Archive | Growth

Property boom a 51% net contributor to rise in households’ net worth

The boom in property prices from 2013-16 boosted the New Zealand household sector’s assets by $184 billion to $1.312 trillion in March 2016, Statistics NZ said yesterday.

That increase contributed 51% of the $364 billion rise in household net worth over the 4 years. In the previous 5 years, from 2008-12, household property values rose $1.5 billion.

Statistics NZ national accounts senior manager Gary Dunnet said yesterday: “When properties are bought & sold, the prices paid establish new market valuations for all properties, not just the ones bought & sold. This has a general effect on property values for all property-owning households.

“From 2013-16, the household sector borrowed additional loans of $36 billion. During the same period, households deposited an extra $45 billion at banks, but they withdrew $6 billion from their equity & investment fund asset holdings.

“From 2008-16, households lent more than they borrowed.”

Mr Dunnet said these were some of the results from the first release of provisional accumulation accounts for New Zealand

The accumulation accounts record changes in the value of assets & liabilities between balance sheet positions. These changes can occur from transactions, and from non-transactional changes such as changes in market value and other volume changes in assets & liabilities (eg, a write-off of house values due to catastrophic earthquakes).

These accumulation statistics will be updated in December. The accumulation accounts are the second stage of a 4-stage programme to improve New Zealand’s national accounts. The next stage is to compile the accounts each quarter, which is due for release in the first half of 2020.

Attribution: Statistics NZ release.

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English proud of economic gain, Infometrics disappointed but says outlook positive

Gross domestic product rose by a seasonally adjusted 0.9% for the third successive quarter in June. Statistics NZ said the rise equated to 3.6% compared to the June quarter last year and to a 2.8% annual rise.

Finance Minister Bill English described the 3.6% as an annual growth rate, said it put New Zealand’s growth rate among the top 3 developed economies and showed the Government’s management of the economy was delivering more jobs & opportunities for New Zealanders.

Infometrics’ chief forecaster, Gareth Kiernan, said 0.9% was below market expectations of a 1.1% lift, and a disappointing result compared to our expectation of 1.5% growth: “Robust domestic demand, particularly around construction-related areas, was the main driver of the increase in activity, along with an improving export performance, but this strength was somewhat masked by a big run-down in stocks over the quarter.”

Mr English said: “Despite the tough period the dairy industry has been through, we are in the unusual position of enjoying solid growth, rising employment & real wages at the same time as very low inflation.

“New Zealand’s annual growth rate of 3.6% is more than double the OECD rate of 1.6% and compares with 3.3% in Australia, 2.2% in the UK, 1.2% in the US and 0.8% in Japan.

“The result means the New Zealand economy is now worth more than $250 billion for the first time.

“Growth in the June quarter was led by construction, which grew by 5.1% over the quarter. Residential construction was up 10% over the last year – reinforcing the fact that New Zealand is in the middle of a significant building boom.

Exports of goods increased 7.6% for the quarter, the highest increase in 18 years.

“While this result is solid and the outlook is relatively positive, there are many risks around and we cannot afford to take our current economic performance for granted. That is why the Government is continuing to focus on building a stronger, more resilient economy.”

Mr Kiernan said household spending surged 1.9% in the June quarter and the retail sector recorded its strongest quarterly growth since 2007: “Spending on durables jumped by 3.6% from March, with spending on furniture & audio-visual equipment particularly buoyant. Spending on services also increased by 1.7%, with household contents & services (including real estate services), along with restaurants & hotels, doing particularly well.

“Both residential & non-residential investment climbed to new highs, and are now 17% & 9.6% above their previous quarterly records reached in 2004 & 2005 respectively. Linked to this growth, non-metallic mineral product manufacturing, which includes glass, cement & concrete, surged 11% over the quarter to an alltime high (seasonally adjusted), while furniture manufacturing activity rebounded 18% to its highest level since 2008.

“Goods export volumes grew by 7.6% over the quarter, the biggest quarterly increase since 1998. The strength was relatively broadbased, and included increases in dairy volumes (up 13%), coal, crude petroleum & ores, minerals & gases exports (66%), meat products (8.5%), and chemicals, rubber, plastic & other non-metallic product exports (10%).

“The rebound in dairy & meat exports from their March-quarter falls resulted in a significant run-down of stocks – a factor that prevented the overall quarterly economic growth number from being as strong as expected. The decline in stock levels knocked about 1.1 percentage points off quarterly growth, implying that a continuation of good domestic & international demand conditions in coming quarters will result in stronger economic growth figures.

“Very strong prospects for construction will be backed up by improving conditions for the dairy sector and the likelihood of further growth in services exports. The biggest risks that could undermine this healthy growth outlook are capacity constraints in the construction sector, the flow-on effects of tighter lending restrictions for housing, some fragility in global demand conditions and the negative effects of the high $NZ on our export competitiveness. Even with these risks, though, we continue to expect growth to accelerate towards 4%/year between now & early 2018.”

Attribution: Ministerial & Infometrics releases.

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Housing catchup starts as rapid population growth continues

Auckland grew at 119 people/day in the last year, according to the latest research from Statistics NZ. That’s equal to demand for about 44 new homes/day at an occupancy rate of 2.7/household. About 43,400 people/year, 16,000 homes/year.

Construction is cyclical but has generally fallen short of demand since the immigration spike in 2003, and a Regional Growth Forum paper 5 years before that acknowledged a shortfall in land available for housing.

Nationally, consents for new homes have been above 2000/month for the last 7 months (and most likely 8 months when Statistics NZ releases the October figures on 30 November).

In the year to September, Auckland had 9251 consents for new homes, including apartments, flats, townhouses & retirement village units. The year before that, 7366.

When the elderly move into a retirement village, they generally make a larger home available; other apartment dwellers will be a mix of empty-nesters, young couples, groups of flatmates, only some of them vacating larger homes.

Demolitions aren’t counted, and Statistics NZ’s quarterly report on building work put in place records total values but not completion numbers. Completions are also cyclical – many homes consented at the top of a building cycle won’t be built, or not immediately, and a rash of apartment developments proposed in a short timeframe will usually see a few fall by the wayside.

Factors influencing both demand & supply are predictable, and are also numerous. On the demand side, emigration has slumped while immigration has spiked upward; Australia’s economy will perk up in a year or 2, though the lift from mineral exports is likely to take longer, so the turnaround in trans-Tasman migration will have a slow start, picking up over several years; low interest rates encourage borrowing and therefore home purchase, but also contribute to the rise in capital cost; Auckland’s continuing economic growth will encourage new arrivals both domestically and from overseas; the shift toward greater acceptance of public transport and the resulting growth spots will focus both residential & business growth in hotspots around the region.

On the supply side, construction will pick up in special housing areas when infrastructure is in place, and that is being co-ordinated better now than ever before – co-ordinated to a high degree for the first time in 4 decades, probably longer; the number of proposed apartment developments has lifted sharply and might not taper off the way it has in the last few upcycles because of a change to greater acceptance of intensive living; more intensive suburban growth is starting to spread and will make greater provision for families through lowrise & midrise developments.

Economic factors will contribute to changes in employment opportunities, and therefore the population makeup, income brackets and therefore housing expectations. The private sector doesn’t have a great need to look at overall employment types, but Auckland Council has started the process toward encouraging sector development, which should lead to some significant geographic & income factors changing.

The super-city council began in 2010 with aspirations to lift poorer, and very Polynesian, South Auckland suburbs economically through the Southern Initiative. That programme has faltered but needs to be prioritised to meet higher educational demands, which will also lead to changes in housing demands.

Many see that as taking the council outside its core domain and into the central government realms of education & encouragement of business.

A feature of the super-city through the Auckland Plan, endorsed in 2012, is that it encompasses these wider issues because they affect the makeup of the city. A swathe of poor suburbs, staying poor while others prosper, guarantees future turmoil. A proactive council will lift aspirations & performance.

Meanwhile the common complaint is that the council isn’t providing the services its predecessors used to, to the same standard the predecessors used to. On my scoresheet, many issues get recognised & resolved, numerous issues don’t get resolved because of structural changes within the council or the budget has been taken away. Overall, the big issues are starting to be dealt with, at huge cost which predecessors preferred to defer or meet only partially because inadequacies in infrastructure such as sewers didn’t attract determined attention as they couldn’t be seen. And some niggly little local issues still fester.

The council has brought in many new executives with the skills to lead these changes; the next challenge is to introduce political skills to match the requirement for better decision-making. That’s not easy. Politicians need to keep an ear to the ground and can’t shift too far from their political base, while also leading rather being led by the nose.

Special housing areas

The council issued notice today of its approval of variation 11 to the proposed unitary plan for a special housing area at Whenuapai & accompanying resource consent, rezoning 16.8ha from future urban to the mixed housing suburban & local centre zones.

The qualifying development will provide for 51 residential sections (50 new, one around an existing house) & 10 superlots, along with establishing onsite infrastructure.

Last week, commissioners heard the application for private plan variation 8 to rezone 200ha at Flat Bush under the housing accord provisions.

It has 3 applicants for resource consent for qualifying developments – Hugh Green Ltd (now with the late Mr Green’s daughter, Maryanne Green, in charge), Murphys Development Ltd (Brian Hong Biao Chen, Andrew Guest & Dan Xiao) & Eastfield NZ Ltd (Lin Zi).

And today, the hearing begins for another group of plan variations & resource consents, this time covering about 240ha on the Hingaia Peninsula.

The applicants for proposed unitary plan variations 1, 5 & 7 are Karaka Brookview Ltd (Mark O’Brien and Frank, Juliet & Richard Reynolds), Hayfield SHA Ltd (Nigel Hosken & Juliet Reynolds) & Gar-Gar Ltd (Jamshed & Nilaofer Behram Meher-Homji), and KARLA (Karaka Area 1B Residents & Landowners Association) & Karaka Harbourside Estate Ltd (Ian & Jim Ross).

The Rosses have been trying unsuccessfully to get development consent for 10 years. Although some parts of their proposal and those of the Reynolds interests are disputed by council planners & engineers, early approval is conceivable.

The Rosses said that if they got consent before February they could have earthworks underway at the end of next year.

The special housing process is speeding up the ability to build, but considerations such as earthworks seasons will vary the development timeframe. Nevertheless, special housing areas are coming onstream and will add thousands of sections for development in the next couple of years.

That will be followed by changed rules for development throughout Auckland once the unitary plan is approved next year (appeals may hold up parts of it), enabling more intensive brownfields development and also setting parameters for adding more land zoned & ready for development.

Thus the bleak picture of supply failing to meet demand for most of 2 decades will be improved in large lumps, though still with a shortfall to overcome.

Attribution: Council consent documents, Statistics NZ.

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Why aim high when we’re just fine on low?

Why would a city that’s proven incapable of explaining its scientific ingenuity want to join an international organisation which demands innovation as an entry card?

New Zealand has a minister of economic development, science & innovation among other things, Steven Joyce, who is determinedly pushing for New Zealanders to rise above being a nation of commodity traders. And Auckland Council’s founding planning statement, the Auckland Plan, is filled with aspirations to treat the environment better.

Whether it be from climate change or other scientifically mappable causes, large chunks of Auckland’s coastline are being scoured out. As a centre of bubbling property values, it would be handy for Auckland to have some idea about how much of this increasingly expensive land will remain above the tide in 10 or a hundred years.

All these are reasons for Auckland to be a centre of inquiry into climate, sea & atmospheric change.

And, if that’s the case, Auckland Council’s membership of the international C40 Cities climate leadership group should be a given. But it’s not.

The proposal for membership was put to the council’s Auckland development committee in March, but a decision was deferred when it looked as though a majority was going to reject the invitation. Cllr Christine Fletcher said on that occasion the report supporting membership of C40 was silent on the costs: “I think the business case hasn’t been well put. I would certainly like a lot more business information and it hasn’t been put forward today.”

Chief sustainability officer John Mauro returns this Thursday with another shot at membership, but with little more to convince doubters of its value.

C40 membership is free and direct costs are low, but to rise from observer to innovation status after the first year Auckland would need to produce some innovative research.

In his background report for Thursday’s meeting, Mr Mauro has pointed to likely accelerated implementation of the low carbon Auckland action plan as a benefit.

This was likely to mean easier identification of future emissions reductions, and associated cost savings, he said. “For instance, over the past 4 years, Auckland Council has saved or avoided at least $1.5-$2 million/year from reduced energy, waste & water use. While the council will be continuously seeking savings & emissions reductions, they will become more challenging to identify & implement in the future.”

Over the 7 years to 2018, he saw council savings of $12.7 million from sustainability measures. From there, Mr Mauro moved on to the potentially big positive: “Sharing best practice & innovation ideas with C40 cities will assist in identifying & achieving such savings which, consequently, have corresponding emissions reductions benefits.

“Strategically aligned international partnerships like C40 can be useful tools to drive implementation of the Auckland Plan & low carbon Auckland.”

Among specific benefits he saw for Auckland: “Access & collaborate with a global network of technical advisors with expertise to design & implement climate programmes & high-impact projects. Access a vast array of research with potential for peer-to-peer exchanges……

“Membership is meant to unlock ideas, innovation & best practice that lead to emissions reductions & cost savings to the council.”

Unlock ideas? That should have been top priority for the super-city council when it was formed in 2010, but to do so requires advanced thinking on things like providing infrastructure more imaginatively & efficiently across old boundaries. There is some evidence of advanced thinking, but it hasn’t been paramount.

The legacy Auckland City Council had a fine example of this 10 years ago, when boffin & one-term councillor Richard Simpson tried to explain some of the benefits of bringing the Digital Earth summit to Auckland – not just as a one-off, but if Auckland seized the opportunity and made itself a centre of expertise & foresight.

Mr Simpson co-founded New Zealand’s first 3D computer graphics firm, Cadabra, and expanded the business internationally. In 2012, he co-authored the world’s first manifesto of the digital earth, virtual nations, data cities movement to apply post-Google Earth (environmental simulation) technologies to the challenges of planning & managing the Earth’s resources to accelerate climate change solutions.

But 2½ years ago he left Auckland to become chief executive of SIBA (the Spatial Industries Business Association) in Queensland.

He says of that organisation: “Our members are significant producers, managers, innovators, users & adopters of spatial information & technologies. They are pioneers, providing inventive, value-added services to governments, business & industry and they range in size from large local & international companies & organisations to small- to medium-sized enterprises, many with 10 employees or less.”

In a presentation in 2005, he said the challenge for New Zealand was “to be a benchmark for sustainable practices”. From the 2006 Digital Earth summit, alone, he said some of the world’s top thinkers would go to speak at Auckland’s tertiary institutions, while the add-ons of future summits plus an international centre would brand the city as a place of foresight: “It could be a Club of Rome or a Davos (both economic summits) and brand Auckland. This is the extreme of technology, a mega-project.”

Auckland opted for the one-off.

Earlier stories:
16 March 2015: Council holds off joining international climate group C40
6 July 2005: Simpson the boffin councillor sets path for Auckland to become high-flying technology conference site, with a benchmarking brand

Attribution: Council agenda.

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Government commits $3 million to starting health innovation “hub”

Published 23 September 2011

Economic Development Minister David Carter & Health Minister Tony Ryall said yesterday the Government would commit $3 million to the development of a national health innovation “hub”, which has a projected cost of $24 million over 5 years. The balance will come from a mix of public & private sources.

The hub will help develop health technology ideas generated by clinicians & companies into business propositions, products & services.

The ministers said New Zealand’s health technology industry currently generates $1.8 billion revenue/year with room for growth. They said the hub would be a catalyst for innovative ideas and would streamline links between the health service & industry.

The hub will be based within a core group of 4 district health boards – Auckland, Counties-Manukau, Waitemata & Canterbury.

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Attribution: Ministerial release, story written by Bob Dey for the Bob Dey Property Report.

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Plenty of hurdles before NZ becomes international funds centre

Published 3 May 2011

Some obstacles to New Zealand becoming an international funds account & administration centre are being removed, but a report released by the Government today contains plenty more points indicating such a creation is unlikely – especially if the usual long-think process is performed.

A taskforce established by Cabinet in March 2010, the International Funds Services Development Group, reported optimistically about such a centre being established over 10-15 years, generating $500 million-1.3 billion/year in export revenue and creating 2-5000 high-value jobs such as accountants, lawyers & trustees.

The group’s report is dated February but was released today by acting Economic Development Minister David Carter.

The group recommended that establishing New Zealand as a financial services centre would require clarification of existing tax policy, establishing the regulatory conditions necessary for a funds domicile and obtaining broad support.

Mr Carter said the Government was making some tax & regulatory changes that would make it easier for overseas firms to domicile their funds in New Zealand: “Changes to the PIE tax rules to allow foreign investors to pay a 0% tax rate on their foreign-sourced PIE income are included in the Taxation (Tax Administration & Remedial Matters) Bill currently before Parliament.  This is consistent with New Zealand’s source-based approach to taxation, which generally taxes non-residents only on the income they earn from New Zealand. The growth of the financial services export industry will also be considered in all future regulatory changes.”

The executive summary of the taskforce’s report says: “The major opportunity is as a funds domicile & funds administration centre, where collective investment funds can be incorporated & serviced. The taskforce originally contracted the financial consultancy firm Oliver Wyman (a part of Marsh & McLennan) to analyse New Zealand’s opportunity to be the domicile for Asia-Pacific retail funds.

“However, further analysis shows opportunities in other markets & fund types (eg, alternative assets). The domicile opportunity does not rule out attracting other parts of the financial services value chain, such as investment management or global custody, but considers it more likely that these will be located in other jurisdictions where fund managers are closer to their investors or the assets they manage.”

Among factors militating against success, the report says many funds servicing companies raised a perceived lack of depth & requisite skills within the local labour market as a major concern. However, the taskforce believed this was an issue of perception rather than fact: “It has come to this conclusion based upon its collective knowledge of domestic labour supply conditions, the moderate increase in demand for the required skilled people over a decade or more, anecdotal feedback from the domestic industry and the large New Zealand expatriate community participating in this industry internationally, many of whom have indicated a willingness to return here.”

The taskforce said a strategy would need to be developed to reverse the market perception, based upon developing local talent, attracting foreign talent (including expatriate New Zealanders) and managing service provider constraints.

The report concluded that New Zealand should focus its efforts on attracting funds administrators & servicers rather than fund managers & distributors: “This is an important distinction as in many respects we will be looking to complement rather than compete with Australia, Singapore & Hong Kong, all of which are primarily focusing on the fund management part of the supply chain….

“The Asia-Pacific region represents the greatest opportunity for New Zealand as an aspirant funds domicile &/or funds servicer. There is currently no established funds domicile in the Asia-Pacific region. There are several potential competitors in the region that in some respects are better positioned to play a domicile role than New Zealand, but they also face their own challenges and have not historically emphasised a domicile-driven strategy. New Zealand would therefore need to move quickly & credibly in order to seize the current opportunity.”

The taskforce said the greatest opportunity might be to form a complementary relationship with Australia, which had aspirations to become an Asia-Pacific financial services centre by building on its funds industry: “In January 2010, the Australian Government released the report Australia as a financial centre: Building on our strengths, the final report from a taskforce of senior financial centre representatives.

“This report notes that, while the domestic industry is strong, managing an estimated $A1.6 trillion, exporting & importing financial services in Australia are low by international standards. Of the total funds under management, the Australian Bureau of Statistics estimates that only $A65 billion (or 4%) was sourced from offshore investors. The report argues that there are some policy settings that inhibit a greater volume of cross-border financial transactions occurring through Australia. The Australian Government supported most of the taskforce’s recommendations.”

The New Zealand taskforce said Australia would be focusing on positioning itself as a centre for asset management services, as distinct from a funds domicile: “International experience indicates that investment managers will cluster close to investment markets and to investors, while domicile & servicing activities will cluster in small, agile jurisdictions with strong regulatory regimes and competitive cost environments.

“This is why the world’s leading funds domiciles are in Luxemburg, Ireland & the Cayman Islands, supporting financial management centres such as London. The taskforce believes there is an opportunity for New Zealand to establish a similar relationship with Australia. Therefore, the taskforce considers the Australian initiative as complementary to the recommendations in this report, rather than competitive with them.

“Singapore is a regional wealth management centre and a significant funds management centre. It has aspirations to become a key funds servicing centre in the Asia-Pacific and has captured significant back-office servicing from Hong Kong with heavy incentives.

“Singapore has the key elements for success in place, including regulation, taxation, incentives, aggressive Government support, financial infrastructure & a skills base. However, it has had limited success in attracting domiciled funds to date.

“Hong Kong is a regional funds management centre with a substantial offshore asset base. It has a strong financial infrastructure & skills base, including front-office & funds servicing skills, as well as good regulation & taxation. Additionally, it holds the key advantage of being best placed to access the Chinese market.

“Since Singapore & Hong Kong compete for the role of the Asian wealth & asset management hub, it is likely that each may find it challenging to ensure the co-operation of the other in any attempts they may make to engage in a regional domicile role.

“Other niche players also operate in this space, such as the Cook Islands & Mauritius. These locations are appealing largely for their attractive tax environments, but in the case of Mauritius the strong connections to India also play a part. However, they have a weak regulatory infrastructure and limited jurisdiction credibility, financial infrastructure & skills base.”

The New Zealand taskforce has recommended that the Government proceed with stage 1 of the funds domicile opportunity through to the end of 2012, subject to the completion of the securities law reform.

Link: Taskforce report

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Attribution: Ministerial release, taskforce report, story written by Bob Dey for the Bob Dey Property Report.

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Interest group to advise Government on making NZ an international funds centre

Published 7 April 2010

Economic Development Minister Gerry Brownlee said yesterday a private-sector group – supported by a secretariat from the Ministry of Economic Development – would advise the Government on the steps required to create an international fund services industry in New Zealand.


Mr Brownlee said the group would consider what was needed to establish an international fund services industry & associated activities in New Zealand, including making New Zealand a popular funds domicile. A domicile is the legal home for a fund, such as a hedge fund, and is the centre for its accounting & administration.


The group will examine what regulatory & other undertakings would be required, and also how this could be used to strengthen New Zealand’s funds management industry & capital markets: "In particular, we need to improve our attractiveness to intermediaries who specialise in the administration & management of global funds & associated activities. This important work forms part of the Government’s economic growth agenda."


Professional director Craig Stobo, who chairs the International Fund Services Development Group, said it had already started identifying the needs of potential users of an international fund services industry: "It is very important that we approach this from a needs perspective. There are some obvious changes identified which will enhance our attractiveness. Other issues will require more careful consideration. Ultimately it is up to the Government to endorse & implement any proposals."


Mr Stobo is chairman of the AMP NZ Office Trust’s management company, AMP Haumi Management Ltd, a director of Broadview Financial Management Ltd, Elevation Capital Management Ltd, OCG Consulting Ltd, Saturn Portfolio Management Ltd & Stobo Group Ltd, and a former director of BT Funds Management (NZ) Ltd, Fisher Funds Management Ltd & Industrial Research Ltd.


Other members of the group are Troy Bowker, chairman & chief executive of Caniwi Capital Partners Ltd, Citigroup Global Markets NZ Ltd chief executive Mark Fitzgerald, BNP Paribas NZ Ltd chief executive Hugh Stevens and Tower Investments Ltd chief executive Sam Stubbs.


Mr Brownlee said New Zealand was well positioned to attract international fund services: "Our transparent, stable & neutral legal systems, high quality regulatory & tax environments, deep pool of talent and unique time-zone advantage together all mean New Zealand has a lot to offer, particularly in light of the global financial crisis.


"For instance, there is not currently a local funds domicile within Asia Pacific despite the significant growth in the region’s capital markets over recent years.  Much of this work continues to be performed in traditional centres."


The group is required to report by the end of May.


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Attribution: Ministerial release, story written by Bob Dey for the Bob Dey Property Report.

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Aquaculture fund boosted

Published 20 January 2010

Economic Development Minister Gerry Brownlee said yesterday the aquaculture market development contestable fund had been increased by $550,000 to help companies take advantage of emerging offshore opportunities. Applications close on Wednesday 31 March.


Mr Brownlee said aquaculture was New Zealand’s fastest-growing seafood sector and investment in it would accelerate the industry’s programme to drive growth over the medium to long term.


The fund is part of a larger $6.5 million programme the Government launched early last year to partner with industry. In the first round of this fund, $600,000 went to 5 projects focusing on opportunities for the sector in key markets, including Asia & North America.


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Attribution: Ministerial release, story written by Bob Dey for the Bob Dey Property Report.

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NZ Institute says Brash taskforce overlooked innovation opportunities

Published 9 December 2009

The NZ Institute released a discussion paper yesterday, Standing on the shoulders of science: Getting more value from the innovation ecosystem.


Institute director Rick Boven said the paper concluded that improving the innovation ecosystem, especially commercialisation activities, would provide valuable economic benefits for New Zealand: “New Zealand needs a world-class innovation ecosystem to maintain relative productivity levels in areas of strength, like agriculture. In addition to protecting areas of strength, New Zealand needs to establish additional sources of economic growth, especially exports.”


Dr Boven said the paper was relevant to the question of how to raise productivity: “The institute’s research indicates that the 2025 Taskforce has overlooked opportunities in the innovation ecosystem, and this conclusion is shared by leaders in many OECD countries New Zealand competes with.”


Dr Boven said an innovation infrastructure included not just research facilities but the business organisations that develop products & launch them in international markets.


He said New Zealand’s investment per capita in research & development remained well below the OECD average.


Website: NZ Institute


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Attribution: Institute release, story written by Bob Dey for the Bob Dey Property Report.

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Gary Taylor: Let’s have a green economy taskforce

Published 8 December 2009

Environmental Defence Society executive director Gary Taylor has done better than I managed at reading through the Brash Productivity Taskforce report, and has come up with a response that offers an alternative to Dr Don Brash’s thinking.


And it is Dr Brash’s thinking. If anybody else had input, it’s been turned into Brash-speak. While hunting through the taskforce report for some new ideas with researched backup – but abandoning that search – I discovered from some email correspondence that I’d had some input to the Brash report in the form of a story about the difficulty of getting consent to chop down a tree beside a busy industrial-area road.


In that particular case I thought chopping the tree down made sense, but the commissioner thought otherwise. Does that make the commissioner wrong and the system unreasonable? My inference from the use of this story in the taskforce report is that that’s exactly what you’re supposed to think.


The taskforce report said: “We agree that use of one’s land should be a right, constrained by law to the minimum extent feasible, not a privilege granted or withheld by officials with limited accountability, and little requirement to internalise the costs to others of their choices & decisions.” In that taskforce sentence, change the word officials to the community or society, and see if it makes a difference to your thinking. Should an individual have rights superior to those of the community in which that individual chooses to live?


The Brash view, here, is that individuals do have superior rights, yet that view is expressed in a paper on getting a community – a society, a nation – to build greater wealth together. Or is it? Is it really about individuals gouging as much as they can, and calling the combined gouge our wealth?


Gary Taylor, not surprisingly given his political stance, takes a very different view from Dr Brash on how to grow an economy. Below is an article he issued yesterday:


Dr Don Brash’s Productivity Taskforce report is disappointingly short on practical measures to lift New Zealand’s performance. Its prescription is to cut Government spending, lower taxes, restructure Fonterra, deregulate Zespri, build more mines and lower environmental standards. That’s about it.


I was expecting exciting ideas on how to lift productivity, create new jobs, release the wealth generated by Treaty settlements, add value to commodity exports, create new low-carbon industries, respond to rapidly changing markets and exploit our new trade agreements.


I was expecting some forward-looking analysis of the kind of world we will be living in by 2025, and what that means for policies today, but instead the taskforce looked back to the 1980s for inspiration. Most of the taskforce’s ideas are so extreme & lacking in coherence that no government would implement them. The prime minister was forced to disown the report on the day it was launched. What were they thinking?


My main concern with Dr Brash’s report is the lack of appreciation of the importance of New Zealand’s environment. The report is right when it says that a strong economy gives us the ability to maintain high environmental standards. But it then goes on to infer that we should do away with the RMA. That is just ridiculous. It would turn us into a third-world country and remove our key competitive advantage: the quality of our environment.


How could Jeremy Moon, who is a practical innovator with Icebreaker and who built his business on our environmental record, have lent his name to such unrealistic, backward-looking nonsense?


The report goes on to recommend opening most of our publicly owned conservation lands to mining. But New Zealand’s conservation lands have outstanding natural & scenic values that should be protected. They also support one of our biggest export earners, the tourist industry. They are not the West Australian deserts. In any case, the profits from the Australian-owned mining companies would add to Australia’s gdp, not ours.


So what do we do now, given the country has been let down so badly by the Productivity Taskforce? First, when thinking about comparisons with Australia, we should bear in mind that Australia is facing an uncertain & troubled future: climate change is seeing the red centre expand and muscle out the green coastal fringe where people live and food is produced. In contrast, the prospects for liveability in New Zealand are good. We should rejoice in the quality of our lifestyles, our environment. Our quality of life is high. GDP per capita shouldn’t be the only comparative measure we use.


Then we should move on to some serious thinking about the economic transformation that’s needed for us to adapt & survive as a trading nation, remote from markets, in a rapidly changing world.


I’d like to see the establishment of a Green Economy Taskforce that would come up with some practical suggestions on how to create new, sustainable, low-carbon jobs. It could also consider rolling out our tourism brand as a national brand: 100% Pure New Zealand.


The Green Economy Taskforce would build on the ideas generated by the NZ Institute, especially growing "weightless exports" – products that can be transported via broadband – such as creative & technical services. It would look at how to transform our tourism & agricultural exports by developing niche products linked to our clean, green brand, and at our emerging biotechnology & cleantech sectors.


I’d bring forward-thinking business, science & academic leaders together and get some real creative horse-power at work to think about what New Zealand’s economy should look like in 2025.


Website: Environmental Defence Society

Taskforce 2025


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Attribution: Comments by Bob Dey, article by Gary Taylor, for the Bob Dey Property Report.

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