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Economic Forecast - 20 June 2014

This morning we had the pleasure of welcoming the Hon. Steven Joyce as our guest speaker. The Minister presented an overview of all of his portfolios which include Economic Development, Science and Innovation, Small Business, Tertiary Education, Finance, Skills and Employment.

The statistics presented by the Minister, in terms of the improved state of the economy, were indeed impressive. While New Zealand still has a significant balance of payment challenge to overcome, the majority of economic statistics point towards a continuation of the success that the Government has had in navigating the GFC, the Christchurch earthquake, a robust exchange rate and house price escalation.

While it is acknowledged that the exchange rate is putting exporters under continued pressure, the Minister pointed out that it is heartening to note that for these businesses to be as successful as they are with the exchange rate at all time highs, things will obviously improve dramatically when the exchange rate returns to historic averages against our key trading partners.

Immigration statistics presented by the Minister also provided an insight into New Zealand's current economic performance against our nearest neighbour Australia. When we compare the exodus of around 30,000 New Zealanders a year to Australia, in contrast to recent figures where the number has now turned positive in the other direction and is forecast to grow as Australia confronts its own economic realities, it's a trend which New Zealand needs to grow.

Again, of great benefit to New Zealand businesses, the changes that are occurring within the tertiary educational sector. These changes are encouraging universities to more closely align their academic focus with commercial need. The historic practice of churning out arts and philosophy graduates does not match skills to current labour market needs. With skill shortages in information technology and agri-science, the high tech era that continues to grow in economic importance for New Zealand and the rest of the world requires graduates in the sciences, technologies, engineering and mathematics - the so called STEM subjects. Historically, research within the universities has not been well aligned to industry needs and the Minister's stronger focus on "outcomes" is needed to provide New Zealand graduates with the best opportunity of a strong economic future, as well as facing down strong competition from Asian countries investing heavily in tertiary education and commercially valuable research.

The Government has also introduced National Science Challenges:  goals intended to align researchers and research funding with national priorities. While these alignments are in their early stages of development, the Minister was clear in stating "we need explicit co-operation between industry and tertiary organisations on meeting skill demands". A sentiment echoed by all members of The Admirals' Breakfast Club.

The Minister ably demonstrated his command of a broad terrain of responsibility indicating his view that New Zealand was on the right track and current Government is keen to continue the country's economic transformation over the next 3 years.

John Dawson, Chairman, The Admirals' Breakfast Club
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