We need to build a different world, where policy settings encourage productive activities here in New Zealand.
My time as Chief Executive of the New Zealand Manufacturers and Exporters Association (NZMEA) has come to an end – it’s been a privilege to be part of this Association for 16 years.
I want to thank all those who have helped me and been a part of the journey; not least the NZMEA Governance, Members, Associates and Affiliates, as well as NZ Manufacturer Magazine for giving me a platform to discuss the manufacturing sector and issues encountered by the members of the Association.
It has not all been fun, but I have valued the opportunity to work with so many great business people in the effort to develop a culture and policy framework that supports manufacturing and exporting activities in New Zealand – I truly believe this is key for creating a sustainable and prosperous future for our country, and I have confidence in the NZMEA’s Governance, under the leadership of President, Tom Thomson, and new management to continue the debate and good work.
The Association’s work is a journey not a destination; it was encouraging to see some policies we have long advocated for, debated, and adopted as policy during the last election, if only for a short time – in the future the NZMEA has a major role in keeping that debate alive.
A few years ago I realised I needed to step away from the day to day demands of management responsibility, to make more time for my family, other governance roles and business projects.
Stepping down early in the election cycle puts the Association in the best possible position to recruit a new CEO, giving time to make the role their own and build relationships before the policy debate heats up in the lead up to the next election.
I want to leave you with a few thoughts on what I believe really matters, particularly for our young people – they need New Zealand to be the best it can be.
To be the best we can be, we need to create a more productive and sustainable economy, and a more equal society. New Zealand needs to be more than a market for land and buildings with a farm and theme park clipped on the side.
The way things are is no accident, it is the result of long standing incentives so deeply imbedded in our policy framework that we hardly notice them, that bias investment towards land and buildings, over more productive, income statement driven businesses.
Specifically, the absence of a Capital Gains Tax or similar policy to tax asset appreciation, and bank regulation that treats mortgage lending as less risky than other debt.
We are not alone – around the world the financial sector balance sheets expand, piling on debt and inflating the relative value of land and buildings with respect to earnings. This threatens financial stability, misdirects investment away from productive activity, and overvalues our exchange rate; increasing the risks and challenging investment in the traded economy.
In such a world productivity, capability development and employment suffer, increasing risk and damaging our shared future – we can’t all get rich trading land and buildings.
We need to learn from others. Countries that have experienced asset price crashes, such as Ireland, are working to control the volume of debt by anchoring debt levels to earnings. Linking the volume of private debt to earnings is job one in being the best we can be.
Next, we need to build a different world, where policy settings encourage productive activities here in New Zealand, that add-value, export and create wealth, expand capability, require improving skill levels, and employ people at higher than average earnings.
In this world manufacturing is not an optional extra – it’s a fundamental requirement if we are to be the best we can be. Manufacturing drives innovation, R&D, capability, economic complexity, and competitive advantage, and exporting such goods and services allows us to pay our way in the world, and increase employment and living standards in New Zealand.
To my mind, policies that restrain asset price inflation by restraining private debt growth, correcting fiscal policy imbalances coupled with policies that encourage our productive sector can better drive sustainable growth offering a new path for our economy. A path that leads New Zealand to be the best it can be.
I have personally taken over www.johnwalley.co.nz and will blog when stuff happens that I think needs comment. I will be most active on Twitter @johnwalley so follow me if you want to share or discuss what I am seeing and saying in the futu