28 September 2000 Speech Notes

Hon Jim ANderton
Speech to Nelson Rotary

5:30PM Thursday, 28 September 2000

Address to Nelson Rotary
Boathouse, 326 Wakefield Quay.
Nelson

Thank you for the opportunity to talk to you.

I'm here in Nelson today and for most of tomorrow as part of a programme of regional visits.

I've visited almost every part of the country this year in my role as Minister for Industry and Regional Development. Earlier this week I visited North Canterbury and next week I'm going to Tauranga.

My visits to regional areas of New Zealand illustrate the Government's commitment to a new approach. It's an era of partnership. It symbolises two important things:

 That this Government is committed to strong vibrant regions. You can't have a strong national economy unless the regions of New Zealand are strong; And

 It symbolises that this Government is prepared to roll its sleeves up and play our part. The days are over when the Government just stood on the sideline and cheered you on.

There have been countless confidence surveys in recent months to tell us that businesses and consumers themselves are worried about the state of our economy.

I want to leave to one side for the moment the question of whether the mood is justified – but I will come back to it.

First of all, I want to let some facts get in the road about where this economy has been heading.

Our incomes have been falling compared to incomes in comparable developed countries.

In 1984 the average New Zealander earned 95% as much as the average earner in an OECD country.

By 1992 that same average New Zealander earned just over 80% of the average of developed countries. Relative earnings rose briefly in the mid-nineties and then slumped back again.

A lot of commentators have supposed that New Zealand has got a lot poorer since our dollar fell against the greenback a few months ago.

The truth is, we have been getting poorer for much longer than that.

In the decade from 1987 to 1997 the economy grew at only a third of the rate of growth we achieved in each of the two previous decades - 1967-77 and 1977-87.

And that was the period when things were so bad, we had to change – remember?

The current account deficit alone should alarm anyone who examines the New Zealand economy.

We haven't paid our way in the world for twenty-seven consecutive years.

At more than 8% of GDP this year, the current account deficit is piling up a very substantial overseas debt.

The servicing costs of that debt alone will be a very heavy cost to our nation's economy for a long time into the future.

One of the reasons we have such a serious current account problem is that New Zealand has a very narrow export base.

Only 4% of our companies are exporting: That’s only 8500 businesses in the whole of New Zealand.

Just 127 companies account for 73% of our total merchandise exports.

Only thirty companies earn half of our foreign exchange.

What this adds up to is a very narrow, and shallow, export base.

New Zealand is highly dependent on a relatively small number of large exporters. We are the lowest exporter of high-tech products in the OECD.

According to a study by the Association of Crown Research Institutes, our current levels of high-technology exports are similar to those of other developed countries twenty-five years ago.

It is those sophisticated exports that hold the potential to unlock higher incomes and more jobs for New Zealanders.

We need to grow our small and medium exporters into larger companies. More small and medium companies need to become successful exporters.

The reality is that 'hands-off' just wasn't working. It wasn't producing change fast enough.

This government has introduced a developmental dimension to New Zealand's economic policy.

In monetary terms, it's true that it is not huge. But it is the beginning of a new approach. The Government's commitment to industry and regional development is providing a catalyst to help make things happen.

I have been surprised at how international corporations considering an investment in New Zealand have based their investment decisions, in part, on the Government's commitment to playing its role.

We have established the Ministry of Economic Development and launched Industry New Zealand. They will enter partnerships with local communities and the private sector.

The first recipients of Industry New Zealand Enterprise Awards will soon be announced – these are grants to innovative entrepreneurs and businesses to help them get good ideas off the ground. Expressions of Interest in the Regional Partnerships Programme close this week – and the first new regional projects will be prepared.

We have many more programmes in the pipeline – support for new industries, and support for new investment, for example.

And probably you're thinking that if all of this is so good, why do the indicators seem to be going the wrong way?

Well I'm the first to agree that confidence is certainly down. But I want to challenge some of the common assumptions about the direction of our economy.

Take the value of the dollar.

If you listened to the Opposition, you could be forgiven for thinking that the dollar is at an all-time low, and that this is an indicator that the economy is doing worse than ever.

It's true that we're at a low level against the US dollar. So is virtually every country in the world right now.

Does anyone remember the value of our dollar against the Australian dollar when our currency was floated in 1985?

Then, the kiwi dollar bought 65 cents Australian. Now it buys about 74 cents. So we're hardly at an all-time low against the Australian dollar. And the fact that our currency has appreciated against theirs is hardly a sign of economic health. No one would seriously argue that the New Zealand economy has outperformed the Australian economy over the last fifteen years.

In other words the value of the dollar is not some kind of national virility index.

The present level of the dollar will have a mixed impact.

It should mean that we export more. That is something we absolutely have to do. The current account deficit makes it crucial for us to sell more of our goods and services overseas.

There were numerous comments today that supermarket prices are going to rise.

Of course it's true that some of them will.

But we should put it in perspective.

New Zealand imported $29.912 billion in the year to August 2000. That amounted to about 29% of our GDP.

If the imported goods rose in price by (say) 5%, then that could equate to an increase at the supermarket of as little as $1.45 for every $100 spent at the check-out – and that's if it stayed in place for a full year.

But what is even more important is that goods and services produced in New Zealand will become cheaper.

At the supermarket, it means that New Zealanders will increasingly buy New Zealand made products.

I saw an item on television recently claiming that supermarket prices are going to rise – and it showed imported cheeses to illustrate the point.

I'm not sure that many New Zealand families think of French camembert as a staple of the family diet. But the reality is that the price of New Zealand made cheeses don't have to rise.

In other words – if the price of French camembert is going up, then you can still buy New Zealand-made camembert. And that will create more jobs and rising incomes for New Zealanders.

Let me quote from the New Zealand Herald this morning:

"We have much more going for us than economics can measure. Farmers and their suppliers in the cities are celebrating the low dollar and, if they are far-sighted, will be looking for new investments that might reduce their dependency on a narrow range of commodity exports. In the cities, especially Auckland, the low dollar is good news for any company that is exporting….

"We have an educated population, modern health services a well-established infrastructure and highly developed telecommunications….

"We have a stable government, an uncorrupted public service and a high degree of popular compliance with the law…."

I believe the Government can take particular credit for stability. It didn't have to be that way. The Government was a shambles before the election. Now, whatever your view of this government's policies, no one can dispute that the public is getting exactly what we promised. That the coalition is being handled responsibly and constructively. And that democracy in New Zealand is benefiting from that.

There is a lot going for New Zealand, and we should be proud of it.

I acknowledge that it is up to the government to set up our vision of where we are headed.

We are committed to governing in the interests of all New Zealanders, and to restoring a sense of balance.

We have a vision for a more prosperous and more inclusive New Zealand, where we all get a sense of 'fair go.'

And I think we should be very proud of how we have a distinctively kiwi style.

For all of the anxiety about race relations in New Zealand, we should look at how we feel when we look across the Tasman to the Olympics. We cheer on our teams and our athletes because they are New Zealanders. We are proud of them regardless of their racial background.

And we are never more proud than we watch a haka being performed there or when we hear the strains of Pokarekare Ana as the athletes entered Stadium Australia. We all know that there is no one else in the entire world who can be mistaken for us when we hear or see that.

You can travel the world and know a New Zealander instantly because of their links with our indigenous culture.

It is crucial to New Zealand to retain those elements of our national make-up. It's what makes New Zealand different. It's why we are here.

ENDS

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