SPRINGTIME IN THE NEW ERAPrime Minister
AUCKLAND REGIONAL CHAMBER OF COMMERCE AND INDUSTRY,
Chairman Dave Truscott, Chief Executive Michael Barnett, ladies and gentlemen.
Thanks for coming along today. It's always good to be back in Auckland.
For the last few years I've had the opportunity to share with you the background to the roller coaster business of political leadership in times of change.
And that's why this afternoon, twelve months after New Zealand's first MMP election, I would like to put into perspective where I believe we are going as a nation.
I've appreciated the support the Auckland Chamber has given those addresses.
I appreciate, Michael Barnett, the frankness of your analysis.
Perceptions become realities and politicians have to deal with them.
I don't say we have to agree with them, just confront them.
The last 12 months have been a remarkable learning experience for us all inside and outside Parliament, and for some the lessons still seem to escape them.
For others MMP and coalition government has been a wonderful reason to relax and blame someone else.
I shared a platform with All Black coach John Hart recently and noted we had similar responsibilities.
We both gathered people from across New Zealand and welded them into a team.
I suggested he had the easier job.
He selected his own team and when they didn't measure up they were dropped.
In politics your team is picked for you and you can't drop those that don't reach the required standard.
One approach is called selection, the other democracy.
The fact is our democratic process changed dramatically at the end of last year.
What did not change is the public understanding of how different things are.
There is still a widespread belief that everything should operate as before.
That perception distorts the reality - that New Zealanders voted for a new system of government in 1993 not the status quo.
The new system of coalition government with MMP is certainly different.
In leadership terms, it is more demanding bringing together the policy aspirations of two political parties rather than one.
It's been a challenge, but it's all do-able.
In this City of Sails let me use a nautical analogy.
Once you get your political sea legs in the new system, it feels OK.
The new political seas may be more turbulent but, as I will show later, we have kept on course for strong sustained growth.
Over the past twelve months, we have had to reinvent politics to meet the new order of doing business.
There were many distractions on the way from the price of underpants, to the wine box, to compulsory super and so on.
New MPs - there are 47 - and new Ministers had to learn their jobs.
We have lost two Ministers on the way but that's far fewer than Australia and they haven't changed their system at all.
Be that as it may, I believe, in more ways than one, it is springtime again in New Zealand.
Springtime is a time of renewal and time of growth.
The economy has turned the corner, business confidence has turned the corner.
I warmly congratulate those business leaders who early on had the wisdom to see that coalition or not the fundamentals of the New Zealand economy were strong - and got on with the job.
Others were side-tracked for too long.
That's now behind us.
The logjam has broken.
Last week saw confirmation of the predicted resounding defeat of the retirement savings scheme.
New Zealanders have spoken.
Their clear voice in the referendum removes any suggestion of New Zealand introducing a compulsory saving scheme.
Politicians should now await the Todd Report on the present scheme due in December before rushing out to design a new one.
A little calm reflection is now required before we rush into something new.
On the economic front the high dollar that gave so many of you headaches has eased.
On September 18, the Reserve Bank released its projections for the New Zealand economy.
The news from this independent source was all good.
Continued low inflation, positive and increasing growth, lower unemployment, a lowering of the current account deficit, higher productivity.
On September 26 the Statistics Department released figures showing growth is on the rise again.
After 17 straight quarters of growth there was that one decline in the March quarter.
Predictably, the pessimists on the left had a field day predicting doom.
Their glee didn't last long as the June quarter GDP figure released last week reversed that and showed growth of 1.2 per cent.
The highest quarterly growth figure since September 1994.
Let me put that growth figure another way, to give you confidence in the inherent strength of our new economy.
The 1.2 per cent growth for the June quarter - at a time I might add when every critic of the Government was having fun - was higher than the average annual growth rate between 1975 - 1990, the total period of the Muldoon, Lange, Palmer and Moore Administrations.
By further comparison in the six years to June 1997 the New Zealand economy grew on average at slightly over three per cent per annum.
Excellent figures for a developed economy over a full business cycle.
It's hard data like that, that gives me confidence, and away from the headlines most business leaders know that as well, which is why Tuesday's National Bank Business September Outlook Report reported that business confidence has not been at what they call "this stellar level since December 1995".
And to quote again "the increase in confidence was widespread, with all sectors recording large rises".
"The economy has been growing without pause for almost five years" and "the measured drop in GDP in the March quarter was an illusion".
It would be boastful to go on - the point has been made.
New Zealand is again on track for quarter on quarter growth through to the new century and beyond.
With lower interest and exchange rates, the next tax cut coming through next July, a rising fiscal surplus and strong international growth, the next three years provide a strong trading environment for New Zealand.
It is a better time to be exporting into a growing world economy.
I therefore have no difficulty in suggesting a 4 per cent growth factor for 1998-99, and that is where we are aiming.
That is why I say that it is springtime again in New Zealand.
My advice to this audience and business leaders everywhere is clear - seize the new opportunities now emerging.
In business and in government there is no such state as coasting.
You cannot decide to stand still or take your eye off the main game.
If you do, your competitors seize the chance that you've conceded.
And I have given my troops in the Coalition Government precisely the same message.
If they want to be re-elected to Government in 1999 then the time for distractions is over.
The most important reason for confidence in the New Zealand economy is that the policy framework we have put in place over the last few years has worked through the difficult low end of the economic cycle.
Yes it was tested.
There were some sweaty palms for a while as the dollar went up and growth moved to zero but now the market has made its corrections and the Reserve Bank has confirmed them.
As a Government we are building on these proven policy foundations.
Having confirmed the platform for growth, I now want to talk about work in progress to further improve New Zealand's performance.
There isn't the time here today to outline all our work programme.
But I do want to make clear to you our current thinking in several of the most important areas.
The international marketplace is a hard master.
It rewards nations which are productive, innovative and flexible.
In the seven years since I led National to victory in 1990 we have progressively moved policy away from attitudes that had their genesis in the 1930's or earlier.
For instance the reform inherent in the Employment Contracts Act broke away from concepts established in law from 1894 onwards.
The Employment Contracts Act broke the monopolistic power of unions and required employers and employees to work together.
It successfully changed attitudes and is a great step forward for New Zealand and New Zealanders.
It is my clear view that to successfully deliver social policy today, be it in health, education, welfare, accident compensation or employment support, will require us to complete the move from monopolistic state agencies and provide for greater private sector and community participation.
The left of politics will be suitably outraged at this principle but I am sure its correct.
What it means, for example, is that we move to have greater community involvement with our smaller public hospitals possibly through community trusts.
In such hospitals there already is greater integration of public and private provision of health care and this I am sure will continue and grow.
It means putting in place our policy for greater regional autonomy for employment programmes to better meet different communities needs.
This policy is well advanced.
Another key policy is to achieve greater overall co-ordination between education, training, welfare and employment agencies to better meet the needs of individuals.
Getting rid of old attitudes and entrenched barriers is hard work, but it is progressing well and we will soon have a more co-ordinated approach to deliver on our strengthening families programme.
In education we have an equally clear view.
I strongly support the direct resourcing of schools so that the local community has a more direct say in the most important institution in their community - their school.
Unfortunately the leadership of the teacher unions have as yet not let go of the past and strongly oppose - especially the PPTA.
For the sake of current and future generations of children this is a policy issue we must win.
The Government is about to embark on a new round of pay negotiations with the country's teachers.
We go into this process this year with a very clear view of what New Zealand needs and our children deserve.
What we want to achieve this year is a unified pay system that treats primary and secondary teachers with similar qualifications, experience and responsibilities, the same.
A pay system that recruits, rewards and retains quality teachers.
A system where teachers have the professional and financial motivation to perform.
Like any other profession, we want our education sector to encourage and reward the best possible performance from all teachers.
This is no radical right agenda, it is plain commonsense - but again the left are outraged.
Another important determinant of the skill base of our labour force is our immigration policy.
The Government is very conscious of recent trends showing a 57 per cent reduction in the number of approvals for skilled migrants and a 15 per cent increase in social approvals.
The Minister is now working on how this imbalance might be corrected.
One of the most encouraging signs of the underlying strength of the New Zealand economy is the ability of our export sector to triumph against adversity.
Despite low commodity prices and the very strong dollar, export volumes were 7.7 per cent higher in the year ended June 1997 than in the year to June 1996.
While the importance of the export sector is given lip service by nearly everyone, I don't think all appreciate just how important this sector is to the New Zealand economy.
Exports currently account for about one third of the New Zealand economy.
Obviously, the faster exports grow, the faster the economy grows.
We all agree that export-led growth is the right road for New Zealand, and my Government will continue to do everything in its power to foster it by improving the climate for business at home and lowering trade barriers abroad.
Our strategy is to remove roadblocks and distortions.
I want now to touch on nine major initiatives we're working on right now to move the economy along.
I've heard from many of you about the cost of electricity, and the Minister of Energy is reviewing competitive arrangements in the sector, determined to increase competition in both retail and wholesale markets.
This is likely to involve the separation of line and energy businesses in power companies.
That review will be completed by December.
We daily hear charges that the operation of the Resource Management Act impedes your decision-making and adds to your costs.
The Minister for the Environment has listened and is reviewing the method by which some local authorities are implementing the RMA, and the impact on compliance costs.
There has been ongoing debate about the costs imposed by local authorities and that they are fuelling inflation.
The new Minister for Local Government is reviewing the role and functions of local bodies and this clearly has some overlap with the Roading Study.
Of special interest to Auckland is the future of the Auckland Regional Services Trust.
I thank them for their work on America's Cup facilities and say that when the ownership issues are sorted out the main objective must be that what services are provided are run on commercial lines.
Tariffs are a major factor in the cost of doing business, and the Minister of Commerce is set to complete a review of post-2000 tariffs for cars by the end of the year, and other tariffs by early next year.
This is to carry forward the Budget announcement of the early removal of all tariffs, and to give New Zealand families and businesses cheaper cars and other goods.
We have taken a world leadership position on this because we see tariffs as a cost to exporters.
The costs imposed by various regulations are also being reviewed, and the Minister of Commerce will have the first report on this by the end of the month.
The Minister of Transport is overseeing the concluding stage of a major review of the funding and management of New Zealand's roading network to ensure we have a cost effective land transport sector capable of meeting our roading needs in the next century.
This project has particular relevance to providing answers to relieve pressure on Auckland's congested roads.
Detailed discussions are now being held before a final report is brought to Government.
In New Zealand, as in many other developed countries, there has been a growing recognition of the limits of Government involvement in the economy and a corresponding greater reliance on markets and individuals to determine the allocation and utilisation of capital and other resources.
Consistent with that, the Government's role as an owner of various assets is up for discussion and decisions on a case by case basis.
We are asking the question:
Are busy Ministers the right people to run -
Property Companies Airports Coal Companies Television Companies and so on
The answer is no.
The private sector is more than able to manage these and other companies, so watch this space.
Another area of considerable interest is ACC.
No one disputes the benefits of no fault universal coverage for accidents.
There is growing concern which I share that once again a monopoly provider is not the best way to go.
So I want to look at how, while retaining a state provider, fair competition may be brought into this $1.6 billion a year industry which annually deals with 1.4 million claims.
I feel confident that we can improve the delivery of accident cover and give New Zealanders better service.
Any move to introduce competition would almost certainly require full funding for future claim liability.
A conference on the Kiwifruit Industry will be held at the end of this month to determine the way forward for that industry.
No doubt the future of its single seller monopoly will be discussed by growers and others.
Already many dairy farmers looking at the massive company amalgamations of recent years are asking what is the right marketing structure for them in the future also.
That's essentially an issue for dairy farmers to decide.
Discussions on this wide ranging programme and the earlier comments on a different approach to social policy are all well advanced - it is about getting the cogent arguments together, the ducks in a line as it were, and then move resolutely on all these issues.
What we are seeing across the board is a new look of how we operate now, and how we will improve that in the future.
The work programme in both social and economic areas is massive, demanding and not for the faint hearted.
It is the most extensive look at how the business of Government can be improved since National was elected in 1990.
So let's put permanently to one side the suggestion that I or the work of Government have been distracted by sideshows or temporary difficulties.
The issues of Government grow more complex year by year, so don't be too surprised that some new members make mistakes or find the going tough or some of the decisions difficult to take.
That's the same the world over - our history is we are prepared to take tougher decisions than most.
That is also true in settling historic grievances.
Alongside the other issues I've discussed we have brought close to finality the huge Ngai Tahu claim and are working on other such complex Treaty of Waitangi settlements.
There are no votes for us in such settlements - but it's the right thing to do.
We are also working to help find a solution to the tragic war in Bougainville, with a delegation of something around 100 people from there back in New Zealand for talks in Burnham at this moment.
It's not glamorous work - its called helping your neighbours.
I am proud and I hope you are of what we are doing as a country both to heal the past and to prepare for successful entry into the 21st century.
This afternoon I have outlined some of the reasons I am very confident about the underlying philosophy and direction of Government policy.
I am delighted to see the growth in confidence of business leaders. That you and they share my optimism that year on year New Zealand's economic infrastructure will improve and why New Zealand will continue to be a great place to do business.
And in case you think I have run out of agenda items, I still have some unfinished constitutional issues that I will raise again when I get a spare moment.
I leave you with the thought that one of the great pleasures of life is doing what others say you cannot do.
You and I know that by working together we can go forward and build that better country we all hold deep in our hearts.
The direction is clear. The lights are on green.
It's springtime in New Zealand - let's relax a little, smile and enjoy it.