web analytics

New Zealand – From 2002 On

New Zealand is at a turning point in it’s life. We’re a relatively young, and small country, and the decisions we make now will effect us throughout the rest of our lives, and the lives of our children. What we do now is going to be written in history for all time, just like Muldoons’ “think big” projects and the Prebble privatisations. This is why, more than ever, we need to be thinking about the direction we want to New Zealand to take.

The economy is strong, growth is estimated to be between 2 and 3%, interest rates are strong, as is the New Zealand dollar. Wether you attribute this to the current labour coalition, or to a strong agricultural season (as many farmers do), we should really be looking at what this means for the future, and the steps we should now be taking.

It is my view that the strong level of exports in the previous year was on the back of a good season in terms of weather and other factors. A comment was made by someone I know, It seems labour is always in government when we have a productive season. So labour would like to take credit for the strong economy, but in the face of the evidence this is not the case.

So we have an election, if we forget the past, and focus on the future, who should we vote for. I don’t know, I’m not educated in terms of the various parties policies, so I’m just going to chuck some policies that should be adopted, and you can decide who to vote for.

Exports. The National Bank business outlook report shows business confidence is negative now, not a good sign for the next few months, and in particular, the expected level of total exports are down. This is the result of the strong NZ dollar in recent months, I could go into this in depth, but I’ll make it brief. New Zealand has higher interest rates than most other countries (in particular the US 1.5% v 7.5% NZ) and so foreign investors want to invest their money here, so they need NZ dollars, so demand goes up, and so the price of NZ dollars does. Take my word for it, this makes NZ exports more expensive overseas, so less attractive, so we are exporting less. We really need strong export levels, to compensate for the high levels of imports that we take from overseas countries.

So what is the road we want to go down in terms of exports? There are a few unique factors that we have to consider. Firstly, consider the isolation of New Zealand from the rest of the world, this extremely hinders our exports because of transportation costs, so this needs to be considered. If we are going to focus on products, we need products with low transportation costs. This does not apply to our current dairy exports, these are extremely difficult to transport, and we need to be considering alternatives.

In terms of products our options are things like high-tech products (microchips etc), software and the like. Can we see this happening in New Zealand? Can we muster the investment and the expertise to make it work? I wouldn’t be betting on it.

The other choice, one especially attractive for a country so isolated (and with increasing communication technology) is that of exporting services. These can take many forms, financial services (accounting etc), transportation and software development.

This is where I see the opportunity for New Zealand, many of us know the story of India, a developing country which has utilised communication technology and cheap labour to develop a very strong software development industry. New Zealand has some of the most educated and intelligent people in the world, and we could so easily solve our problems of losing them overseas, by establishing an industry developing information technology.

This could include research and development as well as the actual development of systems, and a huge number of other affiliated areas.

For this to happen, the government needs to encourage things to happen through some very specific policies. Some of these will include the lowering of corporate taxes, sure, we’ll see an increase in tax avoidance (the legal avoidance of paying taxes), but this is key to encouraging business growth. Also there will need to be low cost government investment into specific companies so that this country can establish an advantage in this area.

I have one condition to place on this. We must not go back to a system of subsidising inefficient businesses with tax-payer money, there is NOTHING good that can be achieved by this. Instead New Zealand has to be focuses on innovation, efficiency, and developing a competitive advantage that will help New Zealand achieve the status it deserves in the integrated world economy of the 21st century.

1 comment

  1. garcinia cambogia supplement

    Hurrah, that’s what I was looking for, what a stuff!
    present here at this website, thanks admin of this web page.

    Stop by my weblog :: garcinia cambogia supplement

Leave a Reply

Your email address will not be published. Required fields are marked *


6 − = five

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>