Anderton speech: Increased Growth And Innovation

Ø Increased Growth And Innovation: What Does It Mean For The Waikato?

Ø Hon Jim Anderton MP Wel Energy Academy of Performing Arts Hamilton Thursday 20 February 2003 Mayor Braithwaite, Councillor Wilson, Dianne Yates MP, guest speakers Aksel Jepson and Ben McGee, ladies and gentlemen

The Government's Growth and Innovation Framework was launched on 12 February 2002. It established a growth goal of returning New Zealand’s per capita income to the top half of the OECD rankings and maintaining that standing. That goal is to be obtained through sustainable development - development that meets the needs of the present without comprising the ability of future generations to meet their own needs.

It means looking after people; taking the long term view; taking account of the social, economic, environmental and cultural effects of our decisions; and encouraging partnerships and participation.

The government’s key concern is to ensure that the benefits of growth accrue to all New Zealanders, all social groups, all ages and all regions.

It’s an ambitious goal - but not an impossible one

However central government cannot achieve the goal on its own. We cannot have a strong national economy unless we also have strong regional economies

My aim tonight is to enlist your region’s support for the development challenges facing New Zealand

Ø Slide change

Is the goal achievable?

Ø Our historical growth performance has been quite poor by OECD standards - our per capita income ranking in the OECD has dropped from 9th in 1970 to 20th (out of 30 countries) in 2001.

Our performance positions us between Spain and Portugal

Ranked on a comparable index against all countries (not just the OECD) New Zealand stands at 45th position, below Cyprus and above Slovenia

In 1970, New Zealand had roughly the same per capita income as Australia. This graph shows that since then we have fallen significantly behind

If we had achieved just 1% additional annual per capita growth over that 30 year period (corresponding to 3.1% real GDP growth), we would have been now on a par with Australia (which ranks 12th in the OECD)

Stronger economic growth would have increased the incomes of all New Zealanders and allowed us to provide the world-class government services that New Zealanders want.

This is why the government has now set a goal for growth.

Ø Slide Change

Economic growth is not an end in itself.

Ø Economic growth itself is certainly not the end goal. We want to achieve a better quality of life for New Zealanders, now and in the future.

This means returning to first-world status across a wide-range of sectors such as health, employment, education and safer communities - all of which have a significant influence on an individual’s quality of life.

Strong economic growth contributes directly to material well-being but also brings indirect benefits to New Zealanders. Prosperity among New Zealand’s citizens not only enables the government to provide world-class services, it also leads to improved local government services and more positive environmental outcomes.

Ø Slide Change

So where would New Zealand be today if we had achieved just 1% additional annual growth over the last 30 years?

Employment - Economic growth helps maintain high employment, and the importance of having a job to an individual’s wellbeing should not be underestimated. It’s hard to say exactly what effect 1% additional growth in each of those 30 years would have done for our employment statistics.

However, as a proxy, in the years since 1999 our economic growth has been above average and in that time we created 123,000 new jobs and unemployment went from 6.3% to 4.9%. In the Waikato during the same period 15,600 extra people got jobs and unemployment went from 7.8% to 5.4% - at that’s with only 3 years of above average growth!

Incomes - Wellbeing is also about relative incomes. 1% higher growth than actually achieved since 1970 would mean that the average worker would now receive an additional ($175) per week.

Health - An additional 1% growth would have allowed us to spend $3.7 billion per year more on health than we currently do.

Education - The story is similar for education. $4.2 billion more (about $3500 per student) would be available per year

Ø Roading - throughout New Zealand, people tell me how our lack of investment in infrastructure in the last decades is now impacting on growth and living standards. If our GDP had grown at the same rate as Australia we could have invested twice a much per capita on roading over the last 30 years

To make it into the top half of the OECD we must aim to regain our standing vis-à-vis Australia. A 4% annual real growth in per capita income (a doubling of our current performance) over the next ten years would get us to where Australia is today. That is how far we have fallen behind.

But we have to do better than that in order to gain and maintain a higher OECD ranking and the benefits for all New Zealanders that follow on from that

Ø Change slide

GIF So the government has taken action. We are not interested in sliding further down the OECD ladder – the business as usual option.

We’ve done more than just set goals. We have studied the underlying principles of growth. We’ve concluded that New Zealand’s next phase of development must by characterised by innovation.

The Growth and Innovation Framework is this Government’s plan to use innovation to achieve the growth we want.

In New Zealand, we haven’t got heaps of money to throw at problems, but we do have the confidence and freedom to try things out.

We must build on this strength and become a nation known internationally for our innovation, our creativity, our skills and our lifestyle. GIF is not solely about achieving a level of per capita growth, its about achieving the best we can as a nation.

The government is committed to working with all parts of the economy to make this happen. But, ultimately, achieving the growth target will require dedication and passion at the local level, as well as nationally. Change slide GIF provides a framework for New Zealand’s economic development and also a guide for the focus of economic development strategies at a regional level.

Only if we achieve alignment between national and regional approaches to economic development, will New Zealand achieve the sustainable development outcomes we all want

Here in the Waikato you are currently in a consultation process to expand your mostly Hamilton-focussed economic development strategy so that it encompasses the broader Waikato region.

Ø The good news is that your economic strategy shares many aims in common with the GIF:

Ø Both GIF and Waikato have a focus on the biotechnology sector - identified as one of New Zealand’s key growth sectors over the coming decade

The development of an Innovation Park as the region’s Major Regional Initiative displays clear links with GIF’s focus on innovation

Both GIF and the Waikato strategy state that economic development cannot exist in isolation from social and environmental factors, but should meet the objectives of:

Ø making the region a desired location for business investment achieving maximum employment opportunity improving the quality of life for residents

Ø Change slide

In many respects the ideas behind GIF aren’t new – and innovation is already an integral part of the way in which some firms do business in the Waikato.

Advanced Animal Technologies (AAT) is a good example. AAT have developed a product that controls the release of drugs in large animals. AAT do their own research and development but also harness the wealth of expertise in the region by contracting work out to educational and research institutions

The commercialisation of innovation associated with R is seen in companies such as PavTech, a leading provider of technology solutions to the manufacturing sector. But you have the potential to do much more. Waikato is the home of numerous research institutions including Landcare Research, AgResearch, the Dairying Research Corporation and the Ruakura Research Centre. Waikato contains up to 25% of the country’s top scientists and researchers. The trick is turning all this brain power into products - to commercialise these ideas ourselves so that the benefits accrue to the regions, and to New Zealand as a whole

And the government is committed to helping with the commercialisation ideas - especially from Crown-owned research centres like CRIs and Universities. Change slide But the path to economic growth in New Zealand (as in the Waikato) is not without its challenges.

Skill shortages are affecting many parts of New Zealand and in Waikato it is particularly evident in the trades and the metal industries. This demands both local and national attention

Gaining buy-in for sustainable regional economic development is also critical. I understand that this is proving a challenge here in the Waikato. It’s important that those who are leading regional development are able to share their enthusiasm and get all the major players in the region behind them.

You must ensure too that the districts outside of Hamilton get to experience the benefits for themselves of implementing the Waikato strategy, and that all Waikato’s population - Maori, urban, rural, Pacific - share in the benefits of economic growth.

These are issues that we can work together to manage.

Ø Change slide

The government has set out a framework and established a series of programmes to assist regional development.

However, we expect individual regions to make their own development aspirations a reality.

In the same way, individual businesses have to seek their own productivity improvements through research and development, attracting and retaining people with the right talents and skills and managing the business in a way that creates success .

And, if you’re doing your best and you need a little Government support to deliver even more growth, you can rely on me as Minister of Economic Development to do all I can to deliver that assistance to you.

Ultimately, I believe, your success and New Zealand’s success will depend on all of us working in partnership.

Change slide

Only if our regions are strong, vibrant and growing can our national economy be strong

But, New Zealand is capable of being more than just the sum of its parts. With well-aligned national and regional strategies, we can not only fulfil, but also extend, each others’ potential.

We must aim high

As I demonstrated at the start of this speech, an additional 1% in the long run can bring considerable benefits for us all. Achieving the government’s desire for 4% per annum growth (or more) will make a truly huge difference to the quality of life of all New Zealanders.

By working together we can deliver sustainable development outcomes for all New Zealanders and hand to our children a New Zealand that is: a land where diversity is valued and reflected in our national identity; a great place to live, learn, work and do business; a birthplace of world-changing people and ideas; and a place where people invest in the future.

Thank you

Anderton speech: Increased Growth And Innovation

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