Progressive and inclusive growth - sharing the benefits

  • Rt Hon Jacinda Ardern
Prime Minister

Address to the Friedrich Ebert Foundation

Prime Minister Jacinda Ardern

17 April 2018, Berlin

Kia ora and thank you for the opportunity to join you here today. I am especially grateful to be hosted by FES.

Some of you may well know that, some years ago, I was the President of the International Union of Socialist Youth.  It was a role that gave me an insight into many things – my poor command of other languages was one. In fact if you asked any of my multi lingual board members at the time, they would have told you that based on my accent, they weren’t entirely convinced I could speak English.

 But I also developed a huge appreciation for the many globally focused think tanks within Europe – and I acknowledge FES for the role you play in that regard.

 Can I also acknowledge your Chancellor Angela Merkel.  In a changing international environment it is imperative that we strengthen ties and relationships with countries who share similar values. I know I am one of many who is grateful for your nation’s much needed global leadership at a time when international systems have come under significant strain.

 Not only do we share values though, we share similarities in our political system. Our election was held in September last year, and in the aftermath we faced considerable pressure to speed up our coalition negotiations. In fact there was a reasonable amount of frustration over the time it took for us to negotiation, produce and sign our coalition, and confidence and supply agreements – which was a grand total of 15 days. 

 Even if our talks were comparatively short, I have an appreciation for the complexity of such  negotiations, whether in your country or mine, not just because of the public pressure that surrounds them, but for the internal party political matters that must also be factored in.  It’s not easy, because compromise is not easy. Nor is maintaining distinct party identities while also building consensus on issues as a government. 

 I am in no position to share any particular insights, especially in a country that has operated under this system of governance for longer than ours. But I can at least say that in New Zealand I am focused on demonstrating that coalition governments can champion both consensus, and diverse views, for the national good. Wish me luck. 

 But for today, my mind is focused squarely on the issues that are dominating the international agenda and have done for some time. Whatever the news headline, the underlying theme in global politics seems to be the same - the rules have changed. Economically, and politically.

 For those of us who identify ourselves as part of the progressive movement, there is no question that this unsettled environment has led to challenging questions from the public and voters, and challenging political outcomes in debates, elections and referenda.

 This is not new.

 A decade ago, as the President of international Union of Socialist Youth, I visited the United Nations in New York for a gathering of the Socialist International.

 Present were leaders like George Papandreou (who at the time was leader of the opposition in Greece), and Joseph Stiglitz.

 We were there to discuss to discuss the emerging financial crisis.

 At the time we were staring down the barrel of a hugely unsettled period for countries and their citizens, and there was a rallying cry for progressive nations and their governments to respond.

 Some would argue that response never came.

 More than a decade later we continue to face the challenges of what I would characterise as a sense of global uncertainty.

 Globalisation of course isn’t new. In New Zealand we have grappled with this issue and its impact for decades.  But the sense of insecurity seems to have only strengthened over the years.  The benefits from globalisation have been distributed disproportionately to the few. There is a growing sense that ordinary people are working harder and harder just to stay in the same place.

 Add to that rapid technological change where even in a country as small as New Zealand the workforce faces the prospect that  more than 45 percent of jobs will no longer exist or will be completely replaced in just two decades. It is little wonder that this sense of insecurity has grown.

 As politicians, we have choices in how we respond to this growing but justifiable dissatisfaction.  We can offer a message of hope, or we can offer a message of fear.

 People need security.

 They need to hear from their political leaders that we anticipate that change:

 That we have a plan.

 That we understand the need for job security.

 That we understand the need for housing security.

 And that we understand the need for hope for the next generation – so that they too can have the future that their parents had, if not a better one.

 And if we do none of these things, we leave a vacuum for fear and populism.

 The challenge for progressive and inclusive movements lies in delivering that sense of security, while also staying true to the notion of open borders, fair trade, international responsibility and other principles that have guided a country like New Zealand for a number of years. 

 In New Zealand, I believe we are starting to meet that challenge.

 The Government I lead is determined to demonstrate that you can be an outward looking trading nation that also supports and delivers on the basic needs and necessities, including of security, for the people who call our place home.

 We want to prove that it’s possible for a progressive and inclusive trade agenda.

 In this, I know we are not alone.

 Today I want to share how New Zealand is trying to meet this challenge, and highlight ways in which New Zealand and Germany can work together in taking this vision forward.

 As a small, island nation, you could say that New Zealanders don’t just believe in an open, fair, rules-based international trading system – we are entirely reliant on it.

 Without clear, fair and enforceable rules to trade under, small countries like ours are thrust to the margins, as the large and powerful leverage ever greater privileges for themselves.

 New Zealand knows what it means to be exposed to the vagaries of the world marketplace - our key goods exports are agricultural products, which remain the most heavily protected from international competition of all economic sectors in all our key markets. 

 Unsurprisingly we’ve spent the past 70 years investing in the rules now established in the WTO system.

 Over the past 30 years we have sought to build on that framework through the negotiation of a network of bilateral and regional free trade agreements.

 This has enabled us to reduce barriers in our key markets, and give our exporters the legal certainty they need to grow their exports, and our national prosperity. 

 Our FTA footprint, now covering markets that account for more than half our trade, has given our exporters more choice and flexibility, which in turn has increased the resilience of our economy.

 So it is deeply concerning to New Zealand to see the rules-based global trading system under such strain.

 There are no winners in trade wars - only different degrees of losing, with the small and vulnerable inevitably losing the most.

 That is why we are committed to working with others, like Germany, who share our commitment to the rules-based trading system to ensure the gains of the past decades are not lost.

 But we don’t just want to maintain the status quo, we want to work to make the rules-based trading system fairer and more responsive to the needs and expectations of our citizens.  Ensuring that this happens will be vital for rebuilding the fragile public consensus around trade.

 Our starting point has been to design our trade policy to address public concerns about the current global economic system – particularly inequality and multinational tax avoidance.

 It also means applying a progressive and inclusive lens to trade policy objectives in general, and trade negotiating mandates in particular.

 It is for these reasons that just last week we set out New Zealand’s vision for a new, progressive and inclusive trade agenda, one focused (as the EU has done) on trade for all.

 As a government, we have already set some of our key expectations for this agenda, including our opposition to Investor State Dispute Settlement clauses. 

 But now are in the process of openly seeking the public’s view on how trade policy can contribute to addressing our other priority policy goals, such as combating climate change, upholding labour rights, protecting scarce natural resources, and implementing our sustainable development goals.

 Some will argue that trade policy is not the right area in which to attempt to advance social and economic goals, but I don’t accept that.

 To give only one example: agreeing effective trade disciplines on current subsidies to fossil fuel use and to the over-exploitation of fisheries could make a major contribution towards addressing two of the most urgent environmental priorities of our time – climate change and the decline in global fish stocks.

 Progressive and inclusive growth also means ensuring that our trade and economic settings help us meet the greatest challenge faced by our generation: that of climate change.

 New Zealand has committed to the goal of a net zero carbon economy by 2050.  This is an ambitious target, and one that will require fundamental changes to the New Zealand economy.

 But this transformation will also throw up new opportunities – especially for those businesses and nations who choose to take the lead. And we can create an eco-system that encourages that leadership.

 As part of the Coalition Government’s agreement with our support partners, the Green Party, we will establish a Green Investment Fund to stimulate new investment in low-carbon industries and help businesses seize these opportunities.

 There is much New Zealand can learn from Germany about how to help businesses adjust to, and realize the full benefits from, technological change.

 I have been particularly impressed by the framework your Plattform Industrie 4.0 initiative has provided for driving the development of an advanced, digitally-connected economy, bringing together government, business, academia, and trade union stakeholders.

 We too recognise that Research and innovation have a central role to play.

 New Zealand is committed to a significant lift in spending on research and development, to a level of two percent of GDP over the next ten years. This will involve both increases in public investment and incentives for business.

 But none of this agenda, be it R&D investment, or trade reform, is a means to an end. And none of it on its own tells us much about our success.

 When the New Zealand Government was formed five months ago, it was through a consensus that all our pursuits should be driven by an agenda for a better life for all our people, particularly the most vulnerable, a growing and inclusive economy and the protection of the environment, including action on climate change.

 Achieving that means officially redefining economic success.

 Next year we will be the first nation in the world to report our annual progress against a range of measures in a living standards framework which tracks the wellbeing of our people and our environment alongside the traditional measure of economic growth.

 A broadened definition of progress has been called for by the IMF and the OECD, in response to growing inequality in developed nations, which is not only eroding the social fabric of those countries, but is slowing their economic growth.

 For me, it’s quite simple. If economic growth is not reflected in the well-being of your people, then we are asking the wrong question.

 As Prime Minister I would find it impossible to tell a child living in a cold damp home this winter that New Zealand’s economy is going well, if her parents have just lost their jobs and they can’t afford to turn the heating on.

 Our new wellbeing measures will be the reality check to help ensure that when we are designing our trade, social and economic policy we’re designing it to benefit the many – including the little girl in the cold house – not just a few.

 And we’ve already started that policy re-design.

 Since the formation of our coalition Government in November last year, we’ve said we want to see a genuine transformation in the way we create and share New Zealand’s prosperity.

 We are already investing in our regions; in responding responsibly to the global climate challenge; and in lifting family incomes through significant increases to the minimum wage and a package of credits which will lift lower and middle income families’ incomes by on average $75 a week.

 We’ve put child well-being at the heart of what we do requiring by law the setting of bold targets to reduce the proportion of children living in poverty and hardship. These, if met, would take child poverty and deprivation rates among our children from some of the highest in the OECD, down to the lowest within ten years.

 We also want to build capability and capacity of our people by rebuilding our core public services, like health and education - the foundation for strong societies.

 Education, in particularly is key. Within the ten years, nearly half off all jobs in New Zealand, as in Germany, could be gone. Our citizens can’t afford us to treat this fact with despair. They need us to plan.

 They need us to prepare for the unknown. They’re relying on us to plan for just and fair transitions away from 20th century industries, to modern, clean ones.

 Without such a plan, towns and communities will wane along with those sunset industries, and anger and disenfranchisement will grow in their place.

 Education is crucial to preparing democracies like ours for the technological changes that are dramatically reshaping the nature of work.

 That is why one of the first changes my Government made was to make the first year of post secondary education free.

 Most people who are eligible for what we call “fees free” are first time adult learners, who are retraining or upskilling. While research tells us that those who’re educated lead happier and more fulfilled lives, it’s also true that a small nation like New Zealand simply can’t compete on the world stage if our people do not have the skills to do so.

 Our eventual goal is for everyone to be earning, learning, caring or volunteering, so that everyone has an opportunity to contribute in some way, and to reduce social isolation.

 But what does all of this add up to? In essence, our own formula to meet the challenges we face by unapologetically putting the wellbeing of people and the wellbeing of our environment at the centre of what we do. 

 Connectedness, inclusion and the principle of kindness in the way we govern is how we choose to meet the challenge of global uncertainty.

As I stated earlier, New Zealand has greatly appreciated the global leadership that Germany has provided in recent years.  

 In these times of change and challenge, countries that share values and which are prepared to show responsible leadership must stand together. 

 I look forward to the friendship and partnership which we have with Germany growing closer still as we each strive to meet the challenges we face as likeminded countries, with a shared vision for a fair society, and a stable and rules based world.

 Change is not only coming, it is here.   I truly believe we can make it work for the good of all, and face it with a sense of hope.

 Kia ora koutou katoa.