Home > Our Publications > New Zealand Outlook > 2001 > November

By Hon. Michael Cullen
New Zealand Treasurer

THE New Zealand Government is running an operating surplus, projected at over 1 per cent of GDP, this financial year, rising by roughly 0.5 per cent of GDP a year for the years after that.
We have an economy geared for long-term international competitiveness: a cleanly floated exchange rate; free movement of capital; no subsidies; deregulation and a modernised infrastructure.
New Zealand's improving economy has been doing far better than those of our key trading partners.
We are seeing a range of economic indicators moving in the right direction for the first time in years. In the past, our performance was more often driven by the global economic cycle.
The economy grew 2.5 per cent in the 2001 March year, and is forecast to average 3 per cent growth during the three years after that. Initially, this was driven by a healthy export sector on the back of strong commodity prices, a competitive dollar and a good growing season for farmers.
Now, the basis of growth is broadening as tourism grows, and life returns to retailing and construction.
Unemployment has fallen to 5.2 per cent of the work force, the lowest unemployment rate since 1988 and significantly lower than Australia's.
We have just recorded our first trade surplus since 1995. Provisional figures show that, in the 12 months to the end of July, the trade surplus was $65 million. That is a big turnaround from a year ago when the trade deficit was $3.1 billion.
The current account deficit has fallen from 7 per cent of GDP to less than 5 per cent, and is still falling.
New Zealand is now back on a stable AA+ credit rating and consumer and business confidence are firmly in positive territory.
We are one of the most "connected" countries in the world: 65 per cent of New Zealanders have access to the Web from their homes. Every other New Zealander now has a mobile phone. We spend 8.54 per cent of GDP on international communications technology - the highest in the world.
New Zealanders create leading-edge technology. Now positioned as a global supplier of niche solutions New Zealand software and information technology services are in demand internationally.
New Zealand is now developing successful world-class clusters of companies and supporting infrastructures around strong niche industries such as IT and our growing biotechnology sector.
We have specialised clusters of skills and competencies in innovative and advanced manufacturing. Our manufacturers can retool quickly and handle small, specialist and difficult production runs.
We have one of the most open economies in the world. New Zealand is a straightforward and cost-efficient place to do business. We have a stable and educated workforce, internationally comparable labour laws and we are recognised as one of the least corrupt nations in the world.
There is no payroll tax, no social services tax and no superannuation tax. A small levy for accident compensation provides 24-hour, no-fault protection.
The corporate tax rate is just 33 per cent and there is minimal and in many cases no capital gains tax and the overall level of tax paid by an international company is limited by double taxation agreements.
We were the first country in the world to recognise the value of intellectual property for depreciation purposes. New Zealand offers 100 per cent deductibility for research and development.
We have an inclusive, multicultural society that includes Maori and Pacific peoples among those of Asian and European origin, a result of over 150 years of migration.
New Zealand is exceptionally beautiful and varied. Our people are lucky enough to enjoy a lifestyle that is the prerogative of only the very rich in most other countries.
Indeed, our most important and most precious resource is our people. New Zealanders are friendly, hard working and fair. We believe in opportunities for everyone.
We will give anything a go with a can-do attitude. Kiwi ingenuity is a catch phrase known the world over. We come up with some pretty good ideas, including three Nobel Prize-winning ideas.
New Zealanders call our country "God's own land". Come over and find out why.