Sustainable economic growth
for New Zealand:
An optimistic myth-busting approach
Paul Callaghan
Alan MacDiarmid Professor of Physical Sciences
Victoria University of Wellington
1. New Zealand is an egalitarian society
New Zealand performance
Income inequality
26/33
Unemployment
15/33
Level of democracy
3/33
Life expectancy
11/33
Prison population
26/33
Math score
9/33
Science score
6/33
2. New Zealand is clean and green
2. New Zealand is clean and green
percent total land area
100
Alpine Zone
Tussock
80
Exotic grassland
60
Exotic forest
40
Scrub, wetlands
Recent history of New Zealand land cover
20
0
1000
Native forest
Settlements, crops
1100
1200
1300
1400
1500
year
1600
1700
1800
1900
2000
Science and trade
Can we have our cake and eat it?
Earthrace “ecoboat”
aka “Ady Gil”
“Sustainable energy,
without the hot air”
David McKay
(UIT, Cambridge, 2008)
Earthrace “ecoboat”
“Sustainable energy,
without the hot air”
David McKay
(UIT, Cambridge, 2008)
3. We don’t need to be more prosperous
New Zealand economy and Christchurch
Some data
15 %
NZ$51 bn
NZ$153 bn
Christchurch % nation’s economy.
Tax revenue in the 2009/10 financial year.
New Zealand GDP
The cost
NZ$15 to NZ$30 bn
cost of rebuild
NZ$3,400 to NZ$6,800
per resident
NZ$11,500 to NZ$23,000 per FTE of employment
New Zealand economy and Christchurch
Some data
15 %
NZ$51 bn
NZ$153 bn
Christchurch % nation’s economy.
Tax revenue in the 2009/10 financial year.
New Zealand GDP
The cost
NZ$15 billion
NZ$15 to NZ$30 bn
cost of rebuild
NZ$3,400 to NZ$6,800
per resident
NZ$11,500 to NZ$23,000 per FTE of employment
residential
damage
$ 9 bn
business
damage
$ 3 bn
infrastructure
damage
$ 3 bn
New Zealand economy and Christchurch
Some data
15 %
NZ$51 bn
NZ$153 bn
Christchurch % nation’s economy.
Tax revenue in the 2009/10 financial year.
New Zealand GDP
The cost
NZ$15 billion
NZ$15 to NZ$30 bn
cost of rebuild
NZ$3,400 to NZ$6,800
per resident
NZ$11,500 to NZ$23,000 per FTE of employment
Government
$7 bn
residential
damage
$ 9 bn
Who pays
NZ$2 bn from EQC
NZ$7 bn from central government
NZ$4 bn from insurance
(with NZ$3 bn from reinsurance overseas)
NZ$ 2 bn in private losses
EQC $2 bn
($5 bn-$3 bn)
business
damage
$ 3 bn
infrastructure
damage
$ 3 bn
private
Insurers
$4 bn
($3 bn offshore)
private loss
+ local government
$ 2 bn
35%
US $35 bn
NZ$ 45 bn
4. New Zealanders have a relaxed easygoing lifestyle
or
We need to work harder to be more prosperous
Iceland
Japan
Greece
Canada Switzerland
Australia
USA
UK
Spain
Sweden
Italy
Ireland
Finland Austria
Netherlands
Germany
Belgium
France
4, New Zealanders have a relaxed easygoing lifestyle
or
We need to work harder to be more prosperous
Iceland
New Zealand
Greece
Japan
Canada Switzerland
Australia
USA
UK
Spain
Sweden
Italy
Ireland
Finland Austria
Netherlands
Germany
Belgium
France
5. More tourism would be good for the New Zealand economy
NZ has 1.3 million FTE of employment
Revenue per employee
$500,000
$400,000
$300,000
$200,000
Needed
for current
per capita GDP
$100,000
0
100,000
200,000
FTE of employment
300,000
NZ has 1.3 million FTE of employment
Revenue per employee
$500,000
$400,000
$300,000
$200,000
$100,000
Needed
for current
per capita GDP
Wine
Tourism
0
100,000
200,000
FTE of employment
300,000
NZ has 1.3 million FTE of employment
Revenue per employee
$500,000
$400,000
$300,000
$200,000
Needed
for current
per capita GDP
Food manufacturing
$100,000
Wine
Tourism
0
100,000
200,000
FTE of employment
300,000
NZ has 1.3 million FTE of employment
Revenue per employee
$500,000
$400,000
Fonterra
$300,000
NZ Manufacturing Exports
Total NZ Manufacturing
$200,000
Needed
for current
per capita GDP
Food manufacturing
$100,000
Wine
Tourism
0
100,000
200,000
FTE of employment
300,000
NZ has 1.3 million FTE of employment
Revenue per employee
$500,000
$400,000
Fonterra
$300,000
Fisher and Paykel Healthcare
NZ Manufacturing Exports
Total NZ Manufacturing
$200,000
Needed
for current
per capita GDP
Food manufacturing
$100,000
Wine
Tourism
0
100,000
200,000
FTE of employment
300,000
6. You can’t manufacture in New Zealand
Petrolem
Tourism
Manufacturing
ELT
Wine
Fish
2
Dairy
4
Fruit and vegetable
6
Metals
Forestry and other primary
US$ 35 billion
8
Meat
Foreign earnings (US$ billion)
Year ended December 2008
0
NZ External Trade Statistics
http://www.stats.govt.nz
“As a share of GDP, New Zealand government spending on R&D is higher than in countries
with materially higher incomes (including the United States, The United Kingdom and Canada)”
“As a share of GDP, New Zealand government spending on R&D is higher than in countries
with materially higher incomes (including the United States, The United Kingdom and Canada)”
“As a share of GDP, New Zealand government spending on R&D is higher than in countries
with materially higher incomes (including the United States, The United Kingdom and Canada)”
“The taskforce is not convinced that there is a compelling case for
more government spending on research and development through whatever means.”
7. New Zealand is small so we need to specialise in the knowledge economy
e.g.
we are good at agriculture, therefore our best chance
for a high tech economy is in biosciences
New Economy Research
Fund
1999-2005
New Zealand
USA
(and nearly everyone else)
Abt Associates report to MoRST
www.morst.govt.nz
7. New Zealand is small so we need to specialise in the knowledge economy
e.g.
we are good at agriculture, therefore our best chance
for a high tech economy is in biosciences
(latest fads=“smart foods”, “cleantech”)
New Economy Research
Fund
1999-2005
New Zealand
USA
(and nearly everyone else)
Abt Associates report to MoRST
www.morst.govt.nz
F and P appliances
Datacom
F and P Healthcare
NDA
Tait Electronics Ltd
Temperzone
Gallagher
Douglas pharmaceuticals
Rakon
Moffat Ltd
Schneider electric
Methven
Allied Telesis
Glidepath
Dynamic controls
Navman wireless NZ
Weta Ltd
Skope industries
TruTest
NextWindow
Orion Health
TIN100
New Zealand Technology Companies
$500m
$400m
$300m
Annual revenue (NZ$)
$1410m
$200m
NZ Pharmaceuticals
$100m
100
90
80
70
60
50
40
Rank
30
20
10
1
Lao Tzu
4th century BC
The words of truth are always paradoxical.
Irony
The perceived notion of an incongruity between what is expressed and what is intended, or
between an understanding or expectation of a reality and what actually happens, "when the
literal truth is in direct discordance to the perceived truth."
Jane Austen Pride and Prejudice
“It is a truth universally acknowledged,
that a single man in possession of a good fortune,
must be in want of a wife.”
“Am I not destroying my enemies when I make friends of
them?” Abraham Lincoln, 16th US president (1809-1865)
April 9, 1865
(Appomattox )
Paradox:
our two greatest scientists
Paradox:
if it sounds unfamiliar, it may stand a chance
TIN100
New Zealand Technology Companies
$500m
$400m
$300m
Annual revenue (NZ$)
$1410m
F and P appliances
Datacom
F and P Healthcare
NDA
Tait Electronics Ltd
Temperzone
Gallagher
Douglas pharmaceuticals
Rakon
Moffat Ltd
Our top 10 technology Companies
$3.9 bn
$200m
$100m
100
90
80
70
60
50
40
Rank
30
20
10
1
100 companies, 100 inspired entrepreneurs
An additional $45 bn per annum in exports (double our present exports)
Ask the question: why would such a business want to stay in New Zealand?
100 companies, 100 inspired entrepreneurs
An additional $45 bn per annum in exports (double our present exports)
Ask the question: why would such a business want to stay in New Zealand?
“A place where talent wants to live”
Total $60 bn contained in all land
Target: $45 bn per year
Strategy for economic growth via the knowledge economy
100 companies, 100 inspired entrepreneurs
Whole of government commitment to strategy: “A country where talent wants to live”
Commitment to education
•Tell the stories of the job opportunities for New Zealand kids at home
(Get the kids and teachers visiting the smart businesses)
•Significantly boost science and mathematics education in schools
•Build school programmes in entrepreneurship
•Boost university engineering and science capability
•Refine PBRF to reward commercialisation work
Commitment to R and D
•Boost science and engineering research from 0.52% GDP to 0.70% GDP
(a mere $300 million)
•Enhance R and D credits to the knowledge sector
•Compel CRIs to give IP share of benefit to employees and allow employee spinout
•Help establish incubators, business/engineering/science synergy
Commitment to Branding
•Understand the value of the conservation estate, liveable cities, quality of life
•Identify and “call out” phony environmentalism and “science-phobia”
•Market NZ as the “smart country, a place where talent wants to live”
Commitment to Leadership and vision
•Bipartisan approach
•Evidence basis for decisions-understand what works for us
As for leaders,
The worst, the people hate,
The next best, the people fear,
The next best the people honor
and praise.
But for the best leaders,
the people do not notice their
existence.
When the best leader's work is
done the people say, 'We did it
ourselves!'