Let's use present momentum to develop sectors that have the potential to transform New Zealand's economy

Graphic Content Warning


This column contains unambiguously positive material which some readers may find disturbing.

What a year to be a New Zealander. We didn't win the America's Cup when we should have and we don't even care. The All Blacks winning every game? Pretty cool. Eleanor Catton winning the Booker Prize? Cool. Lorde topping the US charts for nine weeks? Very cool.


And I haven't even started on business.

Except of course that sports and the arts are both industries in their own right and the people in commercial roles supporting these star performers have all been performing at an elite global level, so good on them.

And I really want to mention New Zealand video games which have had a breakthrough year in 2013.

The huge success of the industry involves a wonderful mix of business and creative arts. It is worth remembering that globally the video games industry is worth about US$40 billion ($49 billion) a year - on a par with, and often exceeding, movies and music.

This year West Auckland firm Grinding Gears (which would also be a good band name) launched what has turned out to be one of the hottest PC games in the world. In the massive multi-player online role playing games (MMORPG) category, Path of Exile has been the year's big hit.

If you think that sounds niche then you must not have heard of World of Warcraft, which generated US$1.2 billion in revenue last year and seems to have peaked in popularity.

But Path of Exile follows a similar format and is on the rise. At last count it had topped 4.2 million registered users.

The game, which took seven years to develop, now has all the right gaming blogs and forums saying all the right things about it. It is probably the most underrated Kiwi success story of the year.

But of course if we're talking tech then 2013 was all about Xero.

The Wellington firm which Credit Suisse called the "Apple of accounting" topped $5 billion in market value as US investors picked up on its potential.

It is true that Xero still has to convert that potential into profits but it has undoubtedly put the New Zealand tech sector on the map this year.

Rod Drury is doing for the local tech sector what Peter Jackson has done for film.

I'll only mention Jackson's latest instalment of The Hobbit to note that I almost didn't bother.

Thinking back to my childhood, how insane is it that a movie of that scale, made in New Zealand by a New Zealander, could be ruling the global box-office and barely warrant a mention in a column like this. The country has really come a long way since I was a child in the 1970s and 80s.

And how about the economy. New Zealand is on track to be the first Western nation to really kiss the great global financial crisis goodbye.

Okay, we're riding into the boom on a wave of dairy, kind of like we always do.

But New Zealand is ahead of the economic curve and in the right direction this time. We were the first Western nation into recession in 2008 thanks to a nasty drought. It has been a long and difficult half decade. So the change in outlook is well overdue.

And not that economics is a race or anything, but we've beaten Australia. The Aussies have slowed down just as we're bouncing back, partly because dairy prices held up better than hard commodities and partly because Kevin Rudd dumped the country's whole surplus in a giant stimulus package early on and they ran out of puff with the finish line in sight.

Let's be honest though, they are still richer than us and this is a bit like a league or cricket win. They'll be back in no time, but we'll enjoy it while it lasts.

Meanwhile, America is on the turn at just the right pace for us and China has kept its economy to an impressive 7.5 per cent growth target. Things are looking good for the year ahead.

Focusing on the positive often has the unfortunate side effect of making people think that you don't care about poverty and inequality or social problems or any number of serious issues that could fill numerous columns and generally do through most of the year.

Sometimes people mistake positivity for a bias towards the status quo and the current political establishment.

That really isn't the case and the big challenge for New Zealand is to make some positive structural changes to the economy while the good times roll.

The boom we are about to have is quite a traditional cyclical upswing - it won't, in and of itself, fix poverty in this country, it won't address inequality.

What it can do is provide those in power - both government and business - with more scope to address these big issues. There should always be pressure from the public and the media to remind them to do so, whoever is in control.

We all want New Zealand to grow in a more sustainable manner, one that doesn't take us from boom to bust every six or seven years, and that requires better long-term planning than we have historically afforded ourselves.

So it is really important that we take a deep breath on the cusp of this change and think and talk about what we do with our economy in the good times. These are the right times to make difficult changes.

It is much harder to do this stuff when you're struggling from quarter to quarter, as most businesses and government sectors have been since 2008.

So let's ride the dairy wave into 2014. We are very lucky to have the dairy industry we do. It underpins our wealth and keeps us safely in the first world.

It is exciting to see that industry committing to being the most advanced and sustainable in the world. It will need to be very smart and very environmentally sound to entertain further expansion in the coming years.

But let's use the momentum we have to develop those sectors that really have the potential to transform New Zealand's economy, to lift us up beyond the restriction of the economic cycles we've been running for the past 30 years or so.

We say this so often that it is becoming a cliche but we need to build an economy that has the kind of jobs young New Zealanders want to do - or they will leave.

And we need to ensure we're giving all young New Zealanders the skills to do those jobs.

When you look at the hundreds of millions of people who have been lifted out of poverty by education and economic expansion in China and India in the last 20 years and then consider the size of New Zealand, the number of people we have who are struggling to keep up with the modern world, who need upskilling and a helping hand, is really relatively small. If we have the will to take everyone with us, then we have the resources and this already wonderful country will be unstoppable.