The speech, ‘Doing different to get different... realising New Zealand's potential’, delivered by Treasury Deputy Chief Executive Vicky Robertson to the Trans-Tasman Business Circle in Wellington on 10
December 2013, has been published on the Treasury’s website.
The speech addresses the need to “do different to get different” in order for New Zealand to realise its potential and
benefit from the momentous economic and social transformations that are happening in the world:
“What we do know is that we can’t fully realise New Zealand’s tremendous potential solely by doing the same things in
the same way, using just the same talent pools we always have ... I don’t need to tell this audience that the world is
changing, our markets are changing, my challenge to you and for us to be riding at the front of the wave, not watching
as it goes past.”
The full text of the speech can be found at :
http://www.treasury.govt.nz/publications/media-speeches/speeches/doingdifferent/
Doing different to get different... realising New Zealand's potential
Published 10 Dec 2013
Speech delivered by Vicky Robertson, Deputy Chief Executive to the Treasury, to the Trans-Tasman Business Circle, in
Wellington on 10 December 2013.
Tēnā koutou, tēnā koutou, tēnā tātou katoa
Tēnei au e tu ake nei
e mihi atu nei
Ki a koutou, rangitira ma
Good afternoon everyone, and thank you to Minter Ellison Rudd Watts for hosting us today.
The Treasury’s vision is higher living standards for New Zealanders, and that shapes the work we do and the challenges
we put our efforts into.
Challenges like ‘How do we lift sustainable growth?’, ‘How can our companies make more inroads into world markets?’ and
‘What skills do we need to succeed in the future – as individuals, as businesses and as a nation?’ In short, we are
thinking very hard about better ways to realise the potential for a more prosperous, inclusive New Zealand.
What we do know is that we can’t fully realise New Zealand’s tremendous potential solely by doing the same things in the
same way, using just the same talent pools we always have. The Chair and CEO of Coco Cola recently put it well when
talking about the Indian market “thinking outside the bottle” – he urges global companies to accept the market as it is,
not as they wish it to be.
I don’t need to tell this audience that the world is changing, our markets are changing, my challenge to you and for us
to be riding at the front of the wave, not watching as it goes past.
We have to do different to get different – and that’s what I’d like to talk about today.
Medium-term outlook
Let me start with a bit of context and give you a quick overview of the medium-term outlook for New Zealand.
Right now New Zealand is a stand-out performer compared to most other developed countries. Terms of trade are the
highest they’ve been for 40 years. Economic growth has gathered momentum, with our GDP up 2.5 percent in the year to
June, and our solid performance is expected to continue over the next few years. Back in October the International
Monetary Fund rated New Zealand as likely to be one of the strongest-growing advanced economies in the world. And last
month the Organisation for Economic Cooperation and Development, or OECD, forecast 3.3 percent growth for New Zealand in
2014, well above the growth they’re anticipating across the Tasman. The Treasury will be publishing our own updated
growth forecasts next week.
We also perform well across a wide range of broader measures. For example, the OECD’s Better Life Index ranks New
Zealand 11th out of 36 countries, scoring us highly in areas like student skills, life expectancy, safety and civic
participation.
But there are some important measures where we have to strive to do better. For instance, our relative GDP per capita
has remained around 15 percent below the OECD average since the mid-1990s.That matters because a having a stronger
economy would mean businesses taking on more people, workers having more money in their pockets, and greater
affordability of the government services and support that Kiwis value. We also know that while New Zealand performs
really well in overall well-being, there are groups in society – specifically the young, the low qualified, sole parents
and Māori – who have a higher risk of experiencing persistent hardship.
We have made progress on these issues, and they are heading in the right direction, but for NZ we need to tackle these
long standing challenges. For two reasons – because this is the place we live and we care about opportunity for all; and
it’s critical to the future success of the country.
So – what’s happening with the wave?
It’s a different shape and size - the world is changing
There are momentous economic and social transformations happening in the world that are working in our favour. One of
the biggest potential advantages for us is that we are now much closer to the centre of global economic activity.
By 2025, Asia will account for almost half the world’s output, with China accounting for half of that. We have recently
seen China become our biggest export market, surpassing Australia.
Even putting China aside, there are growing economies with expanding middle classes in India, Indonesia, Malaysia and
the Philippines. According to one estimate, the middle classes in Asia will more than treble from 500 million people now
to 1.75 billion people in 2020 – the world has never seen socio-economic change on that scale before. The middle classes
are also growing Latin America and elsewhere – and they want the kinds of goods and services New Zealand offers.
This economic growth and increasingly outward focus of the Asia-Pacific region creates immediate and unique
opportunities for New Zealand – as long as we’re prepared to grasp them.
The people riding it are different - New Zealand is changing
According to Statistics New Zealand projections, Māori, Asian, and Pacific peoples will all increase their share of the
New Zealand population. Asian New Zealanders will be the fastest-growing group, making up 15.8 percent of the New
Zealand population by 2026 compared with 9.7 percent in 2006.
That gives us strong personal and cultural links with many of our most important trading partners.
Over the same period, the Māori population is expected to grow from 14.9 percent to 16.2 percent, and they will be much
younger than Pakeha on average. A large proportion of the Māori population is working age, and a large number of the
children in our schools are Māori. This means Māori have a crucial part to play in the future success of New Zealand.
We’ve also seen important demographic changes in the area of education and skills. For example, a recent report by the
Ministry of Women’s Affairs has noted that since 1994, more women than men have been graduating with tertiary
qualifications, and women now comprise nearly two-thirds of university graduates. As the report points out, women are
among the most qualified candidates for entry-level professional roles and now represent a large pool of candidates for
positions at the highest levels.
So, the wave and who rides it is pretty exciting!
It has opened up great opportunities for economic growth - and for that growth to be driven by and shared by people
right across society.
So how do we get at the front of the wave, hit it well and ride it all the way to the beach?
We will need to adapt to our new circumstances – we’ve got to do different to get different.
So what are some of the key things New Zealand needs to do differently?
International connections
Evidence is telling the Treasury that one of the most important shifts to make is to put international connections at
the heart of what we think about and do about the economy. Our distance makes connecting internationally challenging but
our size makes it imperative.
Being more linked into global flows of people, capital, trade and ideas will help us in overcoming some of the obstacles
created by our size and distance. While attracting businesses and people depends on continually improving productivity
across the whole economy, becoming more globally connected can boost our productivity in a lot of ways.
Trade – both exports and imports – is one of keys to boosting productivity and economic performance. We know firms that
export have higher productivity than those that don’t, and that firms which begin exporting, or expand their reach into
more markets, grow and invest more rapidly than those that remain domestically focused. Exporting enables our firms to
gain scale and increases incentives to invest.
With the massive growth of Asian markets, some New Zealand companies need to become better not just at understanding
different cultures, but also different ways of doing business if we are to make the most of our trade opportunities. In
that respect, there’s a lot we can learn from Māori-owned enterprises.
Te Horipo Karaitiana from the Federation of Māori Authorities has spoken in the past about how important
relationship-building is to both and Chinese cultures. The concept of whakawhanaungatanga for Māori and guanxi for
Chinese is a strong cultural connection that helps lead to strong business connections.
Earlier this year the Treasury’s chief executive Gabriel Makhlouf was in Nelson meeting Wakatu Incorporation, a company
that has also talked about the advantage that whakawhanaungatanga has given them while doing business with Asian
customers. It has helped them establish markets for its seafood and premium wines in China.
Maraeroa C is another company looking to export to East Asia. They are using forestry land to grow high-value ginseng
for use in pharmaceuticals and nutraceuticals, and are expecting their first harvest next year. Cultural ties have gone
hand-in-hand with commercial ties, with reciprocal visits between the company’s Māori shareholders and Chinese tribal
leaders.
The lesson to take from these examples is that if we want better international connections and the benefits that flow
from them, then we need to utilise our competitive advantages (culture, smallness and ability to adapt quickly, ability
to build long term relationships).
Tap all the riders on the wave – increasing gender diversity in leadership
Another significant step we can take to help New Zealand realise its potential is to increase gender diversity in the
leadership of our organisations.
Earlier this year I met with Beth Brooke, the Global Vice Chair for Public Policy at Ernst & Young, and she made a couple of really interesting points. The first was that women’s economic worth will be equivalent
to the worth of the rising middle classes in India and China within a decade. We think about investing in these
countries, so why not think about investment in women in the same way? Her second point was that diversity matters a lot
to the performance of organisations. Ensuring diverse views are tabled from not just different genders but also people
of different nationalities, ages and experiences can contribute to better decisions and better outcomes.
A paper published by the International Monetary Fund in September also emphasised the economic benefits of greater
gender equality. It cited a number of studies that show a positive correlation between gender diversity in senior
management teams and better governance and financial performance. Other evidence put forward by the IMF demonstrated
significant economic gains when women are able to develop their full labour market potential.
New Zealand is starting from a pretty good base – the World Economic Forum rates us 15th out of 136 countries in terms
of women’s economic participation and opportunity – but we have room to do better. For example, there is still a gender
pay gap in many industries, and just 14 percent of directors in the top 100 NZX companies are women. The Treasury is
keen to encourage change, which is why we are a founding member of the 25 Percent Group that aims to increase women’s
participation in senior positions, and why we’re a funding partner of a recently-launched initiative called DiverseNZ.
Treasury – no longer wave watchers
We know that the need to do things differently applies to the Treasury too.
The Treasury has to have a good grasp of these changes if we’re going to be effective policy advisers and help the
country realise its potential. For us it means getting more involved in areas that make a big difference for living
standards, getting out more to where the rubber of policy meets the road of reality, and getting a broader range of
thinking, experiences and perspectives.
In terms of being involved in different areas, a lot of people were surprised last year when the Treasury came out
strongly about the importance of education – it was not a space they expected us to be in. But our analysis suggests
that if overall student achievement was lifted to among the top in the OECD, GDP would be 3 to 15 per cent higher by
2070. We know education is a key area we need to focus on if we're to achieve a sustainable step-change in economic
growth and more equitable outcomes in society – goals which are at the heart of the Treasury’s advice.
We also know that doing more grass-roots engagement can make a difference to our advice. A good example has been our
work on welfare reforms. One of our starting points was a piece of research on income mobility, but we knew we needed a
better sense of the reality for people with persistently low incomes. That’s part of the day-to-day work of a lot of
social service providers both inside and outside the government sector, but not so much for your typical Treasury
analyst, it would be fair to say. So we went out and talked to sole parents and gang members on a benefit, and that gave
us valuable insights that altered our views on how case management for beneficiaries needed to change.
Earlier this year our justice policy team invited two former prisoners to the Treasury to talk about their experience of
prison rehabilitation programmes, and the challenges of reintegrating into society. That’s now feeding into our policy
in this area. It’s another example of how we’re looking for different perspectives on issues to try and understand them
better, so we can provide better policy advice.
We were very grateful that these people were willing to share their views with us, and the feeling was mutual. They
couldn’t believe that we had given them the opportunity to talk about their experience. It was a small but meaningful
step.
The last difference I want to touch on is the Treasury’s emphasis on encouraging different voices and tapping into wider
perspectives. There is still a way to go for the Treasury to have a more diverse workforce, and we certainly want to do
better. But we are making progress, particularly in lifting the percentage of women in leadership roles. We have a
fairly even gender balance at management level, and a number of women have been appointed as Principal Advisors this
year.
I would say the greatest step we are taking to bring more diverse perspectives to our work is through seeking a greater
understanding and much closer relationship with Māori than we’ve had in the past. We’ve had a lot of contact in areas
like Treaty negotiations and natural resources, but the Treasury would be the first to admit that we’ve been slower than
some of our government colleagues. It’s something we are making a real effort to change.
Realising Māori potential could make a fundamental improvement to New Zealand’s overall living standards, especially if
we approach it in a more targeted way. Our leadership team decided that this was an important area that warranted
further focus from the Treasury and that, although we had foundational capability, we were not well-connected to groups
who are leading work in this area. We are now looking to identify and target policy areas where we want to shift
outcomes for Māori and progress these in partnership with iwi and others. We’ve also committed to putting more resources
into this, in order to support our teams and also work more closely with MBIE and Te Puni Kōkiri in particular. I’m
really excited by the Treasury being more involved in the Crown and Māori drawing from each other’s respective strengths
and expertise, and working towards a common purpose.
Conclusion
Like you, I see New Zealand as a country with immense potential and huge opportunities in front of it.
As the wave and riders change, businesses and the Treasury alike need to think about what they could do differently to
tap the potential and seize the opportunity. Do we all ride a fantastic wave to the beach, get dumped along the way, or
miss it altogether?
And to finish, the words of a great leader, not afraid to be at the front of the wave: (adapted)
If you talk to a man in a language he understands, that goes to his head.
If you talk to him in his language, that goes to his heart.
Nelson Mandela.