This country's lack of scale is a big issue facing exporters
and a serious debate needs to take place over what its
optimal population should be.
That's according to a new report, Lifting Export Performance,
conducted by the New Zealand Institute of Economic Research
(NZIER) on behalf of lobby group ExportNZ.
Catherine Beard, the group's executive director, said the
report was a sobering reality check on the nation's export
performance, addressing the big issues in New Zealand - its
small size and isolation.
"One of the obvious ways to overcome these problems is to
make New Zealand a bigger country with bigger companies,"
Beard said. "We need a national debate on population policy
and how big we should be by 2060."
Beard said scale could not be faked. "We need to grow the
population through immigration and build companies of scale,"
she said. "Once grown, the challenge is then keeping these
companies in New Zealand so the country benefits from them.
The alternative is selling out to other countries and losing
talent overseas for better jobs and better pay."
NZIER said a population of 15 million by 2060 would be a good
start for New Zealand.
Boosting exports required "first-rate" policy settings, said
NZIER deputy chief executive John Ballingall.
"We need to ensure existing capability-enhancing policies are
delivering value for money. Our immigration, tax, welfare and
foreign investment policies need to enhance rather than
restrict the ability of New Zealand firms to gain scale."
There needed to be more examples of firms working together in
strategic alliances to build presence offshore, Ballingall
The report said part of the reason for New Zealand's strong
dollar was the fact that growth in government social spending
tended to favour domestic consumption over savings and
"On-going efforts to cut less vital spending like Working for
Families and interest-free student loans will ease the
pressure on the kiwi dollar," the report said. "Public
spending has acted like a tax on the export sector."
The report also suggests there is merit in investigating
policies that would reward high-performing firms that retain
capability in New Zealand, rather than moving offshore.
New sources of scale could come from the minerals sector and
Maori-owned businesses, the report said.
Employers and Manufacturers Association chief executive Kim
Campbell welcomed the report, which he said asked some
difficult questions. But he said the report was silent on the
gains that could be achieved through investing in
"Every job created in manufacturing delivers five more in the
wider economy," Campbell said. "The lack of extrapolation of
this through to the export sector and job creation is
somewhat surprising given the report is authored by the NZIER
- Christopher Adams, NZ Herald