from Government – delivered at pace - and the buy-in of not just the people in this room but also the women and men who get up each day and decide whether to accept the status quo or drive for better.

My message to you today is that we’re driving for better and we want you alongside us on the mission.

Thank you.

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