Speech to CEOs of BusinessNZ’s Major Companies Group
It’s a pleasure to be with you tonight. At this time of year, as we head into Christmas and summer, you could reasonably expect a bit of entertainment. Instead you have me, and the light subject matter of workforce shortages, supply chain disruption, geopolitical tension, and a high inflationary environment.
But I’m here with you tonight to share some optimism. Firstly, because we’re not alone in the experience we’re having. And also, because if Covid taught us anything, it’s that we’re stronger when we tackle problems together.
But the question of how we work together on our post Covid recovery should probably first be phrased in a slightly different way – what is New Zealand’s place in the world in this moment in time.
How do we compete, how do we make ourselves indispensable, how do we make sure our people come first, and that our interests, and our values, come first?
Elijah Wood who is returning to New Zealand to star in another film, and who I’m sure is often quoted at such events… put it this way: “There’s the approach to the process that is extremely New Zealand. For lack of a better word, a can do attitude, getting your hands dirty. It doesn’t matter what my job title is, I’ll help you do what you need to do.”
That is the New Zealand way.
But it’s not that we just want to get things done, it’s that we work hard to get things right.
New Zealand businesses are trying not just to be the best in the world, but the best for the world too.
And we can be. After visiting five countries as part of trade missions this year, I’ve been reminded that we have so much to offer that the world wants right now.
But we must tell that story.
Highlighting ourselves as a place, a product, a story, that people around the world want to subscribe to. Not getting bogged down in internal politics as other countries are succumbing to, but of loudly and proudly telling the world that New Zealand is ready and open and has the ability to provide all things a cut above the rest – a better tourism and hospitality experience, food or fibre that’s environmentally credible, better working conditions, a cleaner, greener environment, a renewable, secure energy supply, a better place to raise your kids.
How we model that, and what we say about ourselves, are the only barriers there.
That’s not to say things aren’t tough out there.
Let’s step back for one moment and look openly at the global situation. It might be a good time to pour yourself another glass.
The Covid emergency is over for now – and New Zealand remains prepared, but optimistic, that it will stay that way.
The IMF projects growth to slow to 2.7 percent next year, from 3.2 percent this year, with more than a third of the global economy to contract this year or next.
Much of the world is going through an energy price shock, is screaming out for labour, has supply chain disruption, and is facing surging commodity prices since Russia’s invasion of Ukraine.
Central banks are almost all lifting interest rates to battle the inflationary impacts of all this, and the risk of recession the world over is real.
If you want to look even further at the challenges looming on the horizon, fertility rates are falling at concerning rates in wealthier countries – but perhaps we stick to what’s right in front of us for now.
But even amongst these challenges, there is room for optimism.
Consumers in the US and Europe have just started to shift spending back to services – which can alleviate the inflationary pressure on goods and cost of living.
The cost of shipping containers is coming down – speaking to the easing of demand and delays. Yes some of this points to the impending general slowdown of the global economy but all we can do is to read the updates, brace for a certain level of forecasting, projection, speculation and uncertainty, and then come to the things that we do know for sure.
That New Zealand faces this global volatility with one of the best economies in the world.
An economy 4.8 percent bigger than before Covid, near record low unemployment, low debt and a smaller than expected deficit. All of these economic indicators are running at similar or mostly better levels than achieved during and after the GFC.
It’s a strong position.
And it has allowed us to make strong investments in infrastructure to keep up the pipeline of work, in housing, roading, the underground network of pipes than keep our cities going – and to save the ratepayers of today and tomorrow thousands. And I know that most of you in this room care too that despite three years of a health emergency, we still lifted children from poverty.
More recently, with summer approaching, August became the first month in 30 months where a holiday has been the most popular reason for travel by overseas visitors, replacing visiting friends and family. International card spending is back to nearly 90 percent of pre-Covid times. The return of Wellington’s first cruise ship in two and a half years made the front page of the Post.
We’re up to nearly half a million overseas visitors with travel approval since May, and 145,000 have arrived in the past month alone.
There have been nearly 10-thousand student visas approved,
34-thousand working holiday scheme visas approved – and a third have already arrived,
And primary industry exports are on track to reach a record $52.2 billion for the current financial year.
Here is what else we know.
That New Zealand businesses offer the world what it needs.
Attractive working conditions with a government and businesses working together to protect strong workers’ rights. Fair Pay Agreements will level the playing field so those employers who are trying hard to offer fair terms for their workers don’t get undercut and disadvantaged across their sector.
We offer workers increasing wages, to support the cost of living.
A beautiful, spacious, country that has so much incredible potential.
And a government that is working hard to leverage all of that and back our businesses to stand out and succeed.
Let me delve in there by talking a bit more specifically about trade, decarbonisation, RMA reform, and our people.
First to trade.
Since taking office we have lifted the free trade coverage of our goods to market from about half to three quarters. Once our UK and EU agreements kick in, 73 percent of our exports will be to free trading partners. That is a truckload of tariff savings and strengthened relationships.
I thank those who have joined me from our businesses to reignite face to face, business and country, connections over the past six months or so of our reconnection work. There have been many tangible outcomes from these trade missions.
For example our 12 company strong trade mission to the US drove a significant uptick in global recognition for New Zealand’s climate credentials, though the net carbon zero product launch by Silver Fern Farms.
In Singapore, I know that one of our business delegates secured a meeting with a high profile connection that they had been seeking for six years.
We had 31 Kiwi businesses on our trade mission to Australia in July, with five signing an R&D agreement to ensure our products can tap into the specifics of the market there, and vice versa.
We are after all an outward looking exporting nation, and we know for sure we must continue to get goods to market, amid a sea of protectionist economies and growing volatility. And so we will always be searching for that next trade frontier.
I know that many of you have your export strategies, different markets for different reasons, and I can assure you that as a government we will keep doing what we can to connect you where you want to be connected, to reduce tariffs and other burdens where you supply to market, and to keep the New Zealand brand front and centre on the world stage, helping you do what you need to do, all of which keeps our economy and our people in good health.
In that spirit, while work is still under way and advice to be taken – I can share with you that as a Government we will be looking closely into making free trade progress with Latin America. However, much of my focus for the next year too will be on consolidation in our key markets. Of note at the moment the CPTPP provides significant strategic depth, with two-way trade with CPTPP partners exceeding trade with China and Hong Kong.
The IMF has recently noted New Zealand’s shift towards energy independence through our climate change investments.
And I want to acknowledge the significant steps that many, if not most, if not indeed all, in this room have made to reduce emissions.
I’ve seen much of this work in person.
And we’re working hard to support those efforts where we can.
Our Government Industry Decarbonisation Investment Fund, GIDI, has proven one of the best tools for that job, with the initial $69 million investment unlocking $117 million of private investment – and once those 53 industrial decarbonisation projects are complete, will save more than 7 million tonnes of C02, the equivalent of taking 134,800 cars off the road.
We want this to continue which is why we committed another $650 million in the last budget, which is recycled funding through the newly established Climate Emergency Response Fund – the fund that backs up our first Emissions Reduction Plan to get us to net zero in 2050.
Just one example of what this fund does – McCain Foods will shortly convert their coal boiler to biomass fuel to reduce an estimated 845,000 tonnes of carbon about the project’s lifetime. Some might say that would have happened eventually anyway, but why simply wait and hope when the climate emergency is here now, and the opportunities for green production abound.
Emissions from our energy and industry sectors make up 27 percent of our total emissions – and with many businesses still using fossil fuels, and the growth of the discerning consumer, this does present a risk to our competitive edge. And so we’ll continue to support the move to a low emissions future that is achievable and affordable.
You’ll know too that our UK FTA has the most significant chapter on climate change in our trading history – another signal from the world that you can’t just make and export products you need to be able to prove you’re treading lightly in a depleted environment.
And there’s a way to ensure those environmental protections remain solid, while still being able to freely develop and get plans in place for the future of our towns and cities.
And that’s RMA reform.
We’ve all been calling for it. Our government. Our industries. The Opposition, I note both while in Government and while in Opposition. For over 30 years now.
But we’re doing it.
The resource management system it is a patchwork that isn’t working anymore. Progress takes too long and costs too much all the while not doing what it says on the tin and protecting our environmental resources. Infracom estimates developers are spending $1.3 billion a year on resource consents, or over 5 percent of project costs – putting us at the extreme end of UK and EU comparisons of between 0.1 percent and 5 percent. It’s driven New Zealand’s housing to being amongst the least affordable in the OECD.
But today I can confirm today, that new legislation will be introduced to the House by Minister David Parker in the form of the Natural and Built Environment Bill and the Spatial Planning Bill – within the coming weeks, with an aim to pass them into law next year.
Faster, cheaper, better.
Consents will be simplified.
Designations will mean some activities can happen as of right.
That will cut costs, and it will save time.
Plans will decrease from 100 to 15.
And have a higher degree of national consistency.
Using conservative estimates, the new system is expected to deliver between 3 and 5 dollars in benefits for every dollar spent, with reduced consents leading to savings of up to nearly half a billion a year.
It’s progress that has been long needed.
And it’s paramount we get those settings right.
And we need to get the settings for our workforce right too.
I know that Covid has wreaked havoc, and so have other winter ills and chills over the past few months. I know most sectors are citing immigration as the biggest workforce challenge for the near future.
But I also know that we reached what many consider to be full employment during Covid.
That apprenticeships are more than 50 percent higher than when we took office.
And that there have now been approvals for businesses to recruit internationally for over 70,000 positions since we streamlined the system to coincide with our reopening.
And many businesses are making the most of this opportunity already, with over 17,000 international migrants applying across 550 different occupations across New Zealand since the Accredited Employer Work Visa opened. But that leaves so many more ready and waiting to be filled. I know wait times have been an issue but timings have improved there too as the system warms back up, with job checks going from 13 days at the start of August to 5 days today.
We’re also seeing a steady return of key labour sources, with over 14,400 working holiday visitors arriving in country, out of the 34,000 approved since March and thousands more are expected to arrive in the coming months. We’ve seen monthly arrivals build too, from 1000 in July to over 4000 in October.
And so my message would be – those slots are ready and waiting. What are we all doing to fill them? The world wants the same people we do. We need to be the ones with the credentials that place us at the top of the list.
No government can design an immigration system to rule them all, to respond to every domestic and global shift. The uncertainty would be unbearable. What we can do, and have done with our rebalance, is create a system that can flex to change, protect those who work here, and provide New Zealanders the confidence they need too that immigration is managed responsibly, without the issues of the past such as an oversubscription on vital infrastructure and services.
The Green list allows us to fill gaps where workers simply are not available – and we’re not afraid to make changes before the 2023 review.
New Zealand residency, whether immediate or guaranteed after a couple of years is an attractive prospect, and is something we should use to our advantage.
We’ve also heard you that you need the full suite of immigration tools on offer and so we are resuming the Skilled Migrant Category and Parent Category visa to strengthen our international offering. And now, we need to make the most of what we offer.
I’ve taken much of your time tonight and I want to end on a couple of final points.
We can’t talk about our people without talking about the toll of Covid. The mental strain, and the hit to wellbeing. We’ve seen it in our young people, I’ve heard it through my letters, and we’ve seen in in our workplaces too.
I know that our online tools providing mental health support for businesses have been incredibly well used since they were launched this time last year, with 140,000 engagements.
That’s one of the reasons that Small Business Minister Stuart Nash last month extended our health and wellness support package rolled out in Auckland last year, to all small businesses across New Zealand.
With over half a million small businesses, and over a million individuals who work or own them – we have to acknowledge that our recovery not only relies on their economic performance, but their wellbeing too. And here is where we will continue to provide maximum support.
A focus on all of these important things is what will help us to remain optimistic about New Zealand’s position and the opportunities for our economy.
But you will have heard Finance Minister Grant Robertson talk about the need to remain cautious about how we secure our economy against global turmoil.
The IMF recommended that for countries where the pandemic is receding, now is the time to rebuild fiscal buffers, and that to support people through the global cost of living spike, that spending should be temporary and targeted at the most vulnerable people.
And so in many ways New Zealand is charting its own course in these choppy seas. As we have done so many times before.
Here I want to extend my thanks, I know there has been a lot of grind, sacrifice, and I also know that many of you will have taken on the mental load of a wary team, a team depleted by illness, you will have looked at the same gloomy economic global updates that I have and tried to plot a path through.
And my only message then if there’s one to end on, is that we’re stronger when we tackle these challenges together.
Perhaps stronger than we’ve realised to date.
We proved that throughout Covid. And that took the best part of 3 years.
And we can do that now as we chart our way back to make the most of the opportunities ahead of us.
In what is shaping up to be an increasingly volatile global environment it’s critical the fundamentals of the economy are strong, and they are. We are well positioned to address ongoing challenges while continuing to make investments in the critical services New Zealanders need.
And we will use that strong position to focus on investing in what matters most to New Zealanders: growing wages and cost of living support, hospitals, schools, housing, and addressing climate change. The best investment in our economy is investing in our people.
I think that is an ideal we share.
Yes there is work to be done.
There always is, but I’m always up for that. And I know you are too.
So as we consider New Zealand’s place in the world right now, I want to leave you with this final proposition.
We have on our hands a national challenge. To take New Zealand to the world, and to get ourselves out in front, amid choppy waters.
The trade missions we’ve been on together have shown that there is no real bandwidth for anything but a united and clear proposition for the world.
As a team working together, with the support of NZTE, Government, and business, those missions have opened doors, free trade agreements, and vital links.
I’m committed to lending my shoulder wherever it is most useful to continue opening those doors. In fact, one of the unspoken risks to NZ Inc here is talking ourselves down, and so let’s confront this next set of challenges in the same way we have previous ones, working as a team in New Zealand’s greater interests. Thank you.