22 May 2015

Building better connections between Asia and the Pacific

(speech delivered to 2015 Nikkei Forum, Tokyo, Japan, 21 May 2015)

Minasan, Konnichiwa.

Tēnā koutou, Tēnā koutou, Tēnā koutou katoa.

I am delighted to have the opportunity to speak at this International Conference on the Future of Asia.

New Zealand considers itself very much an active country of this region.

New Zealand governments took a conscious decision, starting in the 1960s, to diversify our relationships away from traditional partners in Europe.

In recent decades, we have drawn ever closer to Asia, economically, politically and culturally.

Today I would like to talk about New Zealand’s place in the region and our approach to growing future engagement.

New Zealand economy

New Zealand is a small economy in global terms, but our economic performance in recent years has been strong.

New Zealand experienced only a relatively shallow recession during the global financial crisis and has since returned to robust growth.

We recorded almost 3 per cent annual growth over the past four years, and we remain on track for solid growth going forward.

The government is seeking to ensure this growth is converted in sustained economic improvements over the long term.

New Zealand already ranks highly in international surveys for being a great place to invest and do business.

We rank second in the World Bank’s Ease of Doing Business Index, while Transparency International’s surveys consistently indicate we are one of the cleanest countries in the world in terms of corruption.

We also score highly (third) on the Legatum Index of overall prosperity, and seventh on the UN’s Human Development Index.

New Zealanders can feel proud of these achievements, but we want to do even better to overcome challenges we face going forward.

In particular we aim to build a more productive and competitive economy, supporting more jobs and higher incomes, through targeted initiatives in areas like innovation, infrastructure and exports.

As an increasingly knowledge-driven economy, we want to lift business-led research and development, with a goal of raising this to 1 per cent of GDP by 2018.

We also aim to extend ultra-fast broadband to cover 80 per cent of New Zealanders.

As the government budget announced today by our Finance Minister shows, we also want to maintain responsible management of public spending, which we believe is essential for sustaining economic growth.

The government is focused on returning to surplus by next year, and its long-term fiscal objective remains to reduce net core government debt to 20 per cent of GDP by 2020. We are on-track to meet these targets.

We’re also focused on delivering better public services for all New Zealanders, and in particular, improving results for the most vulnerable in society.

We have set challenging targets around improving health and education, reducing crime and lowering welfare dependence. And we don’t believe that we have to choose between saving money and addressing social issues – we believe that we can do both.

The key to this is being smarter about how we spend money. For example, we’re intervening earlier in people’s lives to provide appropriate support, so we can help people go on to lead independent lives and contribute to society.

In other words, we’re willing to invest a little more upfront, to achieve better long-term social outcomes.

We’re investing in a number of ways to encourage businesses to be more innovative. For example, we’re increasing research and development growth grant funding to $122 million annually, and increasing our investment in science to more than $1.5 billion in the coming year.

We’ve also set up a high-tech innovation hub, to help businesses get ideas out of the lab and into the market, as well as national science challenges to help direct scientific investment in the biggest issues confronting New Zealand.

Last year, we were among the fastest-growing developed economies in the world.

This growth is giving businesses the confidence to invest, and we expect to see sustained, real wage growth and a continued fall in unemployment.

In short, New Zealand is in great shape, and we’re looking to the future with confidence and optimism.

Economic links with Japan and Asia

The future for New Zealand is about continuing to lift economic performance, through our strong connections with Asia.

Growing trade and investment links to Asia are being underpinned by a widening network of free trade agreements (FTAs), including with China, the Association of Southeast Asian Nations (ASEAN) and most recently Korea.

And we have been the first country to achieve trade deals with all three of China, Taiwan and Hong Kong.

Trade with our FTA partners has been growing faster than with other countries where we have no agreement, indicating the important role these agreements can play in promoting prosperity.

We also welcome foreign investment, which has an important role to play in linking us into regional value chains.

Investment from Japan has been particularly strong in recent years, driven by acquisitions in the wood products and food and beverage sectors.

New Zealand has been a leader in efforts to develop better rules for trade and investment in the Asia-Pacific, in particular through the Trans-Pacific Partnership (TPP) negotiation.

Japan’s 2013 decision to join the negotiation was a giant step toward the realisation of a more economically integrated Asia-Pacific region.

We now seem to be within sight of a TPP result, though some difficult issues remain.

Political leadership will be needed to get a deal over the line, but the conclusion of a TPP agreement would be an immensely positive signal for our economies and a stimulus for growth.

The New Zealand government is committed to working with TPP partners to get to a high-quality deal.

For all states, the capacity to respond to 21st Century challenges has to be founded on strong economies, and to succeed in today’s marketplace requires embracing open economic policies.

So we have watched with close interest the efforts of the Abe government to put Japan back on a path to sustained growth.

Japan is the world’s third largest economy, which means this country is of critical importance to all of us.

As an example of the opportunities this opens up for Japan and its partners, from New Zealand we have watched with particular interest the recent reform agenda for Japan’s farm sector, and what it could mean for revitalising Japan’s food business.

As the former Minister for Food Safety, I recognise that economic growth in other parts of the Asian region has generated immense opportunities for those who can supply the needs of Asian consumers.

In the food trade, there are premiums for producers such as New Zealand and Japan, which can guarantee safety and purity, have a strong country brand, cater to specific tastes and produce to advanced technical requirements.

New Zealand and Japan have held discussions on leveraging our complementary strengths and working together to take advantage of emerging opportunities in third country food markets.

There is a lot we can do together in this area to take advantage of new opportunities opening up in the region.

Social and cultural links

New Zealand’s links with Asia are not just an economic phenomenon.

A rapidly growing range of education, cultural and social connections is drawing us closer together.

In my home city of Auckland, the largest city in New Zealand, over 20 percent of the population is of Asian origin.

By 2021 that is forecast to increase to 34 per cent.

That includes recent migrants, as well as Asian families who have been in New Zealand for generations.

When other ethnic groups are taken into account, Auckland is now one of the most diverse cities in the world – a truly global city.

New Zealand’s education system has benefited from the presence of a growing number of overseas students, particularly from Asia.

New Zealand attracts over 100,000 international students annually, with the top four source countries being in Asia – namely China, India, Japan and South Korea.

The reason for our attractiveness is that the New Zealand education system encourages both learning and personal growth, in an environment where safety, quality of education and student welfare is paramount.

New Zealand was the first in the world to develop a Code of Practice for international students, which sets standards for their support and care.

We are keen to extend those international education links where we can.

Sister schools linked by digital means or by exchange activities can bring our children into contact at an early age.

There is an increasing network of university links, enabling study to be spread across more than one country.

We are also keen to promote increased international recognition of qualifications to improve movement of students and professionals.

At a time when our society is having more contact than ever with Asia, we are also seeking ways to make New Zealand more Asia-capable.

That means putting effort into ensuring we value Asian languages.

New Zealand already has a strong record in teaching Japanese, and there is increasing interest in learning other Asian languages too.

The government has set up a $10 million fund to support teaching of Asian languages in schools.

As Minister of Youth Development, I should also mention the contribution that youth exchanges can make to international connections.

In February I welcomed to New Zealand students who were part of the Japanese government’s 2015 Ship for World Youth.

This programme, which has run since 1967, has many distinguished alumni including a former New Zealand prime minister.

It is one of many successful exchange programmes offered by Japan, which have benefitted young people of many countries.

New Zealand has made its own contributions to youth exchange through our extensive programme of Working Holiday Schemes, now covering over 40 countries worldwide, which provide a unique way of experiencing other countries and cultures.

We are coming together with the Asia/Pacific in other respects too – for example, in another of my portfolio areas – civil defence.

During my visit here, I will participate in an earthquake drill that will connect, online, a school in Tokyo and Wellington.

Japan has led the world in areas of earthquake preparedness, particularly with young people and we are keen to learn from you.

New Zealanders will never forget the effort made by overseas search and rescue teams which came to our aid after the Canterbury earthquake in 2011, and in particular we remember with gratitude the efforts of teams from Japan.

We make our own contribution to international disaster risk-reduction.

Just recently, New Zealand provided $2 million in support for Nepal following its recent earthquakes.

We also make a significant contribution to disaster risk reduction in the Pacific region.

For example, we recently provided emergency relief and recovery assistance to Vanuatu in response to the recent cyclone in the Pacific.

The Pacific is a region that is vulnerable to natural disasters, as we have seen with the effects of Cyclone Pam and Typhoon Maysak.

In addition to the tragic losses faced by those countries affected, natural disasters pose a particular threat to the economic development of small Pacific nations.

New Zealand is a Pacific nation with close historical and cultural links with Pacific Island countries.

Countries need to ensure disaster risk-reduction is mainstreamed and an investment approach is taken.

Our country knows first-hand the social and economic impact of earthquakes. We share this understanding with Japan, given the destruction from the East Japan earthquake and tsunami of 2011.

The Pacific region is therefore a core focus for New Zealand’s international development assistance, with over half of our total aid going to this region.

New Zealand currently provides more than $300 million in development assistance to Pacific Island countries each year.

New Zealand’s development assistance programme supports sectors that contribute to sustainable economic development for some of the world’s smallest states, in fields like education, health, infrastructure and disaster risk management.

As part of my visit, I look forward to building on our discussions at Sendai and engaging with Japan on our shared initiatives on disaster risk reduction.

This will be a key area of focus at the Japan-Pacific PALM Summit being hosted by Prime Minister Abe this weekend, where I will represent New Zealand.

The Summit will also address issues of regional importance to the Pacific region, such as sustainable development, environment and climate change, maritime issues and fisheries, trade and investment promotion, cultural and sporting exchanges and cooperation on the international agenda.

New Zealand and Japan share a commitment to assisting Pacific Island states and I look forward to working with Japan and our Pacific neighbours to achieve a successful outcome at PALM.

Conclusion

In conclusion, let me stress how much New Zealand values our ties with Asia and the efforts we are making to deepen social and economic integration with this part of the world.

We have made great steps in this direction already, and we are in a good position to take bigger steps in the future because we have one of the stronger performing developed economies.

Greater economic integration through trade and business is crucial to our region.

Cooperation and interaction between us in areas like trade liberalisation, education and disaster risk reduction, are all powerful tools to deepen our relationship in the future.

Thank you.
ends

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