Steven Joyce: A chance for a land of milk and money

New Zealand is promoting itself around the world. Here, Gin Wigmore and her band celebrate the inaugural Air New Zealand flight to Houston, Texas, in December. Photo / Nick Reed

Four ways we can help make NZ the innovation hub of the South Pacific

As we head into 2016, a trio of trade agreements signed last year will do much to grow the future incomes and living standards of Kiwis.

We've all heard about the TPP, which will provide unparalleled access for New Zealand companies and farmers to the consumers of 11 countries across the Asia-Pacific region, amounting to around 40 per cent of the world's economy.

Much less has been spoken of two smaller agreements. The Korean-FTA, which came into force with little fanfare in December, has already reduced tariffs not once but twice to the 51 million consumers of South Korea for New Zealand beef, kiwifruit, wine and so on.

And then there is the WTO Government Procurement Agreement. It sounds mundane, but it will have a far-reaching, positive impact on New Zealand's tech companies. Under the GPA, New Zealand companies must be given a level playing field with locals to bid for $1.7 trillion of Government contracts in 43 countries around the world. It opens up huge opportunities for New Zealand's clever niche tech exporters. The likes of Fisher and Paykel, Orion Health, and the Gallagher Group are already taking advantage of it.

Before our eyes New Zealand is becoming more connected to the world and, in particular, the Asia-Pacific region. Air New Zealand has just opened up new direct links to the southern US through Houston, to South America through Buenos Aires, and to Southeast Asia through Singapore; and now Ho Chi Minh City - the gateway to 90-odd million people in Vietnam.

This all continues a process of market and product diversification that began around 40 years ago when the United Kingdom joined the European community. We used to be all about the UK - now it hardly features in our top 10 markets. We used to be all about frozen animal carcasses and bulk milk powder, now we are increasingly about high-value food and beverages, ICT, niche high-tech manufacturing, and services like education and tourism.

Recent publications like the ICT Sector Report, The Investors Guide to the New Zealand Food and Beverage Industry, and the TIN 100 chart the growth of New Zealand's new industries. They are well worth a read for any Kiwi interested in where our country is headed.

I'm confident that this is the year most New Zealanders will realise that our international success is about much more than dairy. While our dairy industry will always be a real strength, it's becoming one of many. Despite the travails in dairy prices over the past year or so, our exports values grew in the year to September, as other sectors and countries stepped up to help fill the gap that dairy, and to an extent China, has left.

In my view there are four things in particular we must focus on this year and in the years ahead to realise that opportunity across all our growing industries.

First, we must continue to nurture research and innovation across the economy. New Zealanders are tremendous innovators. It is in our DNA - probably drawn from our historical isolation. But our investment in formal research and development, while growing, remains particularly low in the private sector.

Second, we must focus on developing the skills of the 21st century, particularly in areas like science, technology and engineering. Our engineering schools and science faculties are bursting with eager undergraduates learning the art of how things work and making new things with modern technology.

Third, we must continue to attract more investment. Capital is the fuel of Kiwi exporters. To make the most of our talent and resources right across New Zealand, especially in regional economies, we need to build the partnerships that attract investment from around the world.

Finally, we must keep building our connectedness to the world. An EU FTA beckons, but the big challenge is to capitalise on the opportunities we already have. As we learned with China, signing a free trade agreement is just the start. We need to work now to build deeper relationships and understanding with the people of the countries and cities we want to work with. That means swapping students, tourists, investors and researchers.

If we do the above, I fervently believe we will cement our place as one of the most prosperous small countries in the world. A place where our children and grandchildren will have it all - our great Kiwi lifestyle and stimulating rewarding work in the innovation hub of the South Pacific.

• Steven Joyce is the Minister for Economic Development.

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