Minister Robertson’s Economic Development Strategy

Written By: - Date published: 7:32 am, July 15th, 2021 - 20 comments
Categories: covid-19, economy, employment, grant robertson, health, labour, Politics, unemployment - Tags:

Minister Roberston’s recent speech to the Trans Tasman Business Circle sets out both how this government is using the pandemic to reset whole sectors of the economy, and also how it is getting its head around economic and social challenges. The points made were unsurprising, but his intended direction was unclear.

The Minister rightly points out the very high performance of New Zealand in key headline economic numbers, such as unemployment at 4.7% and trending downwards, economic activity at levels higher than before COVID, and a credit upgrade to AAA which is our first upgrade since 2003.

But then he gets straight into the problems, the risks, and the way this government intends to meet these challenges. This is what we are going to concentrate on. He makes important points about the vaccine rollout, and then on to reconnecting New Zealand with the world. In terms of our reconnection, he notes Professor Sir David Skegg said that the experience at our borders changed materially after 9/11 and so too will there be a new normal after COVID. Roberston didn’t go into much detail there, but that comparison itself is useful as a hint to what travel will mean both inward and outward in the medium future.

Minister Roberston then concentrated on critical aspects of the path for the New Zealand economy as we look to the future with and beyond COVID.

Without calling it a FIRE economy, Roberston underscores that pre-COVID, “too much of our economic expansion was based on unsustainable increases in house prices, and high levels of population growth.” What he is setting up there is a debate later about really restrictive immigration levels that forces us to train, grow and retain more highly qualified people here rather than importing them. That will mean that low tourism volumes and with it low hospitality employment is going to wither for the foreseeable future, and employers who want these people are going to have to pay more and generate attractive durable careers here.

Too many jobs were created in the low-wage economy and not enough of our firms are exporting into international markets or developing new technologies and products at the global frontier.”

This is a rebuke to the low-wage and precarious tourism and hospitality economy which kept us busy rather than wealthy, as well as mis-directing capital to poor quality assets rather than on research and development investment into higher-value businesses.

Some of that low-wage economy has been perpetuated by this government. Robertson generated a policy of wage subsidy last year that threw tens of billions of dollars to employers with little oversight and no positive shift of our economy other than keeping people busy.

Then he peeks behind those apparently healthy unemployment numbers:

Maori and Pacific unemployment took around 10 years to return to its pre-Global Financial Crisis level, and those ‘normal’ levels of unemployment are still far higher than the rest of the population.

So what was particularly curious here was the absence of any talk of re-regulating the labour market including those mirage-like MECA agreements, or continuing to raise the minimum wage (which they have done), or actively encourage re-unionisiation (which continues to collapse), or indeed anything like transferring some of the grossly unequal wealth at the top to the great majority at the bottom (through shifting taxes, for example, which they have largely neglected apart from a very minor change to an elite few this year).

Roberston further reminds us that our economy has not been sustainable in climate, biodiversity, and waterways. The primary polluter of our waterways is dairy, and yet they passed recently on any strong measures to address this in the 2020 DIRA legislation review which enables the continued existence of Fonterra.

What is discomfiting by this point in the speech is that we are half way through their second term and the Minister of Finance is only now articulating integrated challenges to the economy in this manner. He did outline some of this in the Budget 2021, but the high level areas to address these issues are:

  • Increase productivity through large scale investment in skills, research and innovation, infrastructure, building international connections and reforms of critical underpinnings of productivity such as our planning, water and immigration systems
  • Lift the value and increase the diversity of what we produce and do, and who we trade with
  • Transition to a low carbon economy and seize the potential of new technology and innovation to lead this transition
  • Realise the economic potential of our Maori and Pacific communities and businesses, small and medium enterprises and entrepeneurs
  • Immigration and skills come under focus, because the government is pretty clear that their “reset” is a mighty piece of COVID luck that forces employers to continue training rather than importing cheap labour that keeps wages down in hospitality and construction. They have a number of programmes that do this including free apprenticeships, the Training Incentive Allowance, the Flexiwage programme, and Mana In Mahi to name a few.

In industry transition, transformation and innovation, the Minister mentioned the Just Transitions fund for enabling mitigations under the Emissions Reduction Plan. He mentioned the Industry Transformation Plans for agritech and construction, with others in the pipeline for digital technologies, advanced manufacturing, and food and beverage, and forestry and wood processing.

The Minister is explicitly trying to use the national unification we all felt through our collective response to COVID, to see if that can be transferred to how business can work with government: “We have seen how our country’s stock of social capital (our trust in each other and the connections in our communities) has driven our positive response to COVID. The same must now also be the case for our economic recovery.

Given that we are about to get a whole lot of utes and dogs come into cities to protest the waterways regulations, Robertson’s final commentary is appropriate:

There is sometimes a tendency to think about the relationship between government and business as being dominated by regulation – that it is a dynamic defined by the prevention of particular activities. I’m interested in ways we can work together; where public investment can open up new economic possibilities and crowd-in capital from the private investor, rather than crowd it out.”

The tendency rather is a bit more problematic than that: the government has been “intervening” at greater and greater scale with each successive national crisis that we face year upon year upon decade, and yet for all this intervention we remain a low-income, low-savings, low productivity, low wage, low-regulated, oligopoly dominated, volume commodity dominated, China dominated economy for as far as the eye can see.

Robertson’s speech needed rather a whole-of-government effort more akin to the Growth and Innovation Framework of 2002. It needed to have a common set of themes that every minister then repeated.

This is Robertson’s first speech I’ve seen that has set out a set of economic issues and then what they might do. Perhaps I shouldn’t be so churlish as to complain.

At the moment we have disaggregated government that is not providing messaging on the major changes it is making which include:

  • nationalising the health system,
  • nationalising polytech education,
  • launching a huge waterways cleanup and water supply ownership programme which don’t relate to each other,
  • launching a carbon mitigation plan,
  • re-regulating immigration and skills,
  • massively shrinking the role of local government …
  • and leaving other large parts of the economy untouched such as universities, ports and airports, defence, public media, electricity generators, the entire innovation system such as it is, weak savings, grossly distorted asset classes, and chronic social inequality.

The more big moves this government makes, the less sense it makes.

Currently we only have two strong arms of state, Treasury and Health, and even health is wobbly. To achieve any of what Robertson is proposing, the rest of the state needs to catch up – and that is front and centre a government leadership job.

Sure, it’s one speech. We’ll have to see if there’s something to believe in beyond it.

20 comments on “Minister Robertson’s Economic Development Strategy ”

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  1. Cricklewood 1
    15 July 2021 at 7:45 am

    Clock's ticking in terms of getting things delivered, we've seen close to stagflation in house prices which has cemented inequality in our society for at minimum a generation, no headway in emergency housing with the list growing faster than the build program…

    Both major items this govt promised to address, so far they've tinkered around the edges without actually being bold enough to make real structural change.

  2. pat 2
    15 July 2021 at 9:26 am

    Think it may be fair to observe that this apparent confusion is the result of government by focus group.

    They are bereft of any idea other than re election.

    • Ad 2.1
      15 July 2021 at 9:32 am

      No this government has plenty of ideas. I listed a few. And many are bolder than we've seen in decades.

      Some have been completed, but many are so big that they are very hard to execute within a term. That's not a unique issue to this government – for example all the massive transport projects that National started will finish two terms after they went.

      • pat 2.1.1
        15 July 2021 at 9:39 am

        They are tinkering and reversing at every sign of resistance…their actions are frequently diametrically opposed to their claims…they have 40 billion sitting at the RBNZ unallocated…4 years after being gifted power they have yet to present a roadmap or destination.

        They are bereft

        • Ad 2.1.1.1
          15 July 2021 at 10:34 am

          Get a grip. They've lost light rail. One project among hundreds.

          This is by a long way the most interventionist government we have had since Muldoon. That's two generations ago.

          Sure they're incoherent, but they can be granted time on this theming and messaging since there's no pattern of state intervention across the developed world that has forecast what's been required here over the last 18 months. The GFC was a minor run compared to what we are in now.

          • pat 2.1.1.1.1
            15 July 2021 at 10:49 am

            Get a grip??

            Brilliant!

            • greywarshark 2.1.1.1.1.1
              15 July 2021 at 12:19 pm

              pat you are 90% brilliant. (Nobody's perfect, and the small failure may itself allow an interesting and useful weed to get rooted and actually grow to a worthwhile end.)

  3. Tiger Mountain 3
    15 July 2021 at 11:52 am

    In Northland and the Far North, barely a week goes by without Willow Jean Prime, Kelvin Davis and Emily Henderson launching or opening some infrastructure project–such as a business hub near Kaikohe, and solar farm near Kaitaia, sometimes legacies of the PGF. But how do they capitalise apart from fleeting social media feeds?

    Tomorrow all around the North there will be provincial Nat fans driving tractors around and Utes full of barking dogs, some sort of munters for Judith protest.
    https://www.nzherald.co.nz/northern-advocate/news/howl-of-a-protest-big-crowds-expected-across-northland/5OFHO4CO47O57X3BN5VTUXAFPQ/?utm_medium=Social&utm_source=Facebook&fbclid=IwAR26hvurxRE4-VHbG3EZZGWzM9nD3S1uu-Q-xnddksb6vs_uzpQUMfZqnig#Echobox=1626287191

    Labour need to try harder to embed some of the many worthy reforms they have quietly accomplished in the public consciousness.

    In the bigger picture, Labour lacks critical ideologues and public intellectuals to state the incredibly obvious–they remain handcuffed to “Roger’n’Ruth’s” legacy of neo liberal hegemony. Community organising and direct action are the only way out–as the growing campaign over Whānau Ora shows.

  4. Adrian 4
    15 July 2021 at 12:05 pm

    At the risk of being castigated, as opposed to castrated( too late, that happened years ago), I wonder if the low wage economy charge is fair. If the comparison is between a cafe worker and a Swiss engineer of course it is, but between the cafe worker here and in almost any other country in the world then they are probably pretty comparable. Low wages for jobs requiring not a lot of time having been spent in school paying attention are common in most countries. We must be ahead of the States, Britain, a lot of Europe maybe not Scandinavia and Germany but the cost of living and very high income tax in those places levels that out quite a bit. What little info I do have has been gleaned from my kids experience travelling and working offshore and my own travel in the last 5 years so it is recent info. The truth is, shit jobs, which somebody has to do, pay shit wages the world over, and we are not far out of line with them, and before you cry…but Australia!.. agricultural jobs don’t pay that well there either except in those places where people don’t nessecarily want to live and work, hundreds of miles from anyway and in the middle of the desert. Even nurses wages are only about 10-12% ahead of ours but considerably more where Aussie nurses dont want to work or for a very short spells.

    • pat 4.1
      15 July 2021 at 12:24 pm

      "We must be ahead of the States, Britain, a lot of Europe maybe not Scandinavia and Germany but the cost of living and very high income tax in those places levels that out quite a bit."

      And therein lies some of the issue….the wage /cost of living ratio in this country has been steadily worsening and that is largely attributable to the increasing value of housing, yet this gov who were elected to address inequality, child poverty and housing tied their own hands by ruling out tax increases, wealth taxes or decreased property prices ….the very tools needed to address their claimed concerns.

      The lure of (e.g.) Australia is greatly diminished if your wage provides the necessities of life regardless of its level in comparison to foreign markets….it aint rocket science.

      • Patricia Bremner 4.1.1
        15 July 2021 at 5:32 pm

        Pat "the lure of Australia"… They pay nothing to workers locked down, they have let this virus pass into 3 states, hardly alluring.

        • pat 4.1.1.1
          15 July 2021 at 5:44 pm

          Tell that to the multitudes heading there.

          • Patricia Bremner 4.1.1.1.1
            15 July 2021 at 6:08 pm

            Most are going to see relatives. Work is now ad hoc and paid by the hourly rate. 700 businesses have closed in the Gold Coast alone.

            House prices are rising and food is getting dearer by the day. We have family in all 3 states and they are being worn down by those who won't co-operate.

            Who is going that you know of? or is that just "so there"!!

            • pat 4.1.1.1.1.1
              15 July 2021 at 6:23 pm

              I have lost count of the number of acquaintances who are/ or have family members actively looking to emigrate (mainly to Australia)….not to mention the reports of recruiters here offering employment in a range of industries over the ditch.

              And I too have family there and am well aware of the situation….both the positive and negative.

    • Ad 4.2
      15 July 2021 at 12:27 pm

      I agree everyone will have their own anecdotes to compare. But. On RNZ yesterday morning there was a good set of interviews with chefs who have had experience in France, United States, Australia, and here. They all rated the New Zealand pay rates as comparatively very poor, and that they were simply not treated as having a real career path here as distinct to anywhere else they had worked.

      So many of New Zealan'ds restaurant owners are going into the media crying out for workers to be imported – because they are cheap, hire at minimum wage, and continually undercut the wage and salary expectations of those who are trained here.

      For a country that makes its living out of food, we appear to be paying only to produce the raw ingredients.

      • gsays 4.2.1
        15 July 2021 at 12:55 pm

        Too true Ad.

        In my experience there was little to no formal training. Any upskilling was when the roster was dodgy and folk were thrown in the deep end in another area if the business to sink or swim.

        Too few hospo businesses offer perks, eg a meal for all staff, NZQA quals, profit share for key employees.

        The squealing from hospo voices is the sound of businesses that were barely viable with minimum wage and migrant labour, realizing that their business model is now invalid.

        We could probably lose 1/3 of hospo outlets.

    • greywarshark 4.3
      15 July 2021 at 12:30 pm

      I have read a couple of comments about cost of living in NZ cf to elsewhere. One disillusioned, one recognising the good tops the bad.

      https://e2nz.org/migrant-stories/chapter-9/nz-vs-uk-not-all-its-cracked-up-to-be-is-it-just-me/

      One comment: (note the info given about the person's USA salary may not be true.)

      I had to move back here and while I had been told of the differences, I don’t think I really believed it until I was actually here. Knowing and actually comprehending things are totally different I think.

      I left a job in the US that, on a good week, could pay nearly $2,000 after bonuses. That same job in NZ MIGHT pay $430/week with no bonuses. So what was a career choice (a job I loved) in the US, where I could save and have plenty of money to play with after paying my bills, is no choice at all here in NZ. Is it my fault for not thinking ahead? Well, maybe, but then I never ever planned to move back to NZ.

      The reason why NZ is so slow to improve is because it’s residents are willing to settle. Instead of expecting more bang for their buck they have the whole “harden up” “she’ll be right” mentality.
      Personally the one thing I despised most about moving here was being told to harden up. How insulting.

      https://goingnz.com/living-in-new-zealand/a-year-in-nz-our-cost-of-living-new-zealand/

      This is the conclusion for this couple after doing analysis:

      I think the lesson we have learned over time is to stop analyzing it so much and to think of New Zealand as a high maintenance girlfriend. Heres our analogy…

      She (being NZ) is very good looking and has charm. But to put up with the good lucks and charm of that sexy girlfriend we have to put our hands into our pockets and “Suck it up”. To live here in NZ the cost of living in New Zealand is something we have to start putting up with. This analogy has really helped us clarify our thought process on the price issues.

      When we weigh up the pros and cons we believe NZ is worth the extra expense and we hope you think so too!

  5. Patricia Bremner 5
    15 July 2021 at 1:18 pm

    We are not out of the Pandemic. The fact that this government is using opportunities caused by the disruption to try to fix problems and improve wellbeing is to be commended. The problems are huge, and as stated, they can not save every business, but boy they tried.

    Just one item, Water… every summer people have been told to avoid beaches near Auckland because of human waste. The work to improve sewerage and waste water plus drinking water country wide is huge.

    The next is trade with China. One sentence about expanding our products and markets is about moving on from logs and milk powder, to more finished products produced here.

    Education and training, the government is leading the discussion on training our own to meet the shortages..135000 of them in schemes. Some of that group are future planners. Streamlining our Education system to improve locals lives, rather than importing students to balance budgets for "providers".

    This Government's overarching goals stated in Budget 2021 are being put in place at a an amazing clip, hence the surprised anger of the farming fraternity, who still feel we all need to change but their change horizon should forever be 'pushed beyond the horizon'.

    I admit freely to being a Labour and Green supporter, so anyone with 3 or 4 utes is a polluter and needs to pay for that, they have a choice to lean on their suppliers.

    Signals are very clear, be part of the team solution or part of the problem.

  6. Shanreagh 6
    15 July 2021 at 4:17 pm

    Any chance of changing the Roberstons to Robertson by a global correct. My eye keeps landing on the wrong spelling………

    Cheers

  7. Jackel 7
    15 July 2021 at 10:14 pm

    Looking at the underlying logic in your speech that sounds like a pretty good plan Mr Robertson.