Asia Pacific Conference

  • David Carter
Associate Minister for Food, Fibre, Biosecurity and Border Control

You have chosen to meet in what is considered to be one of New Zealand's most naturally endowed pleasuregrounds - an area I have always marvelled at.

I am conscious you have a full programme to get through, and I am sure many of you will also be planning to take a closer look at some of the natural wonders that the Queenstown region has to offer.

I'd encourage you to do so.

Today, I would like to give you a broad over-view of where the New Zealand economy is at, and outline our perspective towards many of our Asian-Pacific neighbours.

The close of this millennium has seen some very challenging times for countries within the Asian-Pacific rim.

We all know that the start of 1998 and the start of 1999 have been very difficult years, particularly in the Asia-Pacific region.

This time last year, many Asian economies were in turmoil and the outlook for our country, so dependent on exports to Asia, was discouraging.

Twelve months on, the majority of economies in the Asian region have stabilised, talk of a world recession has passed, and we are beginning to see promising signs of economic recovery here in New Zealand.

Despite the doom and gloom many commentators got caught up in, in 1998, the international economy has proved to be a lot more robust than previously expected.

What the last 12 months has also shown - is that New Zealand's economy is now far more resilient than it was in the past.

GDP figures released just two weeks ago show that New Zealand's economy grew by 0.7 percent in the three months to December.

This came on top of a bounceback of 0.6 percent in September and is solid evidence that economic recovery was underway during the second half of last year.

GDP growth is obviously still far too low, in terms of the growth we experienced in the early 1990s, and it is small in comparison with the growth experienced by many of our neighbours currently.

But it is solid and it is resilient.

This recovery came in spite of the fact turbulent trading conditions continued to plague the region, and the average New Zealander felt pessimistic about our economic future.

However, we in Government knew that New Zealand was as well equipped as possible to deal with economic shock.

Over the last decade, we have developed a more open and flexible economic framework which has allowed our business people to rapidly adjust to testing circumstances.

To understand how far New Zealand has come, we really have to delve back into history; to what New Zealand looked like pre-1984.

I would not be far off the mark in describing New Zealand in the early 1980s as a fortress economy similar to North Korea.

Sheltered, heavily subsidised and with severe restrictions on what the average entrepreneur could achieve.

Only the wealthy in this country could afford new cars, as overseas funds were required to purchase these vehicles, which meant time-consuming repatriation of funds.

The flow of money out of New Zealand was carefully controlled , and we had extremely restrictive controls on what imports were allowed in.

New Zealander could not shop freely on Saturdays and Sundays, and the serving of alcohol was restricted to huge hotels and a few fortunate restaurants.

Since 1984 we have seen dramatic reform of our economy and we have removed many of the idiotic restrictions that hampered our progress in the international marketplace.

We have deregulated our finance markets.

Today interest rates are the lowest they have been in 30 years.

We also have low and stable inflation - that is the envy of many of our neighbours.

New Zealand also boasts competitive exchange rates and our exporters have made real inroads, adding value and developing new markets, with the benefit of improved bargaining powers.

In 1991 we introduced an Employment Contracts Act, which has freed up the negotiation process for employers and employees.

Prior to that, unions controlled much of our lives.

Since the introduction of this act we have experienced less industrial tension and average wages for New Zealanders have risen.

Most people agree the introduction of the Employment Contracts Act has greatly improved the workplace environment in New Zealand.

This Government has also managed to introduce a series of tax cuts over the last four years, pumping billions of dollars back into the economy.

This is money that has helped to generate new growth opportunities for small businesses, new life for regional economies and has boosted the incomes of all Kiwi families.

In the midst of these tax cuts, this Government has also budgeted prudently to slash public debt.

In 1991, net public debt peaked at 52 percent of our GDP.

At the start of this decade New Zealand was spending more money on interest on debt than Government was able to spend on Education OR Health.

Today debt has been more than halved as a percentage of GDP - it is under 25 percent, and with the forthcoming sale of one of our energy companies, Contact, we expect debt to come in around 23 percent of GDP.

Most international observers agree that New Zealand has come a long way in the last 15 years.

We are now a significantly more attractive investment destination.

Our infrastructure has improved, our workforce has upskilled and our manufacturers and exporters are succeeding in highly competitive international markets.

In total, we are light years away from the isolated, rural backwater we once were, totally reliant on "Mother England".

I'd now like to turn to our relationships with the rest of the world.

Specifically with the Asia-Pacific region.

New Zealanders paid close attention to the difficulties in Asia over the last two years.

For the first time for many of us, the financial crisis we watched unfolding in Asia on our nightly news brought home how closely our destinies are interlinked.

Forty percent of New Zealand's exports now go to Asia and six of our top ten export destinations are found in the region.

Today, three out of four New Zealanders rank Asia as the most important region to this country's economic future, according to polling commissioned by the Asia 2000 Foundation.

That is a radical shift in our perception of our place in the world.

Up until just 15 years ago, most New Zealanders would have looked to Europe, Australia and the United States for business prospects.

These countries are still important to us, but the emergence of Asia can't be underrated.

With our strengthening relationships, it then came as a massive blow to many New Zealand exporters when Asian markets faltered in 1997 and 1998.

But we are aware that things have picked up.

Long term growth rates in Asia are still tracking higher than anywhere else in the region, and possibly elsewhere.

Exports were up 5 percent in 1998, even with the decline across the region.

Therefore, we can expect as Asia continues to recover, exports will grow from a stable, and not a decimated base.

New Zealanders have developed a strong respect for Asia, but we need to engage further if we are to achieve a community of business purpose.

The EU still persists in limiting agricultural imports, and recent tensions with our New Zealand lamb being exported to the United States, show us if New Zealand is to achieve further growth, it will come from Asia.

American Express growth figures this year show that Asian consumers still intend to expand their spending in the future - and this has to be good for New Zealand.

For the most part, Asia has survived and some economies actually appear to have come through relatively unscathed.

Serious and lasting economic, political and social dislocation appears to have been avoided.

This is no small achievement when you consider the shocks Asia and the Pacific region absorbed over the last two years.

I would like to close my speech with a few points on our new immigration policy.

I think it speaks volumes about where we, New Zealand, want to go as a country.

As part of our drive to make New Zealand a more attractive investment destination and trading partner, we introduced last year an immigration package aimed at enticing more business migrants to our country.

We have a new entrepreneur category, which focuses on immigrants who can bring, or are able to establish, a business in New Zealand.

As part of this we have relaxed our English language requirements.

Now immigrants applying under our entrepreneur and investor categories can qualify by pre-purchasing English language training, which they now have up to three and a half years to complete.

We accept it can be difficult to acquire a new language overnight, while you are involved in setting up a business and shifting your family to a new country.

Our new business immigration policy aims to attract migrants who will contribute to New Zealand's economic growth, and to do this, we recognise we need to be flexible in our approach to what skills they can bring.

New Zealand is a country that has come a long way in the last two decades - structurally we bear little resemblance to New Zealand in the 1980s.

New Zealanders now recognise our future lies in trade, tourism and regular communication with the rest of the Asian-Pacific region, and we will be working hard to continue to foster our links, particularly with Asia in the next decade.

Thank you for listening to my thoughts.

I'd now like to officially declare the Summit International Associates Asia-Pacific Conference open.