Too slow to catch the high-tech train ...

By Lesley Springall


Is it just a matter of increasing our exports, or is the problem more complicated than that? Some believe it is, and that there are real policy issues that need to be addressed.

Gareth Morgan, chief executive of economic and business consultancy Infometrics, suggested yesterday that the whole export issue is much deeper than policy-makers think.

"The size of the export market is not necessarily the important criteria, it's sustainability of income that matters. The electronic sector is a star in terms of export goods and we are a real nursery for those firms.

"But once they get to a certain size, our distance from other markets and the economies of scale become a constraint and the successful ones are sold off overseas."

Using the US as an example, Mr Morgan showed that long term sustainable growth and very low unemployment is not, as some say, unachievable, but should be our goal.

What was needed was technology and investment but it was in this area that New Zealand fell down.

"We are a real nation of Johnny come latelies on technology. We tend to use it for keeping up with the Jones's rather than as a crucial tool to enhance our bottom-line."

Mr Morgan pointed out that the US has a wealth of individuals ready and willing to invest in industry whereas most people in New Zealand "just buy another house".

"There's a raft of taxation methods that bias the field to house buying which are denying sectors like manufacturing the capital they need."

But he says we need to look at one area that is even more basic than that.

"Fundamentally the US is actually making things that people want, why aren't we? Communications, distribution and travel are the fastest growing sectors throughout the world, but not here. Are we just mis-allocating resources out of habit?"

Re-allocation of resources from primary industry to high value niche products is one area being strongly proposed. But Tim Hazledine, Professor of Economics at the University of Auckland, thinks we should look at a balance and a back-to-basics approach.

"We need something in the middle, where ordinary people also can do well. The nuts and bolts activities must be where our future lies -- not an export strategy per se but a production strategy. You can't consume your way to prosperity, you have to make stuff."

Kerry MacDonald, former professional economist and now managing director of Comalco (New Zealand) Ltd believes that commodities still have a vital role to play as well as huge, untapped potential.

"We're just not doing a very good job at. There are many examples around the world where commodity industries have excellent workforces, high wages and are highly innovative. We've done our commodity exporting almost on a farmyard mentality. We've done OK, but not good."

The net effect of all of this is that New Zealanders are leaving the country, says Mr Morgan, and, worryingly, it is the highly trained 30-somethings who are leaving because they can earn more overseas.