Address to Reception, Dunedin Club

Ladies and Gentlemen,

Thank you for sharing some of your evening here with us tonight. You are very welcome, particularly those of you who have travelled from outside Dunedin to be here. May I also express our deepest sympathy to one of our invited guests this evening and his family; the tragic death earlier this week of Gill Parata comes as a great shock to us as it will for the local business, university and Ngai Tahu communities. Richard, we share your sorrow.

My name is Terry Arnold, President of Business New Zealand. Many of you will also have made contact by now with my Council colleagues and our senior staff.

The main reason we are here is very simple: this is Business New Zealand’s first Council meeting in Dunedin – in fact in the South Island – and it’s our first opportunity to meet many of the members who support our regional stakeholder, the Otago-Southland Employers’ Association so well led by Michael Ferrari and Duncan Simpson, and their colleagues.

I understand that the original seed capital for the Auckland Harbour Bridge was raised in this Club in the 1950’s – perhaps we could do with some more southern initiatives to help with our current problems up north– but I assure you, I won’t be passing the hat around tonight.

I should note though, that your regional economy is still an example of how to build on strengths such as tourism, land use and local skills, including the financial insight which continues to seek out and build on new opportunities, even if those don’t include contributing to a second Harbour Bridge!

Business New Zealand is a national business organisation that was formed a little over two years ago when two old and well-known national federations, the Employers’ and the Manufacturers Federations, came together to form this new organisation. Business New Zealand has five Founder Members or stakeholders, the Otago-Southland Employers’ Association of course, the Canterbury Manufacturers Association and the Canterbury Employers Chamber of Commerce in Christchurch, the Employers and Manufacturers Association (Central) based in Wellington, and the Employers and Manufacturers Association (Northern) from Auckland, covering the top half of that Island.

In addition to the 5 Founder Members and the 17,000 or so enterprises who belong to them, there are 53 industry and sector groups in Business New Zealand’s Affiliated Industries Group who share in a two-way process of information, research and comment that is a win-win for everyone concerned. The AIG membership ranges from organisations such as the Outdoor Fabric Products group up to Federated Farmers and the Retail Merchants; an extraordinarily diverse group that permeates the whole economy. All up, Business New Zealand therefore taps into the views, concerns and expertise of some 76,000 individual businesses, from the biggest to the smallest, roughly mirroring the makeup of the business sector itself. Like your local Association, we are very focussed on the challenges and needs of smaller businesses, because if this sector is healthy, we all benefit.

Business New Zealand is an advocacy group. It is, if you like, the Wellington embassy of its Founder Members, which monitors, researches and comments on all issues impacting on the prosperity of business and thus on the creation of wealth for New Zealand.

Its core mission – why we ask Simon Carlaw and his staff to roll-up each morning – is straightforward. It is to push the case for growth; a sustainable growing economy that will return New Zealand to the top 10 of the OECD. In 2001, we documented a growth strategy called “Changing Gear” comprising 20 key planks for growth, and the benchmarks for measuring progress, and have reiterated this message in virtually every public statement we have made since – in formal submissions and representations, in our publications and on our website, in media statements and so on.

Because we are in the business of advocating policy, not playing politics, our single-mindedness on growth is quite useful. The Government has, since 1999, delivered a virtually never-ending flow of policies impacting on business and the economy. In reacting to these, you may have noted that Business New Zealand’s focus is on their contribution towards accelerated growth and what they will do to get us back into the top half of the OECD. Supposedly, this is also the Government’s target, but it seems to be drifting off the screen.

Will, for example, some of the increased expenditure on workplace learning enhance growth? Yes, we think it will. Can the same be said for new or increased taxes by stealth, for environmental or climate change policies that demonstrably reduce our export competitiveness? No, we think not. And so on. While we may be occasionally labelled as whingers, no one in politics has yet seriously accused us of joining in their game and many have expressed praise for the quality and credibility of our submissions. That is our purpose.

Regrettably, the journey that we began at Business New Zealand in May 2001 still has a long way to go. Few New Zealanders know much about Slovenia, and I suspect even fewer care. They should. Slovenia, not Australia, certainly not the UK or Canada or the United States, is a country of about the same wealth as New Zealand in 2003 – what the OECD calls “low middle income”. The problem is that Slovenia is accelerating its growth path. We are predicted to trend in the other direction.

Of equal concern are predictions that the comparatively good growth gains that New Zealand has achieved over the last two to three years will again soon be shaded by Australian growth rates over the short to medium term. Already, Australians are a third richer than New Zealanders. A one percent per annum margin means that within five years, Australians will be 40% richer, then 45% and so on. The pull that this discrepancy will exert on New Zealand skilled labour and capital is a no-brainer: our ability to catch-up, let alone to maintain parity, will simply go further beyond reach while Australians will have 30-40% more dollars available to spend on their health, education, or even rugby, than we will without any need to increase taxes.

In fact, trends on tax, on regulation, even on labour market flexibility across the Tasman are pointing in the opposite direction than ours. Growth matters, and Australia has made it clear that efficiency and flexibility, an on-going commitment to reform and an unequivocal welcoming of growth, underpin an economic performance that we have only rarely matched in the last three decades.

There can be little medium or longer-term comfort in an economy in which export performance continues to diminish and where imported goods or property, not productive investment, continue to soak up our national savings plus a good dollop of other countries’ savings. Critical decisions on key growth infrastructure are overdue – on power generation and distribution, and on roading, for example – but there is little evidence that considerations of future accelerated growth are driving policy. Equally, there are serious challenges to the costs of employment and to job creation in the wings from a raft of labour law and employment market legislation culled from policies that have stalled growth across the European Union. It would be a shame if this also stalled the excellent progress you have made here over the past five years.

Instead, it seems that the dealings of MMP determine today’s priorities. We are jeopardising our global trading competitiveness by sprinting down environmental paths that other richer countries have yet to enter. Yet as surveys demonstrate, few in the community seem aware of the critical importance of business in creating jobs and the wealth for redistribution as health, education, or retirement expenditure. As Peter Townsend has recently observed, New Zealand is in danger of enabling access to a great quality of life but delivering a poor standard of living.

It is not surprising that few in politics wish to spread this message. This means that business needs to stand up and do the job. Business New Zealand, with its regional membership, is already doing so. We rely on your support and encouragement to keep up the momentum. In fact, it will be more critical than ever over the next six to twelve months as the last of this term’s policy proposals are rolled out. Be in no doubt that these issues matter to your business. The economy simply cannot afford the risk of business not shouldering the responsibility of looking after business.

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