Sustainable economic growth for New Zealand:
An optimistic myth-busting approach
Paul CallaghanAlan MacDiarmid Professor of Physical Sciences
Victoria University of Wellington
Income inequality 26/33
Unemployment 15/33
Level of democracy 3/33
Life expectancy 11/33
Prison population 26/33
Math score 9/33
Science score 6/33
New Zealand performance1. New Zealand is an egalitarian society
2. New Zealand is clean and green
2. New Zealand is clean and green
Alpine Zone
Tussock
Exotic grassland
Exotic forest
Scrub, wetlands
Native forest
Settlements, crops
100
80
60
40
20
01000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000
year
Recent history of New Zealand land coverperc
ent t
otal
land
are
a
Science and trade Can we have our cake and eat it?
Earthrace “ecoboat”aka “Ady Gil”
“Sustainable energy, without the hot air”David McKay (UIT, Cambridge, 2008)
Earthrace “ecoboat”
“Sustainable energy, without the hot air”David McKay (UIT, Cambridge, 2008)
3. We don’t need to be more prosperous
New Zealand economy and ChristchurchSome data 15 % Christchurch % nation’s economy.NZ$51 bn Tax revenue in the 2009/10 financial year.NZ$153 bn New Zealand GDP
The costNZ$15 to NZ$30 bn cost of rebuildNZ$3,400 to NZ$6,800 per residentNZ$11,500 to NZ$23,000 per FTE of employment
New Zealand economy and ChristchurchSome data 15 % Christchurch % nation’s economy.NZ$51 bn Tax revenue in the 2009/10 financial year.NZ$153 bn New Zealand GDP
The costNZ$15 to NZ$30 bn cost of rebuildNZ$3,400 to NZ$6,800 per residentNZ$11,500 to NZ$23,000 per FTE of employment
NZ$15 billion
residentialdamage$ 9 bn
businessdamage$ 3 bn
infrastructuredamage$ 3 bn
New Zealand economy and ChristchurchSome data 15 % Christchurch % nation’s economy.NZ$51 bn Tax revenue in the 2009/10 financial year.NZ$153 bn New Zealand GDP
The costNZ$15 to NZ$30 bn cost of rebuildNZ$3,400 to NZ$6,800 per residentNZ$11,500 to NZ$23,000 per FTE of employment
Who paysNZ$2 bn from EQC NZ$7 bn from central governmentNZ$4 bn from insurance(with NZ$3 bn from reinsurance overseas)NZ$ 2 bn in private losses
Government$7 bn
private Insurers
$4 bn($3 bn offshore)
NZ$15 billion
EQC $2 bn($5 bn-$3 bn)
residentialdamage$ 9 bn
businessdamage$ 3 bn
infrastructuredamage$ 3 bn
private loss+ local government
$ 2 bn
35%US $35 bnNZ$ 45 bn
Japan
Greece Spain
Iceland
Canada USA
IrelandUKSweden
Italy
Germany Belgium
France
Austria
Netherlands
Finland
SwitzerlandAustralia
4. New Zealanders have a relaxed easygoing lifestyleor We need to work harder to be more prosperous
JapanNew Zealand
Greece Spain
Iceland
Canada USA
IrelandUKSweden
Italy
Germany Belgium
France
Austria
Netherlands
Finland
SwitzerlandAustralia
4, New Zealanders have a relaxed easygoing lifestyleor We need to work harder to be more prosperous
5. More tourism would be good for the New Zealand economy
0
$100,000
$200,000
$300,000
$400,000
$500,000
Needed for current
per capita GDP
200,000100,000 300,000
Rev
enue
per
em
ploy
ee
FTE of employment
NZ has 1.3 million FTE of employment
0
$100,000
$200,000
$300,000
$400,000
$500,000
Needed for current
per capita GDP
200,000100,000 300,000
Tourism
Rev
enue
per
em
ploy
ee
FTE of employment
Wine
NZ has 1.3 million FTE of employment
0
$100,000
$200,000
$300,000
$400,000
$500,000
Needed for current
per capita GDP
200,000100,000 300,000
Tourism
Rev
enue
per
em
ploy
ee
FTE of employment
Food manufacturing
Wine
NZ has 1.3 million FTE of employment
0
$100,000
$200,000
$300,000
$400,000
$500,000
Needed for current
per capita GDP
200,000100,000 300,000
Fonterra
Total NZ Manufacturing
Tourism
Rev
enue
per
em
ploy
ee
FTE of employment
NZ Manufacturing Exports
Food manufacturing
Wine
NZ has 1.3 million FTE of employment
0
$100,000
$200,000
$300,000
$400,000
$500,000
Needed for current
per capita GDP
200,000100,000 300,000
Fonterra
Fisher and Paykel Healthcare
Total NZ Manufacturing
Tourism
Rev
enue
per
em
ploy
ee
FTE of employment
NZ Manufacturing Exports
Food manufacturing
Wine
NZ has 1.3 million FTE of employment
Year ended December 2008
Mea
t
Dai
ry
Fish Fr
uit a
nd v
eget
able
Win
e
Fore
stry
and
oth
er p
rimar
y
Met
als
Man
ufac
turin
g
Tour
ism
0
2
4
6
8
Fore
ign
earn
ings
(US
$ bi
llion
)
NZ External Trade Statisticshttp://www.stats.govt.nz
US$ 35 billion
ELT
Pet
role
m
6. You can’t manufacture in New Zealand
“As a share of GDP, New Zealand government spending on R&D is higher than in countries with materially higher incomes (including the United States, The United Kingdom and Canada)”
“As a share of GDP, New Zealand government spending on R&D is higher than in countries with materially higher incomes (including the United States, The United Kingdom and Canada)”
“The taskforce is not convinced that there is a compelling case for more government spending on research and development through whatever means.”
“As a share of GDP, New Zealand government spending on R&D is higher than in countries with materially higher incomes (including the United States, The United Kingdom and Canada)”
7. New Zealand is small so we need to specialise in the knowledge economy
e.g.we are good at agriculture, therefore our best chance for a high tech economy is in biosciences
Abt Associates report to MoRSTwww.morst.govt.nz
New Economy Research Fund1999-2005
New Zealand USA(and nearly everyone else)
7. New Zealand is small so we need to specialise in the knowledge economy
e.g.we are good at agriculture, therefore our best chance for a high tech economy is in biosciences(latest fads=“smart foods”, “cleantech”)
Abt Associates report to MoRSTwww.morst.govt.nz
New Economy Research Fund1999-2005
New Zealand USA(and nearly everyone else)
$100m
$200m
$300m
$400m
$500m
$1410m
100 90 80 70 60 50 40 30 20 10 1
F and P appliances Datacom
F and P Healthcare
Navman wireless NZ
NDA
Temperzone
Rakon
Gallagher
Weta Ltd
Tait Electronics Ltd
Douglas pharmaceuticals
Allied TelesisMethven
GlidepathDynamic controls
Schneider electric
Skope industriesTruTest
NextWindowOrion Health
NZ Pharmaceuticals
TIN100 New Zealand Technology Companies
Rank
Ann
ual r
even
ue (N
Z$)
Moffat Ltd
The words of truth are always paradoxical.
Lao Tzu4th century BC
Irony
The perceived notion of an incongruity between what is expressed and what is intended, or between an understanding or expectation of a reality and what actually happens, "when the literal truth is in direct discordance to the perceived truth."
Jane Austen Pride and Prejudice “It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.”
“Am I not destroying my enemies when I make friends of them?” Abraham Lincoln, 16th US president (1809-1865)
April 9, 1865(Appomattox )
Paradox: our two greatest scientists
Paradox: if it sounds unfamiliar, it may stand a chance
$100m
$200m
$300m
$400m
$500m
$1410m
100 90 80 70 60 50 40 30 20 10 1
TIN100 New Zealand Technology Companies
Rank
Ann
ual r
even
ue (N
Z$)
$3.9 bnOur top 10 technology Companies
F and P appliances Datacom
F and P Healthcare NDA
Temperzone
Rakon
Gallagher
Tait Electronics Ltd
Douglas pharmaceuticals
Moffat Ltd
Ask the question: why would such a business want to stay in New Zealand?
100 companies, 100 inspired entrepreneursAn additional $45 bn per annum in exports (double our present exports)
Ask the question: why would such a business want to stay in New Zealand?
100 companies, 100 inspired entrepreneursAn additional $45 bn per annum in exports (double our present exports)
“A place where talent wants to live”
Total $60 bn contained in all landTarget: $45 bn per year
Strategy for economic growth via the knowledge economy100 companies, 100 inspired entrepreneurs
Whole of government commitment to strategy: “A country where talent wants to live”
Commitment to education•Tell the stories of the job opportunities for New Zealand kids at home
(Get the kids and teachers visiting the smart businesses)•Significantly boost science and mathematics education in schools•Build school programmes in entrepreneurship•Boost university engineering and science capability•Refine PBRF to reward commercialisation work
Commitment to R and D•Boost science and engineering research from 0.52% GDP to 0.70% GDP
(a mere $300 million)•Enhance R and D credits to the knowledge sector•Compel CRIs to give IP share of benefit to employees and allow employee spinout•Help establish incubators, business/engineering/science synergy
Commitment to Branding•Understand the value of the conservation estate, liveable cities, quality of life•Identify and “call out” phony environmentalism and “science-phobia”•Market NZ as the “smart country, a place where talent wants to live”
Commitment to Leadership and vision•Bipartisan approach•Evidence basis for decisions-understand what works for us
As for leaders,
The worst, the people hate,
The next best, the people fear,
The next best the people honor and praise.
But for the best leaders, the people do not notice their existence.
When the best leader's work is done the people say, 'We did it ourselves!'