Food and Grocery Council Conference

Thank you for inviting me to open your conference.

The companies you represent form an integral part of New Zealand's economy.

The Government relies on you to provide jobs - close to 150,000 of them - as well as, well - food and groceries. In turn, you rely on us to set economic conditions that promote growth and encourage stability.

My speech today is a bit of a shopping list.

First, I'd like to run through some of the steps the National-led Government is taking to strengthen the economy and provide greater certainty for business. After that I'll turn to a subject which I know many of you will be watching closely - alcohol law reform.

To set the scene, I'll start with the macro-economic climate.

New Zealand has not been immune from feeling the impact of the global financial crisis - in fact, our economy went into recession before the rest of the world did.

It's clearly been a tough time for our businesses and for families.

The state of the economy we inherited on taking office at the end of 2008 presented us with some big challenges. Our economy was characterised by sluggish and unbalanced growth driven by excessive debt, consumption, and government spending.

Our tradeables sector had also shrunk in the five years from 2004 to 2009. By contrast, the non-tradeables sector - the spending side of the economy - had grown by 15 per cent since 2005.

Over that same period, government spending had ballooned by about 50 per cent - twice the rate of revenue and twice the overall rate of economic growth. Clearly this kind of lop-sided economic management was unsustainable.

This Government's focus has been squarely on rebalancing the economy towards savings, investment, and exports.

Our rebalancing programme is based on six economic pillars.

They are:

• A multi-billion dollar investment in infrastructure.
• Better business innovation and an ambitious trade agenda.
• Cutting red tape and regulation.
• Demanding better and smarter public services.
• Education and skills.
• The biggest reform of our tax system in 25 years to reinstall fairness and integrity.

The tax package announced in this year's Budget came at the same time as many countries were being forced to raise taxes.

But this Government recognises that if we're serious about rebalancing the economy we need to give people incentives to save and invest, instead of spend and consume.

The package is a tax switch - meaning that for every dollar we cut in taxes we need to find an extra dollar to tax.

By raising GST from 12.5 per cent to 15 per cent and closing tax loopholes, particularly around property investment, we've managed to deliver across-the-board personal tax cuts and cut the company tax rate from 30 to 28 per cent in the 2011-12 year.

That means New Zealanders earning more than $55,000 a year now pay less income tax on a dollar-for-dollar basis than someone on the same income in Australia. Our company tax rate will also be lower than Australia's.

I acknowledge that your sector has had to shoulder some of the costs associated with the GST increase. However, our decision to increase GST was signalled well in advance of Budget 2010 to give business certainty and time to plan for the change.

And, in the medium to long-term you stand to reap the rewards from an economy more geared towards the productive sector. Treasury estimates that the tax changes will add about 1 per cent to economic growth over the next few years.

And, we're starting to see the impact of our rebalancing exercise with the early signs encouraging. The latest data we have shows households moving away from their debt-fuelled spending binge towards investment and savings. In short, our economy will grow faster. But it'll also grow more sustainably.

All of this will help New Zealand gain a competitive edge, which will benefit your business.

We're also looking at more specific steps the Government can take to make our food industry more competitive.

As I said earlier, the food industry is a mainstay of our economy. It's clear that New Zealand can no longer compete as a food exporter on the basis of low-cost pricing. Our future lies in being a producer of high quality, value-added goods.

To prove my point, last week the Minister for Economic Development, Gerry Brownlee, released a Corolis Research report on New Zealand's food exports to Australia. It shows that New Zealand's exports to Australia of non-traditional high-value food products, such as baked goods and confectionary, are both large and growing rapidly.

If we could replicate that success in other markets, we'd be well on the way to achieving our economic goals.

The strength of our food industry is the result of many years of investment in science, innovation, and market development. The Government wants to nurture this innovation. That's why we have made significant investment in research and development, including:

• Investing up to $140 million a year with industry to promote innovation on and off the farm.

• Giving $45 million to the Global Research Alliance to increase food production and tackle greenhouse gas emissions.

• Investing $321 million in research and science to promote innovation.

Prime Minister John Key is personally committed to improving New Zealand's science capacity. Without saying too much, I expect this will continue to be an area you will hear more about over the next year.

Before moving on to the legislative front, I would like to briefly touch on one other area - the trans-Tasman relationship, and in particular the Single Economic Market.

SEM is something the New Zealand Government attaches a great deal of importance to. Our relationship with the new Australian Government is strong.

We're galvanised in our aim of achieving a seamless operating environment for businesses on both sides of the Tasman, and are taking a number of tangible steps to remove unnecessary barriers.

To give you some examples:

• Earlier this year, ASIC and the New Zealand Companies Office reached an agreement to provide trans-Tasman companies with a single entry point for company registration.

• We're working on establishing a single insolvency proceeding and a single set of accounting standards.

• Substantial progress can be reported on the potential mutual recognition of auditors and financial advisers.

• The formalities of the first cross-appointment between the Commerce Commission and the ACCC are currently being finalised. We will build on this cross-appointment by exploring harmonisation of competition and consumer regulations.

• We're also taking a broader look at investment and tax policy and the portability of superannuation.

Both Governments realise that the easier we can make it for companies to operate in the trans-Tasman environment, the greater the opportunities for business to make substantial productivity gains and take up new opportunities that will underpin long-term business growth.

Now to alcohol reform - which is one of this Government's top priorities. And it's certainly one of the most challenging tasks I've bitten off in my time as Minister of Justice.

It's one of those pieces of legislation that everyone has a view on. And, it's my job to try to get the balance right between addressing the considerable harm caused by alcohol while not unfairly penalising responsible drinkers. 

I'm pleased to announce that the Alcohol Reform Bill will be introduced to Parliament next week.

We've managed to negotiate with other parties to ensure that only one aspect of the bill - the purchase age - will be subject to a conscience vote. I understand this is the first time in New Zealand's legislative history that this has been achieved. It's significant because it'll ensure that the bill retains its coherence as it progresses through the legislative process.

Over the past 20 or so years, piecemeal changes to the 1989 Sale of Liquor Act have eroded away its efficacy.

What we're hearing from the public is that the pendulum has swung too far towards the relaxation of alcohol laws. In saying that, this Government isn't in the business of walking into people's homes and telling them they can't have a beer with their 17-year-old while they watch the rugby.

But the Government is not going to stand by and allow excessive and harmful alcohol consumption to become further ingrained into our culture. Risky drinking behaviour is becoming increasingly normalised, especially among our young people.

That has to change, and the Alcohol Reform Bill sets a foundation for that change.

It pulls a number of levers to reduce the availability of, and demand for, alcohol.

When considered in sum, the changes contained in the bill will fundamentally change the way New Zealanders' drinking is regulated. I think this point has been lost in the weeks since the Government announced its reform package.

In my view, industry, health groups, and the media have honed in on specific issues - such as the purchase age - and as a result have failed to grasp the impact of the package in its entirety.

So let me run through some of the package's main points.

In the area of licensing - the intention is simple. Licences will be harder to get and easier to lose. The days of buying beer and wine at the corner dairy will end when current licences expire.

And, most importantly, communities will be given more say on licences in their patch, empowering them to adopt local alcohol policies to deal with issues such as the concentration, location, and opening hours of alcohol outlets.

To target the high and disproportionate harm that alcohol causes youth, we're proposing a split purchase age of 18 for drinking at bars and clubs and 20 for buying alcohol at bottle shops and supermarkets.

We also want to encourage more parental responsibility for children's drinking, which is why we're proposing to make it an offence to supply alcohol to a minor without parental consent, or in an irresponsible manner.

As for alcohol products - we want to ban those which are particularly appealing to youth, or dangerous to health. So we're limiting RTDs to 5 per cent alcohol content and containers holding no more than 1.5 standard drinks.

In the area of advertising, we want to strengthen the existing offence around the promotion of excessive consumption of alcohol.

We're also investigating a minimum pricing regime. However, because we don't have the price and sales data we need, we're giving industry a year to help us with this. If they're not forthcoming we'll consider regulating to obtain it.

This package of proposals is targeted so it has minimum impact on responsible, legal drinkers and licencees by zeroing in on where harm is occurring, particularly around young people.

I'll conclude by returning to my earlier comments about the Government needing to give certainty to business.

The Alcohol Reform Bill will go to select committee for a full six months - and I strongly encourage you to make a submission. I'm a purist when it comes to process, so while the bill is at select committee it's not my intention to meet stakeholders.

I hope to have the bill passed into law before the end of this parliamentary term - and I can assure you it will include transitional arrangements to ensure businesses have certainty about the new licensing regime.