KEYNOTE SPEECH 1996 MAJOR AND MULTISTORES

Introduction:

Special guests, ladies and gentlemen, I am delighted to be here today as Minister of Commerce for the opening of the Major and Multistores conference 96. You are a significant and very important part of our economy. The retail and wholesale sector includes a wide variety of business whose turnover (for the retail sector alone) was about $36 billion for the year ending June 1995. The sector (including restaurants) employs about 350,000 people.

I would like to first talk about a couple of issues that I am aware you are specifically interested in, and then I would like to make some general comments on the political landscape and MMP.

Anti-dumping Duties:

I know that anti-dumping action is a matter of some concern to you, and in particular the anti-dumping actions involving footwear.

Anti-dumping duties were imposed on certain kinds of footwear in 1992. This action followed investigations carried out under the Dumping and Countervailing Duties Act, which established that the goods were dumped and causing material injury to New Zealand footwear producers.

Earlier this year a review of the anti-dumping duty on women's footwear from China was completed. The outcome of the review was the continuation of anti-dumping duties at a reassessed level.

The review of men's footwear is nearly completed. A few weeks ago copies of a draft review report were sent to interested parties for comment. I understand your organisation made a submission. I can assure you that the issues raised will be taken on board.

Current investigations are also being carried out by the Trade Remedies Group of my Ministry on plasterboard from Thailand, canned peaches and canned apricots from South Africa, and the subsidisation of canned spaghetti and baked beans from Italy.

Over the last five years there have been 43 dumping or subsidy investigations completed, of which 20 resulted in no action being taken against imports. In the other cases it was established that remedial action was justified.

You can be assured that where a careful investigation, carried out in accordance with internationally-accepted rules, establishes that some action against dumping or subsidisation is justified, there will be an appropriate response. However, any action taken will deal only with the impact of the dumping or the subsidy and will not be used as an alternative means of providing protection for industries which cannot deal with fair competition.

Tariffs on Children's Clothing:

My ministry is also working on your joint submissions to me requesting the removal of alternative specific rates of duty on imports of clothing for children up to the age of seven years which you wanted to take effect from 1 July this year. We haven't quite made it yet.

This issue has been a complex and long-standing one. It has taken some time to get all the parties to agree. My officials are currently in the process of analysing the joint submission. The main concern is that we are able to define the garments involved to allow for the effective enforcement of such concessions at the border. We have had preliminary discussions with Customs and have sought additional information from the parties themselves. This has just been received and we are now finalising our wording for the proposed Part II concession. Once we have received a final confirmation from Customs about the enforceability aspect I will then be able to consider the full proposal. I realise the timeframe has been longer that desired. However it is important to get it right.

If all goes well and we get a satisfactory final proposal, the earliest implementation date is likely to be later this year, as once a decision is made the advertising process for any concession will still need to be carried out.

I am also aware that you have an interest in a number of other specific issues such as wine, beer and pharmaceutical sales; joint food standards; cost of compliance with legislation; to name a few. However time is short and I would be happy to discuss these with you later.

Local government:

But I will make a comment on the issue of local government costs. I believe local government councils should take a leaf out of central governments book. They should give tax cuts to their ratepayers just as central government has given tax cuts to taxpayers. Some councils around the country are looking to raise rates, some higher than the rate of inflation. Like central government they need to take up the challenge of being fiscally responsible. Sure it is hard, but that doesn't mean local government should not try.

Wholesalers, retailers, manufacturers and farmers have all been working hard at maintaining their competitive advantage. They are working hard to do things even better. Local governments need to look at all aspects of their own operations to see where they themselves can make improvements. All levels and areas of spending need questioned. The costs of local government compliance needs to be closely examined as well to ensure that the user is paying only for what he/she receives.

Councils should not forget who is paying their bills. For councillors, it might be great fun spending others peoples money, but as a country we cannot afford for local government to just take the easy option of raising rates and charges every year.

Political landscape:

When looking at New Zealand's current political landscape, some would say it has everything. For political scientists and commentators it is the closest thing to heaven they could possible get. For politicians, depending on circumstances, it will vary between heaven and hell. For the general public on the street their interest in politics probably ranges from being important, to irritating, to incredible, to irrelevant. Some will be far more interested in how many tries All Black Johna Lomu scores in rugby, or how our golfers, tennis players or nettballers are going overseas. However, for people such as yourselves, it is not a game. The political landscape of a nation is important. It affects your decisions and the decisions of your customers.

Political challenges:

The upcoming election and formal introduction of MMP will provide some key political challenges. However I can assure you that this National Government will continue to work hard to maintain:

• monetary policy commitment to control inflation through the independence of the Reserve Bank Act and the 0-2% band.

• fiscal policy commitment to keep government expenditure under tight control through the Fiscal Responsibility Act and ensuring fiscal surpluses are used responsibly, especially in maintaining the repayment of public debt

• sensible labour laws that allow flexibility in the labour market through the freedoms and flexibility of the Employment Contracts Act

• a commitment to further expose the economy to international competition through a continuing tariff reduction programme

• a micro economic policy agenda, designed to ensure further efficiencies in the economy.

• the push for more effective and efficient delivery of social services.

National has delivered Success:

We will continue to work hard in these areas because these policies are sensible and deliver results for New Zealanders. New Zealanders are now enjoying much higher levels of sustainable low inflationary growth than for decades, with forecasters predicting a steady growth rate of between 2.5% - 3.5% over the next three years ( with this years growth still be above the average of OECD countries despite gloomy predictions ); our highest ever level of employment; major tax reductions, and in addition, on-going fiscal surpluses of around 3 percent of GDP. New Zealand has moved up to eighth out of 48 in the World Competitiveness Report, and our credit rating, like our rugby, has surpassed the Australians to an improved rating of AA+.

Paying off mortgage to foreigners:

This year we will pay off our public mortgage to foreigners. This is a great achievement. The other parties want to increase New Zealanders mortgage with foreigners. I find this bizarre. At the same time, they want to increase New Zealanders debt to foreigners, and reject overseas people who want to invest in jobs and growth in New Zealand. They are confused. It just doesn't make sense. They want to chase away investment in jobs and growth and instead increase our debt to foreigners. It just isn't right. It is not putting New Zealand first.

While I could go on more about our economic success, I see you have Murray Sherwin from the Reserve Bank updating you on the economy, so I will spare you.

But I would make one more point. And that is while politicians in Wellington may like to take all the credit for New Zealand's economic success in recent years, it is the hard work of those at the coal face, such as your sector and others like you, who have really made it work, and made New Zealand a better place for it. It is people like you who have rolled your sleeves up, got on with the job and made the most of the opportunities.

1996 election results:

There is much speculation on what election results the mathematics of the new system could throw up. In the past there has been a trend for the voters to vote governments out rather than vote governments in, so precise predictions about voter behaviour are difficult with the new fragmentation of voter choice.

History shows us that the last time any party won more than 50 percent of the actual votes on the day was 1952. In toadies climate with 20 registered parties, this is unlikely to happen at this years general election. So we are likely to see either a minority Government or some sort of coalition. Whatever the outcome I believe that we may see more than 120 MPs.

As well as getting used to more MPs than they bargained for, New Zealanders will also have to get used to the idea that elections themselves may not change things. The old system where we knew who was or wasn't going to run the country by 10pm on the election night are gone. In Germany for example it can take anything from 1 to 6 months to work out who is going to form a government. In that country it isn't elections that have actually changed the government. This has happened between elections at the whim of politicians not the people.

We are all going to go through a learning curve and if the wrong decisions are made at election time the ride could be very rocky.

National well placed to lead:

This National government however has gained valuable experience that will assist our nation and our people make a smooth transition to the new political environment.

This government has over the last two and a half years been operating very much in a MMP environment. Since the 1993 election, which on election night looked like delivering a hung parliament, this government has successfully managed a very volatile political landscape. To date we have lost several MPs to other parties. We have gone from being a one party majority government , to a minority government (with the support of the left wing Alliance party) to a full coalition Government with a member of another party sitting around the cabinet table.

This has meant that since 1993 we have put much work into anticipating and understanding how minority and coalition arrangements work We have established the machinery and the ground rules for making these arrangements. We have made it work.

Stability:

It is important for all New Zealanders, including those involved in commerce, that we continue to have stability in our government, stability in our policies, stability in our economy. We all want and need some sort of stability in our lives.

We cannot afford to go off track for short term electoral gain and loose the benefits that have been hard won over the last 10 years. From a political perspective, trying to deceive the electorate into believing that politicians know best and can create some sort of mystical easy life of the so called good old days where everything is fantastic and there were never any problems, is dishonest. It is wrong and it will not work. Yet that is the platform that those most critical of the present Government stand on.

It is interesting that when talking to the more mature in years we often hear stories of how tough things were in these good old days. And the people who are the loudest and most critical of government seam to be the same people who always want more of it.

Less Government:

Personally, I believe that anything that reduces the number and role of politicians and politics is good. We now have much less government involvement in the economy than we used to. There are less opportunities for politicians to muck things up.

In a recent Economist article entitled Withering away the State the authors

noted that New Zealand has reduced public spending from 46% of GDP in 1988 to 36% in 1994 and falling, while many countries are pushing over the 50% of GDP figure.

The article states As a general rule, those economies with the lowest rise in public spending since 1960 seem to be more efficient and more innovative, and notes that in the newly industrialised Asian countries, which are often envied for their growth, public spending averages only 18% of GDP.

I believe this positive trend in New Zealand of reducing governments overall involvement in the economy needs to continue. But there is still a role for government. That role is increasingly now being focussed on issues of social cohesion, which sees a focus on education, security, health and welfare. The real challenge of governments I believe as we move into the 21st century is having a balanced and consistent approach to both economic and social issues. The social goals still have to be paid for.

That means keeping up with the changes that are occurring out there in the market place, and not impeding the market from working, while also making progress with the social agenda.

This government is doing just that. This government has a longer term strategy and a clear vision of where we want to go. We want to continue to build on the solid foundation to grow our nation into an even more successful one, while taking this balanced approach. This is spelt out in the Governments Path to 2010 and subsequent documents. They make good reading.

Consumer confidence:

There have been some recent reports in the media about a relative decline in consumer and business confidence. This is hardly surprising. When you look at the policies and posturings of the opposition parties it is very understandable. We are already seeing mortgage rates being influenced by perceived political risk. The markets know that what they are proposing is wrong for the future of New Zealand.

We shouldn't forget that we are three months out from an election. This means that we have a large number of opposition politicians and supporters putting all their energy into trying to make mountains out of mole hills of every possible negative story that they can find. Under the First Past the Post system, where Governments get voted out, this has been their job. Some of them are quite good at it.

So to ask people how they feel about things a couple of months out from an election when they have been bombarded by opposition propaganda, when the polls say that some opposition parties might make it into government, and when we are implementing the biggest and most confusing constitutional change in our history, it is hardly surprising that people are feeling less than ecstatic.

More accountability:

While election campaigns provide an opportunity for the most negative and pessimistic politicians to excel, they also generally don't have to be accountable. By and large opposition parties can just about make up and say anything. I can tell you that being in government and doing things, is quite different.

However in the new MMP environment, now with more consultation comes more responsibility. This is something that I don't think the current opposition parties fully realise. They may become accountable for some of their views, something that currently they do not really have to worry about. They may have to actually argue facts, and not just rhetoric. Solutions will have to be offered, rather than just restating problems and dragging victims onto TV. Extreme views will be less tolerated and even less relevant.

Tax cuts:

Over the next three years, this National Government will put more than $3 billion into a tax and social policy programme. Your sector will be one of the beneficiaries of this increase in the living standards of working families. We are undertaking a two staged process which will mean that from 1 July 1997 a single earner household earning $35,000 with three children will have a boost in after tax income of up to almost $100 per week. This is a lot of money. To put it in perspective, to get the equivalent amount from a pay increase at the 33% tax rate, this household would have to get a pay rise of almost $7800 per year! - a salary of $42800.

In contrast the existing opposition parties are all promising to increase taxes. As well as taking more money out of peoples pockets, they are saying the people cant be trusted. They are saying the people are stupid. They cant have tax cuts. In fact we should tax them more because we, the opposition politicians, know best. While they accuse this Government of all sorts of things, the opposition parties themselves demonstrate a cynical arrogance towards the people.

The nett effect of their arrogance is higher interest rates, more tax, higher costs more unemployment and lower standards of living for New Zealanders. The very people they pretend to help, they in fact hurt. Some people can see this and it is understandably affecting their confidence. However it sometimes surprises me that many do not understand these basic economic facts.

The Future:

However, I am still very bullish about the New Zealand economy despite the political changes. I believe the way that the parliament has operated over the last three years is a positive indication that reform may still be able to continue albeit not as fast as many of us would like, or perhaps feel is necessary for New Zealand to continue to maintain its competitive advantage internationally.

But the future political landscape is uncertain. Our country hangs in the balance. We do have much to loose. New Zealand is faced by a world that continues to become more regionally and globally intertwined in both an economic and political sense. We cant afford to go off the rails.

I have confidence that National, given the chance, will continue to make proportional representation work in a New Zealand context and meet the challenges that face us as we move into the next century.

New Zealand is still a good place to live and bring up families. Since 1993 this government has adjusted well to the changing political landscape, and given the New Zealand people, its economy, and those involved in it what it now needs more than ever, political stability.

We want to continue to do so. Thank you