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Sustainable economic growth for New Zealand: An optimistic myth-busting approach Paul Callaghan

Sustainable economic growth for New Zealand: An optimistic myth-busting approach Paul Callaghan Alan MacDiarmid Professor of Physical Sciences Victoria University of Wellington. 1. New Zealand is an egalitarian society. New Zealand performance. Income inequality 26/33

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Sustainable economic growth for New Zealand: An optimistic myth-busting approach Paul Callaghan

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  1. Sustainable economic growth for New Zealand: An optimistic myth-busting approach Paul Callaghan Alan MacDiarmid Professor of Physical Sciences Victoria University of Wellington

  2. 1. New Zealand is an egalitarian society New Zealand performance Income inequality 26/33 Unemployment 15/33 Level of democracy 3/33 Life expectancy 11/33 Prison population 26/33 Math score 9/33 Science score 6/33

  3. 2. New Zealand is clean and green

  4. 2. New Zealand is clean and green

  5. 100 Alpine Zone Tussock 80 Exotic grassland 60 Exotic forest 40 Scrub, wetlands 20 Native forest Settlements, crops 0 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 year percent total land area Recent history of New Zealand land cover

  6. Science and tradeCan we have our cake and eat it?

  7. Earthrace “ecoboat” aka “Ady Gil”

  8. “Sustainable energy, without the hot air” David McKay (UIT, Cambridge, 2008)

  9. Earthrace “ecoboat” “Sustainable energy, without the hot air” David McKay (UIT, Cambridge, 2008)

  10. 3. We don’t need to be more prosperous

  11. New Zealand economy and Christchurch Some data 15 % Christchurch % nation’s economy. NZ$51 bn Tax revenue in the 2009/10 financial year. NZ$153 bn New Zealand GDP The cost NZ$15 to NZ$30 bn cost of rebuild NZ$3,400 to NZ$6,800 per resident NZ$11,500 to NZ$23,000 per FTE of employment

  12. New Zealand economy and Christchurch Some data 15 % Christchurch % nation’s economy. NZ$51 bn Tax revenue in the 2009/10 financial year. NZ$153 bn New Zealand GDP The cost NZ$15 to NZ$30 bn cost of rebuild NZ$3,400 to NZ$6,800 per resident NZ$11,500 to NZ$23,000 per FTE of employment NZ$15 billion residential damage $ 9 bn business damage $ 3 bn infrastructure damage $ 3 bn

  13. New Zealand economy and Christchurch Some data 15 % Christchurch % nation’s economy. NZ$51 bn Tax revenue in the 2009/10 financial year. NZ$153 bn New Zealand GDP The cost NZ$15 to NZ$30 bn cost of rebuild NZ$3,400 to NZ$6,800 per resident NZ$11,500 to NZ$23,000 per FTE of employment Who pays NZ$2 bn from EQC NZ$7 bn from central government NZ$4 bn from insurance (with NZ$3 bn from reinsurance overseas) NZ$ 2 bn in private losses NZ$15 billion Government $7 bn residential damage $ 9 bn EQC $2 bn ($5 bn-$3 bn) private Insurers $4 bn ($3 bn offshore) business damage $ 3 bn infrastructure damage $ 3 bn private loss + local government $ 2 bn

  14. 35% US $35 bn NZ$ 45 bn

  15. 4. New Zealanders have a relaxed easygoing lifestyle or We need to work harder to be more prosperous Iceland Japan USA Canada Switzerland Australia UK Greece Spain Ireland Sweden Finland Austria Italy Netherlands Belgium Germany France

  16. 4, New Zealanders have a relaxed easygoing lifestyle or We need to work harder to be more prosperous Iceland New Zealand Japan USA Canada Switzerland Australia UK Greece Spain Ireland Sweden Finland Austria Italy Netherlands Belgium Germany France

  17. 5. More tourism would be good for the New Zealand economy

  18. NZ has 1.3 million FTE of employment $500,000 $400,000 $300,000 Revenue per employee $200,000 Needed for current per capita GDP $100,000 0 100,000 200,000 300,000 FTE of employment

  19. NZ has 1.3 million FTE of employment $500,000 $400,000 $300,000 Revenue per employee $200,000 Needed for current per capita GDP $100,000 Wine Tourism 0 100,000 200,000 300,000 FTE of employment

  20. NZ has 1.3 million FTE of employment $500,000 $400,000 $300,000 Revenue per employee $200,000 Needed for current per capita GDP Food manufacturing $100,000 Wine Tourism 0 100,000 200,000 300,000 FTE of employment

  21. NZ has 1.3 million FTE of employment $500,000 $400,000 Fonterra $300,000 Revenue per employee NZ Manufacturing Exports Total NZ Manufacturing $200,000 Needed for current per capita GDP Food manufacturing $100,000 Wine Tourism 0 100,000 200,000 300,000 FTE of employment

  22. NZ has 1.3 million FTE of employment $500,000 $400,000 Fonterra $300,000 Revenue per employee Fisher and Paykel Healthcare NZ Manufacturing Exports Total NZ Manufacturing $200,000 Needed for current per capita GDP Food manufacturing $100,000 Wine Tourism 0 100,000 200,000 300,000 FTE of employment

  23. 6. You can’t manufacture in New Zealand US$ 35 billion Year ended December 2008 8 Manufacturing 6 Forestry and other primary Foreign earnings (US$ billion) Metals Petrolem 4 Fruit and vegetable Tourism ELT 2 Dairy Fish Meat Wine 0 NZ External Trade Statistics http://www.stats.govt.nz

  24. “As a share of GDP, New Zealand government spending on R&D is higher than in countries with materially higher incomes (including the United States, The United Kingdom and Canada)”

  25. “As a share of GDP, New Zealand government spending on R&D is higher than in countries with materially higher incomes (including the United States, The United Kingdom and Canada)”

  26. “As a share of GDP, New Zealand government spending on R&D is higher than in countries with materially higher incomes (including the United States, The United Kingdom and Canada)” “The taskforce is not convinced that there is a compelling case for more government spending on research and development through whatever means.”

  27. 7. New Zealand is small so we need to specialise in the knowledge economy e.g. we are good at agriculture, therefore our best chance for a high tech economy is in biosciences New Economy Research Fund 1999-2005 USA (and nearly everyone else) New Zealand Abt Associates report to MoRST www.morst.govt.nz

  28. 7. New Zealand is small so we need to specialise in the knowledge economy e.g. we are good at agriculture, therefore our best chance for a high tech economy is in biosciences (latest fads=“smart foods”, “cleantech”) New Economy Research Fund 1999-2005 USA (and nearly everyone else) New Zealand Abt Associates report to MoRST www.morst.govt.nz

  29. F and P appliances TIN100 New Zealand Technology Companies Datacom F and P Healthcare NDA Tait Electronics Ltd Temperzone $1410m Gallagher Douglas pharmaceuticals Rakon Moffat Ltd $500m Schneider electric Methven Allied Telesis Glidepath Dynamic controls $400m Annual revenue (NZ$) Navman wireless NZ Weta Ltd Skope industries $300m TruTest NextWindow Orion Health $200m NZ Pharmaceuticals $100m 100 90 80 70 60 50 40 30 20 10 1 Rank

  30. Lao Tzu 4th century BC The words of truth are always paradoxical.

  31. Irony The perceived notion of an incongruity between what is expressed and what is intended, or between an understanding or expectation of a reality and what actually happens, "when the literal truth is in direct discordance to the perceived truth." Jane Austen Pride and Prejudice “It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.”

  32. “Am I not destroying my enemies when I make friends of them?” Abraham Lincoln, 16th US president (1809-1865) April 9, 1865 (Appomattox )

  33. Paradox: our two greatest scientists

  34. Paradox: if it sounds unfamiliar, it may stand a chance

  35. F and P appliances TIN100 New Zealand Technology Companies Datacom F and P Healthcare NDA Tait Electronics Ltd Temperzone $1410m Gallagher Douglas pharmaceuticals Rakon Moffat Ltd $500m $400m Annual revenue (NZ$) Our top 10 technology Companies $3.9 bn $300m $200m $100m 100 90 80 70 60 50 40 30 20 10 1 Rank

  36. 100 companies, 100 inspired entrepreneurs An additional $45 bn per annum in exports (double our present exports) Ask the question: why would such a business want to stay in New Zealand?

  37. 100 companies, 100 inspired entrepreneurs An additional $45 bn per annum in exports (double our present exports) Ask the question: why would such a business want to stay in New Zealand? “A place where talent wants to live”

  38. Total $60 bn contained in all land Target: $45 bn per year

  39. Strategy for economic growth via the knowledge economy • 100 companies, 100 inspired entrepreneurs • Whole of government commitment to strategy: “A country where talent wants to live” • Commitment to education • Tell the stories of the job opportunities for New Zealand kids at home (Get the kids and teachers visiting the smart businesses) • Significantly boost science and mathematics education in schools • Build school programmes in entrepreneurship • Boost university engineering and science capability • Refine PBRF to reward commercialisation work • Commitment to R and D • Boost science and engineering research from 0.52% GDP to 0.70% GDP (a mere $300 million) • Enhance R and D credits to the knowledge sector • Compel CRIs to give IP share of benefit to employees and allow employee spinout • Help establish incubators, business/engineering/science synergy • Commitment to Branding • Understand the value of the conservation estate, liveable cities, quality of life • Identify and “call out” phony environmentalism and “science-phobia” • Market NZ as the “smart country, a place where talent wants to live” • Commitment to Leadership and vision • Bipartisan approach • Evidence basis for decisions-understand what works for us

  40. As for leaders, The worst, the people hate, The next best, the people fear, The next best the people honor and praise. But for the best leaders, the people do not notice their existence. When the best leader's work is done the people say, 'We did it ourselves!'

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