[asia-apec 589] NZ Trade Minister on APEC/Asia

[Gatt Watchdog]

> New Zealand Executive Government Speech Archive
>     ---------------------------------------------------------------
> 
> 1.00 pm
> Wednesday 24 June 1998
> (Malaysian Time)
> 
> 5.00 pm
> Wednesday 24 June 1998
> (New Zealand Time)
> 
>    ADDRESS BY HON LOCKWOOD SMITH, MINISTER FOR INTERNATIONAL TRADE
> 
>                     New Zealand in the Asia Pacific
> 
>                        Launch of Sarawak Chapter
>                  New Zealand Malaysia Business Council
>                                 Kuching
>                                Malaysia
> 
> Deputy Chief Minister, Tan Sri-Tan Sri, Dato-Dato, Friends.
> 
> Links between New Zealand and Malaysia - and between New Zealand and
> Sawarak - are already very strong. New Zealand troops helped to
> liberate Sawarak in the Second World War. Today, both Malaysia and New
> Zealand are members of the Commonwealth and APEC. The launch of this
> new chapter of the Malaysia New Zealand Business Council is another
> example of how our ties continue to grow.
> 
> In the five years since they were formed, the Malaysia New Zealand
> Business Council and its sister organisation back home have made a
> very positive contribution to building economic links between our two
> countries. Already, the business council here in Malaysia is involved
> in the annual policy dialogue arranged by your Trade Minister. It has
> helped bring people together and it helps continually build the
> bilateral relationship. We in New Zealand have appreciated its support
> for scientific cooperation in Antarctica and its assistance with our
> preparations for this year's Commonwealth Games - to mention just two
> examples.
> 
> Given its success, it makes sense for the council to establish
> chapters in other parts of Malaysia. I'm confident this will only be
> the first. And it's fitting that Sarawak is the first new chapter,
> given the especially close ties between Sarawak and New Zealand.
> 
> I understand that Deputy Chief Minister Tan Sri Alfred Jabu, State
> Secretary Tan Sri Datuk Amar Hamid Bugo and Honorary Consul Datuk Amin
> Satem and many others of you here today have studied in New Zealand.
> Today, well over 300 young Sarawak people are following in your
> footsteps and studying in New Zealand universities. Links between New
> Zealand universities and UNIMAS are growing. A Chair of Malay Studies
> has been established at Victoria University in our capital city.
> 
> Economic links between New Zealand and Sawarak are just as strong,
> going well beyond our growing trade in goods. New Zealand assisted
> with the tourism master plan for Sawarak. We have longstanding links
> in the surveying area. Your Chief Veterinary Officer recently visited
> New Zealand.
> 
> We in New Zealand were also honoured that your Chief Minister has been
> able to visit us twice in recent years. In late 1997, he joined us for
> Sawarak Week which involved cultural and trade promotions as well as
> meetings with ministers.
> 
> This new chapter can only help strengthen relations further. My thanks
> to all involved. I wish you every success.
> 
> New Zealand's particular interest in Malaysia stems most obviously
> from our shared geography. We are both Asia Pacific countries. But New
> Zealand is also of the firm view that the next century will be the
> Asia Pacific century, the current difficulties notwithstanding.
> 
> Those difficulties have not dampened our enthusiasm for Asia, and your
> country. Reciprocal prime ministerial and ministerial visits in recent
> years have helped to update our relationship. Last year, we signed a
> new Trade and Economic Cooperation Agreement. New Zealand is a keen
> participant in the annual consultations between the AFTA economies and
> Australia and New Zealand. We regard ourselves as a leading member of
> APEC, fully behind the liberalisation agenda.
> 
> Our trade with Asia remains critically important. That's why our
> Deputy Prime Minister led a delegation to Kuala Lumpur and Penang last
> week. It included many of our most senior businesspeople, our former
> Prime Minister, Rt Hon Mike Moore, and the chair of our Asia 2000
> Foundation. The delegation was pleased to send a representative to
> Sawarak.
> 
> The extent of our integration with Asia means that what happens here
> impacts directly on us. That applies to the current downturn.
> 
> It is clear that different economies are addressing the downturn in
> different ways. Some, like Malaysia, have taken on board the need for
> reform. Others are still grappling with what they see as the enormity
> of that they need to do. Because of the close links between all the
> economies in the APEC region, we need to encourage them to make those
> reforms. Failure to act will impact negatively on us all. New
> Zealand's recent history may offer a guide to those governments in the
> region having to make the necessary reforms.
> 
> For most of our history, New Zealand acted as a farm for the United
> Kingdom. Producing food for what many still called the "mother
> country" was the source of our prosperity. But in 1973, the United
> Kingdom joined the EU, and our market access was restricted. The '70s
> also saw the oil shocks. It was clear we would have to take a
> different economic approach than we had for most of our history.
> 
> For a variety of reasons, we took the wrong path. We subsidised our
> major industry of agriculture. We implemented a system of
> protectionism as vast as you would have been able to find outside the
> communist world. Our government grew in size and ran budget deficits.
> 
> By 1984, that approach had clearly failed. We had slipped from near
> the top of the OECD in terms of living standards to near the bottom.
> Unemployment was rising. Inflation was controlled only through a wage
> and price freeze. Our debt was becoming unsustainable. Our farm
> subsidies had reached 30% of the value of agricultural production. The
> top rate of tax was 66%.
> 
> Since 1984, both the main political parties in New Zealand have
> contributed in different ways to turning that around.
> 
> Government spending has been controlled so that deficits have been
> turned into surpluses. We now have zero net foreign public debt. Taxes
> have been cut - the top rate halved. Our central bank has the sole
> responsibility of keeping inflation at between 0% and 3%. Our labour
> market has been deregulated. The size of the central bureaucracy has
> been slashed. We have privatised over US$6 billion of assets,
> including our telephone network, our railways and our airline. That
> enabled us to cut our debt, freeing up debt servicing payments for tax
> cuts and for greater investment in social services.
> 
> And we have opened up our economy to fair competition with the world.
> Our farm subsidies were abolished in one year. We abolished import
> licensing. We have no tariff quotas and we will abolish all remaining
> tariffs ahead of APEC's 2010 deadline. Our economy is now more open
> than Hong Kong's.
> 
> That reform process was not easy. There was some initial pain, but not
> to the extent many expected. The abolition of farm subsidies, for
> example, meant that fewer than 1% of farmers needed to stop farming.
> 
> And the returns have been clear to see. We have experienced economic
> growth this decade far higher than in the previous decade. Two hundred
> thousand new jobs have been created this decade, in a country with a
> population of fewer than 4 million.
> 
> What's more, our reform process will continue. I mentioned the
> abolition of all tariffs. We're also reforming our electricity
> industry, the provision of roading and our accident insurance regime.
> We are carefully planning for the removal of the special powers of our
> agricultural producer boards. Further privatisations will occur when
> the government is clearly identified as not the best owner.
> 
> New Zealand's experience shows that reform can be achieved with less
> pain that many believe. And our experience shows that it is the
> country which makes the reforms fastest that will get the biggest
> returns the earliest.
> 
> There is no reason at all why Asia cannot come through its current
> difficulties, with sufficient dedication to reform. It is critical
> that economies do not follow the example of New Zealand in the 1970s.
> It is critical that the path they follow more closely resembles New
> Zealand's path since 1984. If they do, there is no reason why next
> century should not be the Asia Pacific century.
> 
> As long as the region deals appropriately with the current
> difficulties, I believe New Zealand and Malaysia can both look forward
> to being part of the most dynamic and fastest growing region of the
> 21st Century. That can only be good for our countries, and good for
> the Sawarak Chapter of the Malaysia New Zealand Business Council.
> 
> I wish every one of you all the best for the future.
> 
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