Economic Development Minister Steven Joyce is confident that New Zealand can make the Government’s target of exports reaching 40% of GDP by 2025.
But he doubts we will get there without more deals like the proposed Chinese investment in Silver Fern farms.
And he says the Government will soon have more to say on encouraging more private sector investment in research and development.
But the proposal by the Chinese company, Shangahi Maling to invest $261 million in Silver Fern Farms points up one major constraint on Mr Joyce’s ambition to reach the 40% target — the availability of investment capital within New Zealand.
He said that right from 2012 when the Government identified that it would an extra $150 – $200 billion by 2025 to reach the target it recognised that some of that would be international.
“If we were to wait around the for the New Zealand domestic investors then we might be waiting a while,” he said.
“New Zealand has aspirations to grow faster than that”
But if a lack of capital is a constraint then there is also a problem looming with the overall slowdown in the economy, particularly for the export dairy industry.
And the US recession had really caused the headwinds for our non-dairy exporters
However Mr Joyce believes the lower dollar coupled with economic recovery in the USA might help make up for this.
“This will give us the opportunity to grow quickly over the next few years,” he said.
“But obviously that will be masked by dairy till dairy comes back a bit.
“On a medium term basis we can probably feel a bit better about our prospects given the lower dollar.”
Earlier his year he announced that the Government would focus its export promotion efforts on markets that were within 12 hours flying time from New Zealand.
Trade Minister Tim Groser seemed to back that up yesterday with a focus on regional trade agreements.
In a joint statement with Mr Joyce he said: the Business Growth Agenda would prioritise “seeking a strategic partnership with South East Asian nations, developing a new partnership with the Pacific Alliance countries in South America, pursuing the launch of an EU-NZ FTA negotiation, negotiating an FTA upgrade with China, and seeking a successful conclusion to the TPP negotiations. “
Interestingly a free trade agreement with the Gulf States — the reason for the controversial farm in the desert and where Mr Groser has just visited is not on the list though it was in 2012.
And an ambitious programme under the auspices of NZ Inc to grow merchandise exports to India to $2 billion by 2015 and to grow services trade by 20% per year appears to have also been dropped.
The 2012 Agenda said achieving that target would largely depend on favourable external factors.
“Securing an FTA with India would substantially improve our prospects, and negotiations are underway.”
There was no mention of it in the report’s list of potential trade negotiations released yesterday.
There is however more to come, most importantly a paper on innovation and it is clear Mr Joyce believes there is still a good deal to do in this area.
Asked if he was happy with the mount of private sector research and development expenditure he said he was “happier”.
“It is improving but I’ll have more to say on this in a few weeks.”
He said that previous r and d statistics had been inflated by the amount Solid Energy had been spending but was now not.
Instead there was a switch to r and d spending coming from the ICT sector and high tech manufacturing.
There is some cynicism in business about Mr Joyce’s package of glossy reports which make up the overall strategy but there does appear to be a coherence to it all which might provide a more informed structure to Government policy and spending decisions.