Source: New Zealand Government
Tēnā koutou katoa. Nga mihi ki nga manawhenua o tenie rohe me nga waka katoa ki tae mai nei.
Good afternoon everyone.
Thank you for the opportunity to be here today.
I want to acknowledge the work the Nelson Tasman Chamber of Commerce does.
And I want to acknowledge the Nelson Tasman business community. You are at the heart of your communities, creating jobs, generating income for locals and producing a diverse range of goods and services.
I always enjoy visiting Nelson and have enjoyed many visits here since becoming an MP. Your local Mayor and Former MP Nick Smith has made sure of that!
But my first iconic Nelson-Tasman experience was not in fact a Nick Smith related one.
I have especially fond memories of kayaking and hiking through the Abel Tasman National Park around 20 years ago with my then boyfriend – now husband – and being dazzled by its majesty, complete with frolicking baby seals, enthusiastic trampers playing 500 in the huts. A Thai green curry and cold beer providing a grand finale at what I think must have been the Park Café Mārahau.
My personally memorable experience is not unique.
The Nelson Tasman region is a really special part of New Zealand. That’s demonstrated by the number of people who choose to visit here – from around the country and the world, and the number of migrants who choose to move here and make this place home.
Like many other areas of the country, the communities of this region are facing both exciting economic opportunities and a range of economic challenges.
On the one hand there is so much to feel optimistic about, from your thriving and diverse food and beverage sector, the growing and potential-filled blue economy, your leadership in forestry and wood product manufacturing, and your growing visitor economy, all of which sustain jobs and incomes today and have the ability to deliver even more in future.
These growing industries are good news for the future of people here, and, beyond that, will help New Zealand earn the additional revenue we need to fund great health care, education services and physical infrastructure. Like the Hope Bypass, upgrades to Nelson Hospital and repairs to local schools.
I’ve had the pleasure today of visiting some of the people leading in these sectors: I spent time at the Cawthron Aquaculture Park and felt excited by their vision for driving forward the Government’s goal of quadrupling the size of the aquaculture sector over the next decade.
I visited Trinder Engineering and was wowed by their commitment to research, innovation and a positive workplace culture.
And I visited Pic’s Peanut Butter: whose story began with a product made in a concrete mixer winning over die-hard fans at the Nelson Farmer’s Market and has now expanded to produce 25,000 jars a day for peanut butter lovers the world over.
There are good news stories like this across New Zealand, and I think we should all do more to celebrate our great Kiwi success stories.
These successes came about because of clever, brave people who decided to take a risk, to take a loan to invest in big ideas, to work hard to make things happen, to hire good people and offer them meaningful careers, to pursue a vision and keep going in the face of adversity.
In doing so, these enterprises, and the hundreds like them across Nelson and New Zealand, have supported thousands of people into good jobs, providing income for their families and investments for their communities.
They’ve also paid a lot of tax along the way – which has allowed the Government to increase its annual investments in schools, health services, superannuation support, and other essential public services.
That contribution by business and hard working taxpayers too often goes unacknowledged: We all have hopes for new investments and better services, but before we dream up new ways of spending, we first need to collectively earn the dollars required to sustainably fund that spending.
Growing regional economies, and successful local businesses are vital to that equation. Put simply: To deliver the kind of country we all want – with better living standards, better opportunities for our kids and more financially secure families, Nelson and New Zealand needs more success stories like Cawthorn, Trinder and Pic’s.
That’s why our Government is so focused on delivering policies that support economic productivity and that give entrepreneurs, employers and firms the confidence they need to invest, hire, expand and grow.
That includes getting the basics right, such as low and stable inflation, manageable interest rates and credible fiscal management.
It means ensuring the Government doesn’t make it harder to do business by tying people up in red tape, endless consent processes, or sticking rigidly to rules that simply don’t make sense.
These sensible policy approaches are the base from which we will deliver better choices and investments in the years ahead.
I have enormous optimism in New Zealand’s economic growth potential.
We are a safe, secure country with established trading relationships and a global reputation as a good place to do business.
We are blessed with abundant natural resources – everything from ocean to freshwater, fertile land to minerals and temperate weather.
In a world worried about food security, we feed more than 40 million people with levels of efficiency and sustainability that are the envy of the world.
We have a long history of stable democracy, strong institutions and rule of law.
We’ve produced world-leading scientific breakthroughs, send rockets to space and continue to produce some of the world’s best digital effects.
There are many reasons for New Zealand to be optimistic that better times are ahead.
Even so, I’m not a total Pollyanna.
I’m conscious of the challenging economic circumstances many people in Nelson, and around the country for that matter, have experienced in the past few years and in some cases continue to experience.
Local employers and households have come through a post-Covid period of very high inflation and rapidly rising interest rates.
High inflation and high interest rates aren’t just numbers for economists – they’ve had big human impacts: elevating the cost of living, and putting a handbrake on business activity, with significant impacts for people’s jobs and incomes.
Our country has also been left with a sea of debt and red-ink in the Government books that will take time to repair.
The post-Covid ‘structural deficit’ has left a big gap between what the country needs to fund to deliver on the spending commitments we’ve made and what we need to earn to pay for that spending.
In effect, the Government is borrowing billions to bridge the gap, with a $13 billion deficit this year and forecasters anticipating deficits in future years too.
That obviously can’t go on forever, or else our kids and grandkids will be left with unsustainable debt and considerable economic uncertainty.
That’s why our Government is working carefully to bring the country’s finances back into balance: so we can start to pay down our debt and create better buffers for the future.
We want to ensure New Zealand is financially strong and resilient enough to effectively respond to whatever the future may throw at us: be it earthquakes, extreme climatic events or other events outside our control.
Restoring that fiscal balance, while continuing to increase investment in essential front line public services, requires careful prioritisation and some tough – but unavoidable – choices.
Believe me – I too would love the freedom to throw today’s Budget constraints out the door – but I’m always conscious that the dollars we spend today eventually need to be repaid. Freedom today could mean serfdom tomorrow.
The good news is that New Zealand has in recent months been turning the corner in our post-Covid recovery.
Inflation has been brought back under control, interest rates have dropped 200 basis points, exports have been growing, commodity prices have improved, tourists have been returning and business and consumer confidence has been on the up.
That growth is positive for Kiwis’ jobs and incomes and for the Government’s books. It provided a welcome backdrop as the Government started putting together this year’s Budget.
But, there’s a but. As you know, the world economy is now facing further headwinds, with United States trade policy changes, counter-tariffs, retaliatory measures, tariff pauses and still unfolding estimates of what this could all mean for global and regional growth.
Uncertainty abounds.
The impacts for New Zealand are twofold.
On the one hand, there is the first-order impact for our exporters who now face the prospect of higher tariffs being charged for them to export their goods to the US.
I know many exporters are finding it very difficult to see through the noise and plan for what might lie around the corner for them.
I think for example of the wine exporters of the Nelson-Marlborough region, who are nervous about the many implications different tariff regimes could have for their existing customers and for the way wine is traded around the world. Will they be competing with more European wine in the UK? Will they be better placed in a relative sense in the US?
It’s simply too soon for wine exporters to know and this makes it very difficult for them to plan.
Direct tariff impacts may well be uneven from firm to firm, sector to sector and market to market.
There will inevitably be both swings and roundabouts. For example, I spoke to a beverage manufacturer in Wellington last week who’d just taken a large order from China, as importers there were looking to find alternatives to US products which they expect will carry much higher tariffs into the future.
The Government has moved swiftly to gather the best possible information and insights about these unfolding implications for our exporters, relying on our incredible network of diplomats and representatives around the world.
Officials are addressing queries from exporters, have hotlines established, are delivering information webinars and are working with individual firms to help them understand the practical implications of tariffs, including for firms who have manufacturing in third countries or product already en-route to the US.
New Zealand Trade and Enterprise is currently providing tailored support to a group of 1000 larger exporters, including access to their in-market staff, their network of private sector exporters and financial advice.
For now, most business appear to be looking to navigate through the initial uncertainty rather than making dramatic changes in response.
The Government will keep providing exporters with information and advisory support and assess impacts as more certain information becomes available.
Beyond direct tariff effects, the second-order impact for the New Zealand economy is what forecasters are now predicting will be more financial uncertainty, potentially increased inflation pressure and a lower growth trajectory for the global economy and many of the countries with which New Zealand trades.
These are just forecasts at this stage, and, once again the actual impacts are still unclear. Put simply though: all these developments will make New Zealand’s economic recovery harder.
We can’t wish that away.
What we can do is focus on the things we can control.
This means it is more important than ever that New Zealand offers a predictable, steady approach to our economic and fiscal management.
In an unstable world we need to stay the course with responsible policies that provide stability, support investment and make us an attractive place for the world to trade and do business with.
New Zealand has the opportunity to position ourselves as a safe haven, and to continue our long history of honouring existing trade agreements and forging new ones.
Earlier this year, well before “Liberation Day”, I released the Government’s Going for Growth framework which sets out 88 policy actions to do just that. These actions are grouped under the Government’s five key thematic growth pillars.
Promoting global trade and investment was a key pillar then and it’s a key pillar now.
Our goal is to double the value of New Zealand exports within a decade so we are working to grow and strengthen our trade relationships around the world.
The Prime Minister kicked off the year in Dubai signing a new trade agreement with the United Arab Emirates and trade talks with India, soon to be the world’s third largest economy, are underway.
At the same time, we are making it much easier for New Zealand to benefit from international capital and investment.
A new agency, Invest NZ, is being established to welcome international investment into New Zealand, and the Overseas Investment Act is being reformed to make it easier for businesses to receive new investment, grow and pay higher wages.
There are four additional pillars in the Government’s Going for Growth agenda:
- Developing talent
- Competitive business settings
- Innovation, technology and science; and
- Infrastructure for growth
I encourage you to check out the full plan online but let me make just a few remarks about each.
Developing talent: This is about making the most of our most important asset, human capital, getting back to basics and arresting the woeful decline in the literacy and numeracy skills of our school leavers.
We simply can’t be the wealthy country we want to be if too many of our school leavers emerge from the school system without the basic skills they need to succeed in the modern world.
We’ve already acted to stop the slide and re-introduced structured literacy and maths to our schools, ensuring kids are receiving instruction in ways that work. We’re bringing practical knowledge and skills back to the curriculum and reporting on performance.
At the same time, we’re tuning-up our vocational education system to make it more responsive to industry and regional needs, and to ensure people wanting to acquire skills for a new trade or industry have good choices for upskilling. This means ensuring institutions like the Nelson Marlborough Institute of Technology can be locally nimble and responsive.
Competitive business settings: This is about both cutting red tape and ensuring we have rules that foster competition between big firms to deliver a better deal for New Zealand consumers.
In my view, in recent years New Zealand has in too many areas of life become stultifyingly risk-averse, and we now have a spaghetti of costly and complex rules and regulations that are holding back sensible development and clever ideas.
The Government has already zeroed in on a key target in this regard: the Resource Management Act.
We’ve passed a new fast-track law to bypass the burdensome court process and accelerate the yes for dozens of major projects that, if approved through a streamlined panel process, will drive jobs and growth across the country.
In this region, three projects have been identified as potential fast-track initiatives.
They include the Hope Bypass, already confirmed as a Road of National Significance in our land transport plan, with a proposal to alter the existing designation and acquire additional land outside that designation.
They also include the Maitahi Village housing development, including plans for a commercial centre and retirement village. I’m advised that this project is already being progressed through the fast-track panel process, with final decisions still pending.
The Mapua Housing Development, is also listed as a fast-track project with potential to enter the process. I’m advised that project would include up to 320 residential allotments, a recreational reserve, a community amenities building and parking, a wetland and restoration of the Season Valley stream.
Beyond the fast-track process we are also working at pace
to replace the Resource Management Act as a whole.
We’re advised our plans will deliver a 45 per cent reduction in administrative and compliance costs.
We’ve also worked quickly to lessen the regulatory burden on the agricultural sector. We back farmers, and we don’t want unwieldy rules stopping them making sensible decisions for their farming businesses.
Reform of the Health and Safety at Work Act is underway to reduce box ticking exercises and compliance costs.
The other aspect of this work is in the competition space.
Everyday Kiwis, visiting OECD economists and Ministers around our Cabinet table share concerns about the concentration of large businesses in some of our major industries, with mounting evidence that competition has suffered as a result, and that New Zealand consumers are missing out on a fair deal.
You’ll probably have noticed that we’re acting to improve competition in the banking and grocery sectors and we’ll have more to say about those as well as other sectors in the coming months.
Innovation, technology and science: This is about not only the Government’s investment in science but also the steps we’re taking to make it easier for businesses and industries to pursue their own innovation agendas.
Government science institutions are being streamlined into four much more commercially focused entities that will ensure our taxpayer investment in science is connected with the needs of a growing economy.
We’re also thinking hard about what we can do to incentivise New Zealand businesses to invest in the new machinery, technology and equipment that will lift productivity in the years ahead.
We know that faster-growing countries tend to have more ‘capital intensity’ in their businesses, which helps drive productivity. I’m keen to unlock more of that in New Zealand and am considering the best ways to support it.
Finally, infrastructure for growth. Roads, ports, hospitals, schools and more.
New Zealand has an infrastructure deficit that is reducing productivity and living standards.
We need to catch up with the rest of the world when it comes to how we plan, fund and build modern infrastructure.
We are putting together a 30 year National Infrastructure Plan and a new national infrastructure agency. Just last week we released New Zealand’s first health infrastructure plan, which sets out a national, long-term approach to renewing and expanding the country’s public health facilities.
Instead of building single, large-scale structures, the plan proposes a staged approach – delivering smaller, more manageable facilities in phases. This will mean patients benefit from modern healthcare environments sooner, while providing greater certainty around delivery timeframes and costs.
And yes, rest assured, redeveloping Nelson Hospital is a key priority for the Government. Work is already underway to expand the Emergency Department at Nelson Hospital, and earthquake strengthening of the George Mason Building is also underway. The $10.6 million ED expansion project is designed to meet the growing demand for emergency care in the area as part of the wider redevelopment programme for the hospital.
The Health Infrastructure Plan highlights the need for increased bed capacity at Nelson Hospital, earthquake strengthening, a new energy centre and a refurbishment of the George Mason Building. These improvements are key to ensuring the hospital is able to deliver timely and quality healthcare for the people of Nelson. These stages of development of course remain subject to future Budget funding allocations.
Conclusion
Taken together, all of this work represents a significant economic change agenda.
I doubt all of this will be welcomed by everyone.
It’s easy to say no to a new mine, to say no to concerts at Eden Park, to say no to more tourists, to say no to more housing, to say no to change. But cumulatively all those little “no’s” add up; they add up to a smaller, poorer country.
New Zealanders can’t afford that. We have to make it easier to get things done in this great country. We have to deliver on our untapped potential. We owe that to our kids.
Let me finish on a positive note: New Zealand faces some significant challenges and those challenges have only grown in recent weeks.
But if I could choose to be any country at this particular moment in time, I would choose New Zealand.
Our Government has a plan, and our plan will mean a stronger, growing economy and that growth will mean New Zealanders can live better lives. And that is what it is all about. Thank you and I look forward to your questions.
MIL OSI New Zealand News –
