Investment the key, says Cullen
New Zealand's efforts to be economically strong should include increased capital investment by manufacturing and other firms, Deputy Prime Minister Michael Cullen says.
Friday, November 30th 2007, 11:13AM
The service and manufacturing sector in particular needed to change to help drive New Zealanders' incomes towards those in Australia, Cullen told The Press after the 20/20 Primary Industries Summit in Christchurch yesterday."The big difference between the Australian economy and ours is the intensity of capital investment in their economy.
"That means a lot of things: certainly improving capital markets (with) things like KiwiSaver; and improving the human capital -- things like changes around the company tax rate and depreciation are all about encouraging investment," Cullen said.
Business also had to recognise that increased capital investment was needed for long term development. "We're running out of capacity to drive simply growth by working people harder and adding more workers. This has what has driven this economy too much for the last 15 years."
New Zealand had to continue to focus on skilled migrants, and the Government would eventually like to see the migration statistics to grow back to an annual intake of 10,000 people flowing into New Zealand, Cullen said.
He was not concerned by the continuing drift of Kiwis across the Tasman.
For a long time New Zealand's overall long-term trend inflow had been assumed at around a 5000 net inflow each year, but that would gradually increase towards 10,000 annually in the next couple of years.
"More recently we've have upped that and I would expect to see that grow again -- not necessarily in the next year or so, but over the cycle.
"We need to continue to concentrate on that for the long- term future because that's really the nature of our economy."
Cullen said New Zealand's primary industries could provide leadership in terms of showing efficiencies and sustainable practice to the nation. Today's wave of globalisation was both faster -- with tariff barriers falling and corporates expanding global operations -- and deeper, than before.
With world economies coming closer to each other than ever before the successes and failures of nations were becoming increasingly collective.
For example rogue events such as the spreading North American subprime mortgage market problems could easily spread as far as our shores.
New Zealand had to seize global opportunities while maintaining "vital insulation" from global shocks.
Primary industries had the global scale, sophistication and competitive advantage to lead a continuing economic transformation to build prosperity for New Zealanders.
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