New Zealand may be enjoying a strong economic spurt but there needs to be a bigger push into increasing productivity -- especially in the technology sector, warns Kim Campbell, chief executive of the Employers and Manufacturers Association (EMA).

"If you look at the New Zealand economy at one level, the headline numbers look good ... driven by a shortage in the housing market and a new head of steam in infrastructure development where we have under-spent during the last 30 years.

"People are building stuff, we have quite a strong dollar and this has given a sense that we are better off. But if you look at output per individual and capital invested per person, then these indicators haven't grown in the last 40 years," says Campbell.


"Most the growth has come in services -- education, tourism and some consultancy -- but overall we have not invested in new plant and equipment. We have not moved quickly enough in productive sectors such as high-tech."

Campbell says as soon as a new high-tech company gets to any size, it gets bought up and disappears. "The way we do incubation here is a dead cert that the company won't stay here. It may [be invested in] through Callaghan Innovation but who benefits when it grows? Silicon Valley."

He says the Government's Business Growth Agenda has some fine elements but it hasn't accomplished what was intended. The research and development spend has gone down, and there needs to be some intervention "if we want to look long term".

"We are reaching the upper limits of what we can pull off the land [in the primary sector] and we can't extract minerals or water. What's left? A highly urbanised nation.

"So how do we recalibrate the economy and do the difficult work that adds value -- like Sweden and Denmark have done with clean energy and high-tech manufacturing and Ireland in attracting the likes of Apple?

"The type of intervention I'm talking about is incentives such as lowering the corporate tax rate and employing lots of very highly skilled and paid people in high-tech companies. It has to be something to make it interesting for people to work here," Campbell says.

"We have to make sure that people are better educated and we have to invest in productive businesses to keep them here and do the difficult stuff -- rather than just building factories, houses and roads."

Campbell is worried about New Zealand's high level of household debt in the world -- "it has grown at a rapid rate and it's going to end badly for some."

He also believes planning systems and laws should be freed up so people can invest freely and have some certainty in doing that.

We have not invested in new plant and equipment. We have not moved quickly enough in productive sectors such as high-tech.


"We have created institutions -- such as Overseas Investment Office, Electricity Authority, Resource Management Act, Local Government Act -- which are inefficient and slow to respond.

"We [the EMA] are at the interface where public policy hits the road and we hate to see waste. We tolerate far too much community engagement and consultation."

Campbell is an advocate for councils such as Auckland recycling its assets to fund new infrastructure. "When a city is short of capital to develop roads, which provide fundamental productivity, and it invests in the airport and seaport, I see a complete disconnect."

He also backs other funding devices such as public private partnerships and city bonds for targeted financing. "If the council issues a bond with a coupon rate of 3.5 per cent and the money goes towards fixing the potholes I drive over, then I couldn't get my cheque out fast enough."

Kim Campbell's Top Three:

Top three business priorities for the next 12 months:

- Fix the Resources Management Act and related planning systems.

- Continue to find ways to do more high-value activities.

- Continue to seek solutions to Auckland's infrastructure issues.

What's likely to keep me awake at night:

- Sourcing and retaining skilled staff.

- Digital disruption.

- Regulatory challenges.