Speech to the
Economic Development Associations of New Zealand Conference
Thursday 18 November 1999
Christchurch
Gerry Brownlee, MP
Thank you for the invitation to speak to you today.
Max Bradford couldn’t be here because of election commitments.
But I'm delighted to have the opportunity to talk to you about the National Party's enterprise policies and to update
you on our Bright Future Package.
You have asked me to speak on Beyond 2000 - Kick-Starting the New Zealand Economy.
This makes the economy sound like a Vespa that has stalled half way up a hill.
I prefer to think of it as a Britten Bike - innovative, uniquely New Zealand and ready to charge ahead full throttle.
Unless, of course, the Labour-Alliance Bloc get their hands on it.
That is why I have called my talk- Beyond 2000 - Putting the Foot on the Economic Accelerator.
In nine years in Government the National Party has spent a lot of time and effort getting the economic fundamentals
right.
We have focused on five key elements:
-developing an open, internationally competitive economy,
-lowering inflation and interest rates,
-reducing tax rates,
-fiscal prudence and reducing debt; and,
-flexible labour markets.
The results speak for themselves:
During the last nine years we've had over 22% economic growth. The economy has rebounded since the Asian Crisis and we
are now on track for 4% growth for the next two years.
Interest rates are now at their lowest level in 30 years, while inflation levels have been reduced from over 8% in 1990
to below 2% and kept there.
What business could not invest with confidence in such circumstances?
Taxes have been cut, and our debt to GDP ratio has halved, reducing servicing costs and leaving more room for further
tax cuts and increased government expenditure.
And, thanks to the Employment Contracts Act we now have one of the most flexible labour markets in the world. Strikes
have fallen to their lowest level since 1935 and we've created 282,000 net new jobs since June 1991 and unemployment is
6.8 % and falling.
That's some record.
That's not the record of a stalled economy - that's an economy that is motoring along nicely and is ready to take off.
What we need to do now is change gears and put our foot on the accelerator.
Of course, by "change gears", I don't mean that we should put our economy into reverse, as the Labour and Alliance Bloc
proposes.
Reversing ACC, repealing the ECA, increasing taxes, introducing new taxes, forming 157 new ministries, banning parallel
importing, freezing tariffs.
All of this would stifle the engine of growth in our economy - business.
An overburdened economy will go nowhere - it's hard to kick-start a donkey.
My party is not interested in old solutions to new problems.
What we need to do now is get world class performance right across the economy.
As a group that has strong links with business, government and the community, economic development agencies know the
benefits of working together.
Well, this is the sort of model that National wants to extend.
We want to improve the linkages between the business, research and education sectors and expand the areas of overlap and
mutual interest.
This is the thinking which led the Government to articulate the "5 Steps Ahead".
The Five Steps Ahead framework is:
Lifting New Zealanders' skills and knowledge.
Using both publicly and privately funded research to generate more valuable ideas for New Zealanders to use.
Improving New Zealanders' chances of getting the risk finance they need to turn good ideas into reality.
Ensuring regulations and laws support, not frustrate, innovation.
Promoting success and backing New Zealanders with creative ideas.
We took these steps round the country and talked to over 2000 people at 25 forums.
Many of you were involved in running the 5 Steps Ahead forums and I'd like to thank you and your staff, for your
contribution to what was a very successful process.
The result was the Bright Future package: $223 million of initiatives over four years, including $86 million of new
money and money from savings.
Education is the key to our success in the knowledge age, so we make no apology for having education as the first step
in our economic development policies.
There are too many initiatives in this area for me to go into detail on all of them, but I'd like to highlight a few key
ones.
In Bright Future we promised over $30 million of scholarships - including 500 next year which would link business and
educational institutions and allow enterprises to get the skills they need.
Those scholarships are now available from the Foundation for Research, Science and Technology, and I would urge you to
find out about how enterprises in your area could benefit from this initiative.
To reduce the cost of student loans we have also announced a reduced interest rate for students who are still studying
and quicker repayments after graduation.
We have not, and will not, however, go as far as Labour which promises interest free loans while studying as we believe
this will lead to huge increases in student debt. After all, what student in their right mind wouldn't take out an
interest free loan - even if it was just to put it into the bank for a year!
We are also helping develop tomorrow's entrepreneurs. From the first of February next year we will also have in place
programmes to help teachers deliver enterprise education in schools.
As well, we want to give businesses the management skills and information they need to thrive in today's environment.
That is what the hugely popular new BIZ programme is all about. We are not giving people a hand-out, we're giving them a
hand-up.
Labour has claimed that New Zealand needs a modern apprenticeship programme - well, I have news for them- we already
have one.
Since 1993, the number of people in industry training has trebled to 50,000 - there are more people in traditional
apprenticeships and structured training has been extended to 32 new industries. That’s why National is committed to the
current industry training system.
The second of the five steps ahead is better focusing the direction of the Government’s efforts in research and
development.
We recognise that investment in science and technology is crucial to our future growth and jobs. That is why we have set
aside $36 million over three years for research and development in high-value industries like biotechnology and
pharmaceuticals.
We have put aside over $18 million dollars to fund the possible expansion of Technology New Zealand.
We have also committed to a review of the taxation of research and development by March 2000, with a view to equalising
the tax treatment of research and development.
The idea is enough to give Treasury the heebie jeebies - which probably means it's a good one.
The Government is going to improve access to funding to unleash the good ideas of New Zealanders.
When we went round the 5 Steps Ahead forums we heard that there was no shortage of capital in New Zealand, the problem
was accessing it.
We're tackling this issue on two fronts:
Firstly, the Government is assisting the New Zealand Stock Exchange to set up a New Capital Market that will provide a
mechanism for small businesses to raise capital.
This will be launched by April 2000.
Secondly, we are establishing an Invest New Zealand Incubator Programme. This will help SMEs and investors to get their
business to a stage where it is ready to attract outside investment. It will also help match investors and innovators.
We don’t believe in creating any more government agencies than necessary, so we will not be giving this programme to a
great monolith called "Industry New Zealand" to manage.
Instead, this programme, like BIZ, will be tendered out and managed by the private sector. So there is a real
opportunity for the Economic Development Agencies to get involved, either by themselves, or in tandem with other groups.
We are also doing more to promote New Zealand as an investment destination. In the Budget we announced another $3.6
million which will be used to attract global partners who can help promote innovative New Zealand ideas.
National is committed to cutting compliance costs, red tape and getting government out of the way of business.
Seventy years ago, I'm told that New Zealand's statutes were accommodated in eight volumes, today they take well over
60, each averaging about 800 pages, and that doesn't count regulation!
The Ancient Greeks had a cure for this kind of over-regulation.
People proposing a new rule had to stand on a three-legged stool with a noose around their neck and announce their
proposal.
If the crowd approved it, the rule was implemented. But if it opposed it, the stool was kicked away.
No new rules were made for 180 years.
We are not proposing such drastic measures. However, we are concerned that the large volume of legislation we have is
preventing innovation.
That's why we've set up small business test panels to review current and new legislation - a trial panel on reducing
compliance costs for doctors is already operating.
We have also asked departments to reduce regulation by 12 -25%. So far the Ministry of Commerce and the Department of
Labour alone have identified 21 regulations that are no longer needed.
We recognise that tax is also a major issue for business.
National will not increase taxes at a time when our major competitors like Australia are lowering theirs - that's
madness. Labour/ Alliance Bloc madness.
We are committed to reducing tax. Not only that, we are aiming for a
"less-taxing tax system."
We have put out proposals on interest deductibility and tax simplification, including aligning payment dates, reducing
the penalties for late payment and improving access to instalment arrangements.
Business also needs better information on the myriad of laws that affect them.
Simple on-line guides to legislation are therefore being prepared for the BIZ web site and will be available by June
2000.
Last, but not least, we are committed to celebrating success.
In Bright Future we announced a number of initiatives to recognise and reward innovative New Zealanders and to keep in
touch with New Zealanders overseas.
These include Prime Ministers’ Awards, an Innovate New Zealand Council and building networks with Kiwis abroad.
However, we recognise it is the whole package that counts.
In 1934 George Bernard Shaw visited New Zealand. He was asked by a photographer to smile his brightest smile at the
thought of leaving New Zealand.
Bernard Shaw remarked "If I showed my true feelings, I would cry: it's the best country I've been in."
That's the sort of country we want New Zealand to be. The best country in the world to live and do business.
We're on the way, we've made tremendous progress, but we need to keep going forward.
With the foot firmly on the accelerator, not in reverse.
Ends