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Economic destiny largely lies in New Zealand's hands

Improving New Zealand's productivity and competitiveness is critical to our economic prosperity, the Governor of the Reserve Bank said today.

In a speech to the Canterbury Employers' Chamber of Commerce in Christchurch, Mr Wheeler said there is no easy formula for boosting economic growth rates. Like other small, commodity-producing economies, New Zealand's economic prospects depend greatly on the growth in world output and trade.

But Mr Wheeler said there are ways to build prosperity in the longer term, and the Reserve Bank is committed to helping cement the foundations for this growth.

As well as ensuring price stability and reducing the risk of inflation surprises, the Bank is strengthening financial sector regulation and supervision to promote a stable and efficient financial system.

Strong international demand for New Zealand's commodity exports will also help to build prosperity. However, we need more investment to help with job creation and market development.

"Instead of welcoming foreign investment, we have one of the more restrictive frameworks among OECD countries. We should re-examine the factors, including tax and regulation, that diminish and distort the incentives to both save and invest," he said.

Mr Wheeler said returning to fiscal surplus and lowering public sector indebtedness will also strengthen the economy's resilience and create more room for responding to future economic shocks.

Improving education and employment outcomes, especially for Maori and Pacific Islanders, will also help to strengthen New Zealand's skill base, improve productivity, and reduce inequality.

"To a considerable extent our destiny lies in our own hands," Mr Wheeler said.

"We've much to do in continuing to build our global linkages and addressing government spending and regulatory issues that diminish productivity and competitiveness. But addressing these will create valuable payoffs for our future given our major resource endowments, our impressive agricultural and primary production engine, and the potential in our education, tourism and other sectors."

Media contact:
Naomi Mitchell
External Communications Adviser
Ph 04 471 3960, 027 485 9474, [email protected]