Dialogue: Why we must develop passion in our business

As we launch into 2001, business optimism is high, fuelled by record earnings from commodity exports and Government progress on trade agreements, and indications that it will, at long last, tackle compliance costs and improve the regulatory environment.

We are looking at a 3 per cent growth rate for the year, which is above levels recorded by many of our trading partners and competitors.

Yes, New Zealand's long-maligned economy is showing some positives. But is this simply another temporary recovery or have our fortunes at long last been turned around?

Is the turnaround sustainable and has the start been made towards bringing us to a level of prosperity matching countries we constantly compare ourselves with - Ireland, Finland, Singapore?

Or perhaps a better question: what must we do this year to ensure that there is no going backwards?

Just as business confidence collapsed in a matter of weeks early last year, and as quickly stormed back in December, what is to stop another reversal once the bubble bursts on this growth spurt? In fact, very little, which is why this is a crunch year for a strong campaign to manage our unlimited opportunities and to build a prosperous country.

Before I suggest how we might secure a more sustainable growth-based economy, I must explain further what I mean by the essential fragility of our business infrastructure and confidence levels.

First, the big increase in commodity export earnings last year had very little do with any production increase or returns from new investment, and a lot to do with our low dollar and an upswing in world prices.

Economic commentators are united in their view that as the American economic boom settles back, the value of the New Zealand dollar will rise. At the same time, commodity prices are predicted to fall. The result: prices for our exports will drop.

Secondly, the high profile given our successful exporters is, in fact, narrowly based. New Zealand still lacks an inventory of advanced products and experienced exporters able to exploit the limitless opportunities in the global marketplace.

Think of Sweden, with its relatively small population and tough environment. It has been successful in introducing branded products - Volvo, Saab-Scania, Electrolux, Ericsson - and has expansion plans in some. Where is the equivalent penetration of Swedish markets or consciousness by New Zealand brands. Some wine and beer products perhaps, but what else?

It is not that New Zealand has a poor reputation. We simply have no reputation at all, which is perhaps understandable because the many headlines generated by our advanced knowledge-driven exports businesses stem from no more than 500 companies.

Less than 1 per cent of New Zealand's 200,000-plus businesses do regular business in the global economy.

Contrary to myth, our economy is not technologically advanced, and we are well behind the likes of Ireland and Belgium as a per capita exporter of the goods we produce.

Thirdly, our competitiveness ranking slipped from 13th place in 1999 to 20th place last year. Compare this with Australia, 12th in 1999, a position it held in 2000, while the Netherlands, Ireland and Finland climbed from ninth, 10th and 11th in 1999 to fourth, fifth and sixth last year, respectively.

The point is that our decline last year continued a trend: from third in 1996 to fifth in 1997 to 13th in 1998. In September, we will know whether we slipped further last year.

We need to lift our game across the board if we are to again feature in the top group of countries of high and rising living standards. Here are suggestions for action this year:

Develop a strong passion, commitment and sense of urgency to build a new platform of export-focused businesses. The Government-business summit last September was seen as a public relations triumph. It contributed to the turnaround in business confidence.

But we need to see the strategy and milestones from that gathering that will lift our export production. Programmes need to be unveiled to increase the number of businesses exporting successfully. The big-picture vision statement needs to be spelled out, and a campaign launched to empower every New Zealander to start talking this country up and stop talking it down.

Bridge the gaps between research and development, business management, attracting investment, raising the skill base and undertaking international marketing. We must encourage entrepreneurial businesses, university researchers, producer boards, Government agencies, bankers and international marketers to cluster and incubate good ideas into successful international businesses.

Rejuvenation of our mature producer boards - through the use of science, development, quality control and marketing to generate a sense of urgency to move from low to high value-added products and to embrace entrepreneurial producers who bring forward fresh products and marketing ideas.

Each producer board must come under a strong cultural and attitudinal imperative to leave its mark on the world. Our producer boards could also take on some of the investment challenges to enter joint ventures with international firms seeking to establish a foothold here.

Raise the skill base. It has been said many times before, but it needs to happen this year.

Overcome the tyranny of distance. As other countries have modernised their economies and lifted their performances ahead of New Zealand's, we need to find ways to have better economic policies if we are to attract investment and skilled people.

We need to have a major point of difference that sets us apart positively from other countries. It might be a combination of attitude, social diversity, quality of lifestyle, clean and green environment and sense of freedom and boundless opportunity.

The lesson we should draw from the successes that other smaller nations have begun to enjoy from the technological revolution is that we can achieve exactly what we want to achieve - any kind of knowledge-driven business, we can grow most foods, we are good at building things, we can set our own employment levels.

Our prosperity is in our hands, and we have only ourselves to worry about in asserting our right to choose, both individually and collectively. If collectively we set a target to spawn a rejuvenated and productive nation, many of our young people will be packing their bags for the first plane home.

* Michael Barnett is chief executive of the Auckland Regional Chamber of Commerce and Industry.