KEY POINTS:
The Government is setting up a business expansion scheme that could see taxpayers' money used to create jobs overseas.
Economic Development Minister Trevor Mallard will today outline plans to help companies to establish foreign operations, instead of just assisting them to export their goods.
The move could raise eyebrows because overseas expansion could come at the cost of jobs in New Zealand - a trend already seen in the manufacturing sector. Fisher & Paykel Appliances is one of several companies to have shifted operations to other countries.
Mr Mallard said the Government had put a lot of support into exporting and now wanted to take a broader view and look more towards owning things overseas.
Asked if that could be at the expense of local jobs, he said: "I'll acknowledge that we're doing it to help change the nature of jobs in New Zealand, to make sure that we have people to do the higher wage jobs in New Zealand.
"That's what the focus should be - I don't want to be competing with the $20-a-day Chinese or Thai jobs."
The Government now offers help to local companies through its New Zealand Trade and Enterprise and Investment New Zealand arms, which also assist foreigners looking to invest in this country.
But a review of Investment New Zealand has raised concerns about its focus and how much it spent in relation to what was gained.
Mr Mallard said he wanted a more strategic focus on inward foreign investment, although he specifically noted that his comments had nothing to do with Overseas Investment Act regulations.
"I think there was a view, certainly in the 1980s, that essentially it didn't matter that much who owned it, as long as the jobs were here.
"But the problem that I have is, we could do really well in exporting, but if most of the companies that are doing exporting are overseas-owned, then the flow of profits back to the home countries means that we are no better off. In the end, what a country owns is very important."
He said nothing he would outline today should imply any view on the decision he might be called on to make about to the potential sale of Auckland International Airport to Dubai interests.
He felt the level of foreign direct investment in New Zealand was about right, but he wanted it to be more focused on new areas and on bringing in new technologies.
At the moment the investment is often used more to buy existing companies.
Some grants made to businesses by Investment New Zealand will be abandoned. Instead Mr Mallard wants to use money for feasibility studies and give other help to local companies looking to make their mark overseas.
He said the help would take the form of assisting companies to identify how - and where - to put their roots down overseas.
New Zealand Institute chief executive David Skilling last night welcomed the shifts outlined by Mr Mallard.
"It gets around the problem of New Zealand being a remote country," he said. "If you make something here and then ship it, it's generally going to be more expensive and more time consuming."
