Our productivity growth has been flagging – so fixing this should be high on Phil’s new agenda

Stripped  of  his  housing  portfolio, Phil Twyford  has  to  rebuild  his  political  reputation.

Given his spectacular  failure with  KiwiBuild, PM  Jacinda  Ardern  might have  been  pardoned  for  leaving Twyford to  work  out  his redemption   in his other  portfolio  of  Transport,   which has  enough  problems  of  its own to demand  the full-time  attention of a   struggling   minister.

But Ardern has  entrusted  the  Economic  Development  portfolio  to Twyford.  This has surprised  some business  leaders,  and dismayed  others.

NZ’s  economic  development  is  suffering  from sustained and  deep-seated  malaise.  Labour  productivity, or output per hours worked, is  around  40%  lower  than  the output per hours worked of international peers.  In a  recent report  the Productivity  Commission  noted the only members of  the  36 countries within the OECD with both a  lower  productivity level and  weaker productivity  growth than NZ  are  Mexico and Greece.

As  economic  commentator  Brian  Fallow  pointed  out,  economic problems do not  get more fundamental than this,  if only for the  obvious reason that income  has to be earned  before it  can be  spent,  or taxed.

And  we  are  not  really  very  good at  doing that”.

NZ  suffers   from  capital shallowness: the capital-labour ratio  is low.  Since the  mid-1990’s it has increased at only half the pace  recorded  across  the Tasman, which explains   why Australians  are richer   than  NZers.

The  Productivity  Commission  and  other  economists  have  underlined  how  NZ   has  lagged  in its investment  in  infrastructure, competition  policy, fostering   R&D,   promoting a  healthy  innovation  policy, and ensuring  the education  system is  geared for the  digital age..

So  here  is  Twyford’s  first  challenge.  Fortunately  for  him, his  predecessor  with the  Economic  Development  portfolio, David Parker, is  handing on  some work  aimed at  spurring  industry  innovation  and lifting  productivity

Parker  says  the flipside of the impact of the technological revolution on the future of work is the huge potential it opens up for businesses and the development of high-skilled, higher paying jobs.

“Growing innovative industries is a key focus of the government’s broader economic strategy.”

A new direction is outlined in the document, From the Knowledge Wave to the Digital Age: Growing Innovative Industries in New Zealand, which also charts the challenges and opportunities the NZ economy is responding to. New Industry Transformation Plans – an idea borrowed from Singapore – will maximise the opportunities offered by the fourth industrial revolution and help move towards a productive, sustainable and inclusive economy.

The agritech sector has been chosen as a key focus because it brings together two of NZ’s key competitive advantages – our expertise in agriculture and horticulture with our well-educated workforce,”

Parker insists NZ needs to move from volume to value in sectors like agriculture.

“Agritech is an excellent example of where NZ can make big strides. Strategy work is already well underway,”.

In  what  he says is a call to action,  he has urged the agritech sector, innovators and workers to bring their ideas to help develop, in partnership with government, the draft agritech Industry Transformation Plan.

 “We expect this and Plans for the other focus sectors – forestry, food and beverage and digital technology – to be implemented from 2020.”

This  could be   where  Twyford,  even  with the  KiwiBuild  millstone  round his  neck,  could start to put  a bit   of polish   back on  his  political  record.

Given   it is   thought  40%  of   today’s occupations  won’t  exist  in  10 years’  time , AI   solutions   will   play  an   increasing  role  in  animal  husbandry,  and  agriculture   generally.

NZ   earns   around  $37bn  from  primary  sector  exports,   but   with   global warming  the  demand    for  foodstuffs  from  temperate  zones  could soar  exponentially.

One of  the  biggest  issues   which confronts  NZ   is  gene  editing,  a science   which  could make  developing   new   varieties of   food crops  significantly  quicker than  traditional  methods.

Scientists say new  varieties  of  vegetables,  fruit   and  animals   can  be  produced  in  months  rather than decades.  Other  countries  are already  moving  ahead  with   gene  editing,  but it  is   opposed,   curiously,    by  Green  lobbyists  and  politicians—even  where  it  might be used for  disease  prevention  or  malnutrition  in poor countries.

But this is  an  area  where Twyford  – with a background  in  Oxfam – should have  the political  courage to  take the  lead. .

Point of  Order  says:   Go  to it, Phil.

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