New Zealand needs to refresh its broad economic strategy to focus on the weightless economy and the potential of the food sector, as the impact of Covid-19 on our economy hits home.
That’s one of the recommendations from Sir Peter Gluckman, Director of Koi Tū: The Centre for Informed Futures, in his keynote address Covid-19 and beyond: Contextualising our decision making at the ANZ-KangaNews New Zealand Capital Markets Forum today.
Sir Peter says New Zealand’s highest income sectors – tourism, export education and agriculture – are threatened by long-term challenges, and it was unrealistic to return to a pre-Covid ‘business as usual’ mindset.
“This is a challenging climate in which we collectively need to make decisions; not just over the next few months but perhaps over the next decade.”
Over the past three months, Koi Tū – a think tank and research centre at the University of Auckland – has produced eight reports with input from 100 industry and academic leaders, exploring the implications of Covid-19. The reports cover New Zealand’s place in the world, protecting mental health, enhancing social cohesion, the environment, the future of food, and the effects of the digital divide during lockdown.
Sir Peter acknowledged much of the focus must remain on managing the Covid-19 pandemic. However, he called for a renewed discussion on New Zealand’s longer-term strategy, with actions and policies that would support long-term economic growth and social development, in alignment with the Sustainable Development Goals.
He says too many issues remain in the “too hard basket” such as transgenerational disadvantage, our bicultural and multi-ethnic nature, water and land use, our low productivity and a narrow view of our economic future.
“Around the world the call for a post-Covid reset has focused on the green economy, climate change, environmental degradation and social progress. There is no doubt that New Zealand will follow this path. This means we need a major reset of our key industries.”
He says a global shift against carbon-intensive goods and services will over time heavily affect tourism and ruminant-based agriculture.
“The primary and food sector is again dominating our economy but it needs to evolve to be environmentally much more sensitive and conscious of future market trends.”
He says the food sector could create a unique brand strategy by capitalising on New Zealand’s high international profile, commitment to sustainability, social cohesion and our distinctive bicultural story.
“We need to make necessary changes now, rather than to have changes effectively imposed on us through a sudden loss of markets with environmentally conscious trading partners.”
Meanwhile, the pandemic will accelerate the move globally to quality online learning, which may over time limit New Zealand’s long-term export education opportunities.
“Our most important asset will be knowledge and the weightless economy. Yet building this asset will require new strategies and much more than the rather limited efforts made by successive governments,” he says.
Sir Peter says cities are “hubs of innovation” and in order for New Zealand to attract and retain people and capital, Auckland must be able to compete with Melbourne, Sydney, Singapore and London.
He says many of our businesses are already pushing the frontiers of new ideas and processes in the IT, medical, agritech and manufacturing sectors. While the innovation sector is growing fast, scale up is much harder.
“We are yet to reach a critical mass of labour and capital that catalyses further entrepreneurship and creates capacity to market globally and earn at scale.”
He says multinational corporations account for the vast majority of private research and development around the world and are core to global innovation systems – yet New Zealand has the lowest density of these in the OECD.
“We need to work hard to take advantage of our reputational positioning to attract serious entrepreneurial activity to New Zealand.”
Sir Peter says universities play a central role in the knowledge economy, both in the creation of new ideas and processes, and in creating the next-generation workforce.
“World-ranked universities act as magnets for talent and private industry. Silicon Valley would not exist without Stanford University. Efforts must be made to have at least one globally high-ranked university here.”
He says greater public sector investment in research and development is core to economic growth, as well as positive environmental and social outcomes.
Sir Peter says the impact of Covid-19 has created an incentive to rethink our path ahead and to find ways to discuss the complex issues and appreciate the tradeoffs involved.
“How can we sustain and transform our economy in ways that allow our social and environmental futures to flourish? Any shift will take time and needs a coordinated strategy agreed across many sectors of government and society.”
You can read the full speech here.