The regions and economic transformation

Speech to a public meeting in Masterton, Wairarapa

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Thank you for the opportunity to talk to you tonight about local regional development and what the Labour-led government is doing when it comes to our economic transformation agenda.

Our work to transform New Zealand into an economy that is innovative, export-led and high wage - has one ultimate aim. That is, we are committed to raising living standards and the quality of life for all New Zealanders.

Economic transformation is about working with business to achieve that goal, and it's about working with local communities to make sure they are part of this process.

The Labour-led government is committed to making sure rural families and businesses have the same opportunities as urban families. Investments in health, education, law and order, roads and telecommunications are central to this.

The Working for Families tax relief package helps your communities, as does the extra investments we are giving in health and education. Significant boosts to funding for industry training and apprenticeships was also a key to Budget 2006 as we work hard to continue to skill up workers - for the sake of our young people, but also for employers across the country.

There have been massive boosts in funding for roads in communities right around the country, and the Wairarapa is no exception, with some big projects going ahead as part of the $885 million spend in the Wellington region. These include the construction of the SH2 Waiohine Bridge, work on the SH2 Rimutaka Corner Easing (Muldoon's Corner), construction of passing lanes including north and southbound lanes between Featherston and Greytown and between Masterton and Carterton. The completion of design of the SH2 Rimutaka Corner Easing project is scheduled for 2006/2007, with construction remaining in the six to ten year period of Transit's State Highway Forecast.

Work has begun on a new policy to manage fresh water and protect nationally outstanding rivers, lakes and streams. The programme will be developed in partnership with local government, sector groups and the public.

The government is also developing a strategy to improve telecommunications delivery to rural communities.

In more general terms, there is a wide range of business support available - to help firms break into offshore markets, and strengthen their businesses. Many companies in the Wairarapa have accessed this business support to date - around $2 million worth in the last three years alone.

The budget significantly expanded support for exporters keen to break into offshore markets with a $64.2 million increase to the market development scheme - to enable more firms to benefit.

Budget 2006 also delivered $33.2 million for major biosecurity response preparedness and pest management and surveillance.

At this point, I also do want to touch on the floods that were experienced in the last week or so, with farmers in the lower valleys again having to deal with the effects of extreme rainfalls. You've experienced one of the biggest flood flows on record in the lower Ruamahanga and very high lake levels in Lake Wairarapa. Significant soil erosion has also occurred in the Eastern hill country catchments.

The government has made Enhanced Task Force Green assistance available to help with immediate clean up and restoration activities. The costs of providing additional pumping to get floodwater off inundated pastures, as quickly as possible, will also be eligible for reimbursement.

I am also advised that the need for additional measures will be considered once the assessment of damage has been completed in the next few weeks.

The Wairarapa is one of New Zealand's key agricultural economies. You have recognised your strengths, and developed the potential of the land through a more diversified base of industries such as viticulture, niche food and beverage and tourism. This a model that I would like to see the rest of New Zealand follow.

I'd like to also acknowledge your efforts - after a difficult period of relative decline, the Wairarapa now seems to be performing better.

I note a recent BERL report had the Wairarapa economy growing at a similar rate to the national economy, but most significantly predicted higher than average levels of productivity growth. This is really encouraging.

The Wairarapa is in an enviable position in that it enjoys both the benefits of a rural outlook, with significant natural resources, but also has strong links to the urban centre of Wellington. This means that not only can you benefit from resource-based industries, but also the urban employment and market opportunities that Wellington provides.

At a regional level, economic development means creating an environment in which business can learn, develop and grow.

It requires a strategic and collaborative approach from local institutions, identifying the industries or sectors your region has an advantage in and taking actions to exploit these.

As such, the Wairarapa has identified Food and Beverage as a key industry, and recently held a conference looking at its role as a driver of economic development.

A good example of regional economic development is the progress towards a 'Cuisine and Fine Wine' initiative in the region. The value in a project such as this is that it builds upon the existing strengths of the region in the food and beverage sector, but will also look at new ways in which the region can add additional value to the sector.

The project is a joint endeavour between members of the local food and beverage sector, UCOL, and Go Wairarapa with the backing of the government through New Zealand Trade and Enterprise. This shows the benefit of the private sector, local government and central government working together, and I look forward to hearing more about it.

Competing internationally is a challenge often faced by New Zealand regions.

Places like the Wairarapa may have the skills, resources and products sought internationally, but lack the scale necessary to compete alone. However, the Wairarapa has begun to successfully address this, through its ongoing work in the greater Wellington region and involvement in the Wellington Regional Strategy.

Similarly, the 'Classic Wine Trail' which is a showcase of New Zealand's finest wine regions from Hawkes Bay, down through the Wairarapa to Marlborough shows the benefits of collaborating with other regions.

Our economic transformation agenda is not a one off process but instead is about ensuring that the New Zealand economy can continuously adapt and transform, by remaining flexible and responsive to new opportunities.

Economic transformation is more than a nationally focused strategy. It is absolutely relevant to the Wairarapa and all other regions - particularly because we recognise the importance of leveraging off New Zealand's strong resource-based industries.

To be successful, economic transformation will need to have shared ownership of the process across government, business, farmers, workers and the community.

New Zealand has had a traditional reliance on the resource-based industries, and will continue to play an important role.

Instead economic transformation in these resource-based industries will see a movement along the value chain, the creation of high value spin-off industries and the building of backward and forward sector linkages, for the growth in the neutraceuticals industry.

New Zealand's ability to compete on the global stage as a whole is inherently determined by the ability of our firms - including our farms, to rise to the challenge.

Creating an environment in which we grow more globally competitive firms who want to locate and remain in New Zealand is an important issue for government.

We need firms that can create a competitive advantage with their ability to utilise the best human capital and managers, innovate in terms of generating new ideas, turning those ideas into products and then marketing them overseas.

You have examples right on your doorstep. A fantastic example of a business that is willing to both utilise and respect the land and apply new technology and thinking to its business is Palliser Estate, a previous winner of the NZTE Food and Beverage Export Award.

I spent a bit of time there with my predecessor as Minister of Education, Wyatt Creech, who I note, is now vying for the title of former Minister of Wine and Cheese.

Palliser Estate has an ethos that recognises the significance of the environment as a partner in its business, but also appreciates the importance of forward thinking. As one of the early producers to move to the screw-cap lid, Palliser Estate realised that technology can play a key role in the success of a business.

Similarly, Palliser is actively involved in the New Zealand's Wine Family, an alliance of wineries focused on export marketing.

We need to create the right environment in which businesses can grow, and this has both national and regional implications. For example, at the regional level it means identifying areas of competitive advantages and ensuring that local and regional strategies encourage private enterprise in these areas.

This also means that areas like the Wairarapa need to think about how to make the best use of the skills you already have and how to secure those you need, and make innovation a part of your everyday work environment.

The quality of a region's infrastructure has strong bearings on the willingness of businesses to locate in a certain area, their ability to innovate and get goods to market. This is clearly an area in which local decisions can have a substantial impact on the potential for regions to contribute to New Zealand's economic transformation.

The sustainability of both our environment and economy are fundamental to the long-term health and prosperity of New Zealand. Environmental sustainability means looking for both more productive and environmentally sound ways of production.

It is not a win-lose trade-off between the economy and the environment, but recognises the environment is integral to our economy.

Economic transformation is an opportunity to build upon what New Zealand already has and is good at, but will take it to the next level - a level that will deliver for all New Zealanders - in a strategic and innovative way.

It means central government, local government and businesses working together to achieve the economic success that will deliver benefits to us all.

ENDS

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