Exporters Desperately Needed

NZ’s dreadfully low export income as a percentage of total economic activity just has to be boosted. Aussie exports are nearly three times higher as a percentage of GDP than ours. It appears that most political parties accept that exports need boosting, but although many politicians want to do the right thing, there is debate about what that right thing should be.
Realistically the Government doesn’t have that many levers but it is pleasing to see that they are thinking about using some of them, albeit a bit tentatively. To get more exports you have to do something different to encourage those that can export to do so, as more of the same policies will only leave us with more of our poor export performance.
Not everyone can respond to the call for more income earned offshore, but as one who can, I can report that incentives do work. I just love it (not) when some suit from one of the big accounting firms, screams "return to Muldoonism" when some form of tax incentive for export income is announced, especially as the suit is normally used to charging outrageously for his time with no offshore income risk at all.
Back in the early nineties, my engineering firm won the design of the precast panels at the prestigious Hong Kong Jockey Club and with it some follow up work in mainland China in the early days when such work was a risk to get paid. Various government agencies such as Tradenz applauded us but could offer nothing in the way of encouragement for this extra risk, no payment guarantee system or tax incentive was on offer, so we pulled back to make easier money from the busy home market where we could at least knock on the door of any dodgy payer.
If the government of the time had really valued that offshore income over locally earned income then they would have done something about it. Well, maybe the low export receipts and our high external trade deficit may mean that now they will.
If there is a greater value to NZ to have income earned offshore either by exporting real goods or intellectual property, then that income should receive a tax benefit to encourage business to move that way. That’s what the high growth countries like Ireland have been doing.
Similarly it’s about time our exporters got the same level of marketing support that our competitors do. Just show up at a trade fair and look at the flash displays of our Aussie competitors. A quick chat reveals that they get a one for one subsidy for these costs, and what do we get? Up till now the answer is bugger-all.
In theory there is a fund somewhere at NZ Trade and Enterprise but it has always been given out before the year even begins. Imagine if welfare was like that! "Sorry there’s no more money for the DPB this year because last year’s pregnancies were greater than expected and used it all up."
If it makes sense to help export marketing to get more export income then there shouldn’t be a limit to it. In the real world more selling investment means more sales and therefore more income! If the first dollar invested in offshore marketing support makes sense, then so will the last. This policy should be applauded. This is not welfare, which is often described as social investment. If it works the government will receive more overall tax anyway – Win/win.
While they are at it, a payment guarantee system and use of government funds as the working capital part of a high growth export strategy will not only speed up export growth but also earn good economic returns to the government. Not a subsidy, just good investment in Kiwi export growt! Surely this is better for us than sending our superannuation dollars away to grow American companies. Another win/win and we need every one of them we can get.
WAYNE BROWN