BUILDING A CAPABLE NEW ZEALAND ECONOMY

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BUILDING A CAPABLE NEW ZEALAND ECONOMY

• Productivity, Ownership and Growth
• Towards an NZ Inc. Approach
• Hon David Cunliffe, MP for New Lynn

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DEMUTUALISING THE NZSX

• Pressures for demutualisation
• Members bill
• Timing faciliatiating rebuild
• Regulatory framework Securities Markets and
  Institutions Act

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BUILDING A CAPABLE NZ ECONOMY

• The drivers of productivity
• Globalisation and integration
• Benefits of foreign investment
• Risks of hollowing out
• Towards an NZ-Inc approach

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1. DRIVERS OF PRODUCTIVITY
GDP per capita
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GDP PER CAPITA GROWTH IS RECOVERING (11-year
moving average comparison with OECD countries)
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DRIVEN BY RISING LABOUR UTILISATION..(11-year
moving averages growth in hours worked per capita
comparisons with OECD countries)
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..MASKING POOR GROWTH IN CAPITAL-LABOUR RATIOS
(Capital-labour ratios New Zealand vs Australia,
1988-2002)
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2. GLOBALISATION AND THE CHALLENGE OF INTEGRATION

• Globalisation a fact not a philosophy
• New Zealand is highly trade dependant
• Integration therefore essential but terms vary
• Open up and hope
• Head in the sand
• Smart engagement

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3. THE SAVINGS GAP AND FOREIGN INVESTMENT

• Domestic savings gap requires capital inflow
• Partial offset from government fiscal surplus
• FDI brings potential spillover benefits
• Technology, capital access, market access
• Large net investment outflows on current account
  persist (3-4 GDP)
• High level of foreign investment in NZ
• Lower returns on NZ investment abroad

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4. RISKS OF HOLLOWING OUT

• Out-migration
• Capital migration
• Intellectual property
• Risk of self-reinforcing processes
• FDI composition
• High levels (85) of MA FDI
• Low levels of greenfields investment
• Historical investment and migration rules

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5. TOWARDS AN NZ INC APPROACH

• Build on firm foundations
• Target capital productivity drivers
• Redefine NZs economic space

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(i) BUILD ON FIRM FOUNDATIONS

• Strong economic fundamentals
• Easy, safe business environment
• Increase labour participation and skills
• Invest in innovation and technology
• Active international trade policy

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(ii) TARGET CAPITAL PRODUCTIVITY

• Address the savings gap
• Deepen domestic capital markets
• Incubate and protect intellectual property
• Leverage technology across sectors

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(iii) REDEFINE NEW ZEALANDS ECONOMIC SPACE

• Recognise ownership matters
• Maximise the benefits of FDI
• Link with domestic sector strategy
• Negotiate as Team Kiwi
• (re)Brand NZ Inc