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@deirdrekent To be expected when income is taxed and capital gain not...
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@bernardchickey Or take the job and do the right thing anyway - the RBNZ is "independent" after all...
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19
MAR 15

The best we can be?




The following is a speech I gave at farewell functions for my stepping down as Chief Executive of the New Zealand Manufacturers and Exporters Association (NZMEA) at the end of March:

I would like to thank you all for taking the time to be here today.

There is never a good time to leave, my feelings are a mixture of sadness and happiness, and thoughts a mixture of retrospection and anticipation.

For the past 16 years it has been a privilege to be a part of this Association. I want to thank all those who have helped over this time: not least the NZMEA Governance, Members, Associates and Affiliates.

It has not always been fun but I have valued the opportunity to be a part of the effort to develop a culture and policy framework that supports manufacturing and manufactured exports.

It was great to see some policies we have long advocated debated and adopted, even for a short time - in the future this Association has a major role in keeping that debate alive – if only for the reason that no one else will.

A few years ago I realised that I needed to step away from the day to day demands of management responsibility, to make more time for family and governance responsibilities.

If there a choice, when is the best time to change? Leadership changes early in the election cycle puts this Association in a good position to appoint a new CEO, and give them time to make the role their own before the policy debate heats up in the run up to the next election.

From that perspective now is a good time.

For the future I will leave you with a few thoughts on what might matter a lot, maybe not so much to most of us old people in the room but what really matters for the youngsters.

They need really New Zealand to be the best it can be.

To be the best we need to create a more productive, a more sustainable economy and a more equal society: be more than a real estate, with a farming and theme park clipped on the side.

The way things are is no accident; what we see springs from longstanding incentives deeply imbedded in our policy framework that bias investment towards land and buildings.

Specifically the absence of a capital gains tax or any similar policy to tax asset appreciation, and bank regulations which treat mortgage debt as far less risky than any other debt.

In the world we have made the financial sector’s balance sheet expands, pilling 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: damaging our shared future - we can’t all get rich trading one another 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 and anchor 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 those productive activities that add-value, create wealth, expand capability and increase average earnings.

In this world manufacturing is not an optional extra - it is a fundamental requirement if we are to be the best we can be. Manufacturing drives innovation, R&D, capability, economic complexity, and competitive advantage.

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.

Thank you all again for being here tonight and listening to this.

I leave you with my best wishes and hopes for the future.
 


tags: nzmea, exports, future, sustainable, debt, productivity, innovation, wealth, r&d, speech, leaders' network
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