Michael Barnett: Achievable goals and realistic timeframes aid growth

New Zealand needs to increase exports in new areas. Photo / Supplied

Opinion

Look at the reality of New Zealand businesses' continuing poor exporting and growth record over recent years. There is a huge untapped potential for improvement represented by this underwhelming performance.

It is obvious that the economic targets we have set as a country are wrong. They simply do not connect with businesses or motivate New Zealanders generally to set goals that are capable of success on a world stage.

I suggest that what is needed are realistic goals that are understood and seen to be achievable within timeframes capable of holding a nation's attention span.

The previous Labour-led Government adopted the target of reaching the top half of OECD rankings in per capita gross domestic product (GDP). The current Government has the goal of closing the gap with Australia in per capita GDP.

Per capita GDP is a recognised indicator as it is a good proxy for income per person. Measuring the target as a ranking, though, is problematic because New Zealand could get richer but if other countries also got richer faster than us, we would drop in the rankings.

Nevertheless based on 2009 OECD data, for New Zealand to reach the top half of OECD countries it would have to increase its ranking from 21st to 17th. It would need to overtake France and to grow 16 per cent more than France to achieve this target.

Similarly to close (eliminate) the gap with Australia, New Zealand would need to grow 35 per cent faster than them.

It is worth noting that the gap has actually widened since 2008 because even though New Zealand has been growing quite respectably, Australia has been growing even faster.

Both these targets have been widely misused over the years. People talk about the importance of "getting into the top half of OECD" or "closing the gap with Australia" without really understanding what it will take to achieve these goals or what they need to do to make the goal achievable.

Rather than ranking New Zealand against other countries, there is merit in having some absolute targets - or a range of sustainable economic, social and environmental goals that when achieved the consequences would enable our economy to grow and the living standards for all of us to be improved.

New Zealand needs goals that all of us can relate to and become motivated and passionate to achieve.

These goals we set as a nation need to be realistic and achievable by a larger tier of business across a wider front.

It has become clear that our current group of export heavyweights in agriculture and tourism lack the growth capacity to alone significantly lift living standards and New Zealand's overall economic performance.

We need to find ways to grow export values and volumes in new areas. Like information and communications technologies, film making, clean technology and energy, high-value food products and all the many other innovative and creative services made locally.

We need free trade agreements that deliver these outcomes.

Every New Zealand business has the potential to improve its performance. They should be provided with the motivation to grow their turnover, engage in research and development , develop or grow export initiatives and attract investment.

What we need are some believable goals, some bolder initiatives that capture the imagination of a significant number of businesses. And some enabling attitudes from business leaders and supportive Government agencies.

* Michael Barnett is chief executive of the Auckland Chamber of Commerce