The Government wants to double exports, so here’s what it needs to do
By Phil O’Reilly
First published on the The Post.
The Government has set a target to double the value of New Zealand exports over the next 10 years. It is sobering to note that the stretch target will only bring our exports as a share of GDP back to around 30% – the same level we were at a decade ago. There is much work to do.
What actions might Government and business take to get us there?
The first and most obvious point is that a Government target is not a business target. It means focus and accountability – at least in theory. Government doesn’t export anything. Businesses do.
Exporting happens because an individual business takes the risk to invest in a new market or a new product or service. What Government can do to help is to create an enabling and supportive business environment to encourage appropriate risk taking and innovation.
Government can emphasise business to business contacts. This new Government has already carried a number of trade missions with the promise to do the most ever. That is admirable. But we need focus.
We will need more business- and trade-led missions with expert ministers supporting them, aimed strategically at new markets and contacts. Trade missions are expensive exercises. We need to work together to make sure we are pointing each of them at the best available opportunities, as defined by the business community.
There should be improved coordination between various elements of the business community and relevant agencies.
There are already a number of long term and energetic players in the field representing private sector interests such as BusinessNZ, ExportNZ and the International Business Forum.
Some exporters, however, are better represented in these kinds of organisations than others – such as established agricultural goods exporters.
It is no surprise, nor is it any criticism, that we tend to focus on the big existing sectors. But we need to do more together to reach out to those who are not traditionally quite so visible in those kinds of policy forums, including digital businesses or those in emerging sectors such as AI.
We need to hear their voices because if we are to hit the Government’s target we will need to get much more value out of them as well as lifting the contribution of existing exporters.
We need comprehensive focus across government. This is not just the job of the Ministry of Foreign Affairs and Trade (MFAT) or New Zealand Trade and Enterprise (NZTE), it is also the job of other government agencies thinking about whatever it takes to enable exports.
A good example is industry skills training where domestic skills are vitally important for building capability to go offshore. Or depreciation rules set by Treasury that might support building company capability to invest in new equipment to take on a new market.
This is about taking every single opportunity to build value and not let it leak out the back door.
International education for example has been very poorly treated since the Covid lockdowns and it is worrisome that international cruise visitations are going to be dropping in the next few years.
Our TV documentary companies sell to dozens of countries but may be hamstrung by what is happening to broadcasting at home.
It is all very well to build value at the front end, but we need to make sure that every single dollar of existing export revenue remains so that we don’t have to work any harder than necessary to hit the target.
The next thing we need to do is review our trade strategy. This is already happening to some extent, but more could be done to engage the business community here.
For example, our reliance on comprehensive free trade agreements with partner economies has served us very well but is unlikely to be the big driver of new trade opportunities in some countries in the future.
Traditional FTAs are becoming harder to come by – particularly in target markets like India and the United States. Is it time to take a new approach to the ways we build trade relationships and enter markets?
Alongside this, it may be timely to look anew at the role of NZTE, what it is currently doing and whether or not there are better ways of achieving outcomes for exporters, given the kinds of financial constraints we are under and the kinds of countries (such as Africa) that are a big part of our trade future.
While NZTE has been a popular agency for export businesses and has done an excellent job, particularly during the Covid disruptions, there hasn’t been any thorough review of NZTE for many years now.
And finally, we need to build insight into what makes successful exporters from New Zealand. There has been an enormous amount of work about this over the years, including dozens of studies.
We may not need to reinvent too many wheels here, but we should certainly refresh our memories collectively about what it takes to succeed and apply that to new markets and new business sectors that might be emerging. A successful China export strategy is unlikely to work in India or Thailand, for example.
This will help the Government to measure progress and celebrate success. We need to hold each other to account – both in government and the business community. We need to own the successes as well as the challenges.
If Government does all of these things, it is likely that more businesses will react by intensifying and diversifying their global exports, which will benefit all of us.