Competing with the world

By the end of July, New Zealand will be, once again, fully open to the world.

Earlier this year when I set out our plan to reconnect with the world I was clear that a return to business as usual would be a disservice to the hard work of New Zealanders over the past two years during the pandemic. We can be and should be much better than BAU.

Covid-19 showed us that. It highlighted the way New Zealanders unite in support of one another, and that delivered us the lowest cases and deaths for two years running. But more than that, it proved that a strong health response is also the best economic response, as we now have the lowest unemployment on record, and a bigger economy than before Covid-19.

That is because we worked with business to retain their workforce through the wage subsidy scheme, kept supply chains open, freight moving, and tailored other business support packages to ensure we had a business community strong and ready to go on the other side of Covid-19.

That worked but still Covid-19 laid bare some weaknesses, not least of which was our unsustainable reliance on temporary migrant labour. Immigration will continue to be a part of our economic story, but in our immigration reset, including a new Green List which allows employers to bring in skilled labour to fill gaps more quickly and easily, we have taken the opportunity to build resilience into our workforces.

In particular, health workers and construction workers will fill the gaps in our infrastructure building and health systems, providing greater workforce reliability, and accelerating the country’s economic recovery.

In Budget 2022, we took the opportunity to build into our systems greater economic security, to drive a high-wage, low-emissions economy – because that is an economy that can best withstand future shocks in an increasingly volatile world.

We invested in a business support package that included a $100 million Business Growth Fund to support small- and medium-sized enterprises to access finance. The fund will help fill a gap in the capital market for SMEs that require growth. It is an investment model that works and is already established in the UK, Ireland, Canada and Australia.

We also fully funded the Regional Strategic Partnership Fund to unleash regional economic development opportunities, a Tourism Innovation Programme to promote sustainable recovery, and dear to my heart, we progressed eight Industry Transformation Plans (ITPs), which join the dots between where an industry needs to go and the workforce it needs to do it.

ITPs are developed in partnership with business, workers, iwi and government to transform the productivity and performance of key sectors of the economy, while also improving sustainability and labour market conditions. They are focused on the following sectors: advanced manufacturing, agritech, construction, digital technologies, fisheries, food and beverage, forestry and wood processing, and tourism.

There are the things we did too, in spite of Covid-19. Something that can no longer be postponed is climate action. We are living within the daily impacts of climate change now, with droughts in the cold seasons and storms knocking homes, farms and schools multiple times a year. Reports continue to remind us of accelerating sea level rise, and the threat to infrastructure and the stability of society that comes with that.

As a country that depends on our environment for our economy, we must act. That is why over the past two years we progressed and have now released the country’s first Emissions Reduction Plan, a plan for the whole of New Zealand, in partnership with every sector of the economy, to help us meet our carbon budgets, as well as unlocking new investment in new industries.

The action is backed by the biggest investment in climate ever, recycling the billions of dollars paid into the Emissions Trading Scheme. For example, we have made a $678 million investment in the Government Decarbonising Industry Fund (GIDI), where the government partners with major process heat energy users, helping them cut costs as well as emissions.

We made this investment because this fund works – the initial $69m investment in GIDI helped fund 53 major industrial decarbonisation projects – all contracted for completion by April 2024 and over their lifetime are estimated to save 7.46 million tonnes of CO2, equivalent to taking 134,800 cars off the road.

We have a green brand to uphold to ensure our products still fetch the premium we want them to, but the many businesses still using fossil fuels is a threat to us, so ensuring our businesses are run on, and produce products made with renewables, is critical to maintaining our leading business edge.

Zero emissions cars, trucks and buses will all be supported within one of our biggest emitting industries, transport, along with a pricing mechanism and accelerated tools and technology across our farming sector. Native climate sinks and more woody biomass are also supported.

I penned this from the United States on my second of several trade missions back out into the world this year. I take with me the singular message that New Zealand is open for business.

There is a distinct feeling of competition in the world as many other countries do as we are, look to build more security into their national systems, in an increasingly volatile world, and try to encourage the best workers and most generous tourists back to their shores.

The war in Ukraine, and the global energy shock that caused, off the back of a global pandemic, only serves to reinforce the idea that another crisis can be just around the corner. In an increasingly digitally interconnected world, that extends to misinformation wars.

Along with the rest of the world, we are also dealing with the cost of living cycle that abounds after a period of restricted global supply and heightened geopolitical conflict, and that’s something we must support New Zealanders through, too.

But the immediate should never derail us from the longer term challenges. I know we can take the lessons of Covid-19 and build a secure future for New Zealand, because we already are.