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Wellington: Lifting our Sights
October 2008
What do these two men have in
common?
NZ’s GDP per capita is sliding rapidly
relative to other nations
World Rankings: GDP per Capita (PPP)
1950
1. Qatar
2. Kuwait
3. United Arab Emirates
4. United States
5. Switzerland
6. New Zealand
7. Luxembourg
8. Venezuela
9. Australia
10.Canada
2007
1. Qatar
2. Luxembourg
3. Norway
4. Brunei Darussalam
5. Singapore
6. United States
7. Ireland
8. Hong Kong SAR
9. Switzerland
10.Kuwait
…
32.New Zealand
2025 (Projected)
1. Luxembourg
2. Singapore
3. Qatar
4. Hong Kong SAR
5. Norway
6. Bahrain
7. Ireland
8. Kuwait
9. United States
10.Oman
…
33.Botswana
…
42.Kazakhstan
…
47.New Zealand
Sources: 1950 GDP per capita rankings from The Conference Board & Groningen Growth and Development Centre, Total Economy Database (Sept 2008)
2007 GDP per capita rankings from IMF World Economic Outlook Database (April 2008)
2025 projections based on extrapolation of long term real GDP per capita growth forecasts from IMF World Economic Outlook Database (April 2008)
IMF rankings are adjusted for purchasing power parity
Morrison & Co analysis
We are working long hours, but our
productivity is falling behind our peers
NZ’s Ranking Amongst 24 OECD Countries: 1960 – 2007 (1)
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7th Highest
12th
Hours Worked
Highest Per Worker
20th Highest
21st Highest
GDP per
Hour Worked
(1) Includes all OECD countries that existed as independent states in 1960 (ie excludes Germany, Czech Republic, Hungary, Poland & Slovakia)
Source:
The Conference Board and Groningen Growth and Development Centre, Total Economy Database, September 2008
It’s time to lift our sights
“New Zealand needs a vision that will excite and motivate every
citizen to reach new and heretofore unheard of heights.
There is no reason why this country cannot be one of the
most prosperous nations in the world and a model for others.”
Dr Michael Porter, 1998
We should aim to be back in the World’s
GDP per Capita Top 10 by 2025
NZ’s World Ranking in GDP per Capita (PPP)
2025? “Back Where We Belong”
• 4.5% pa growth in GDP per capita
• Return to the Top 10 by 2025
1980
27th Wealthiest
2007
32nd Wealthiest
1980-2007
1.4% pa real growth in GDP per capita,
slipping further down the international rankings
“Beaten by Borat”
• 1.5% pa growth in GDP per capita
(in line with IMF forecasts)
2025?
• 47th Wealthiest Nation by 2025
• Fall below Botswana and Kazakhstan
2007-2025
More of the same,
or change the game?
Sources: 1980 to 2007 data from IMF World Economic Outlook Database (April 2008)
2025 projection based on extrapolation of long term real GDP per capita growth forecasts from IMF World Economic Outlook Database (April 2008)
Korea, Ireland, Taiwan and Singapore have
all shown this level of growth is possible
Real Annual Growth in GDP per Capita of the World’s Wealthiest Nations: 1987-2007
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5.2
5.2
4.9
3.8
4.5
3.2
3.0
2.6
2.5
2.5
2.5
1.5
1.4
2.8
2.3
2.3
2.2
2.1
2.1
2.0
2.0
1.9
1.9
1.8
1.8
1.7
1.7
1.7
1.6
1.6
1.6
1.6
1.2
0.8
0.7
0.4
0.3
Source: IMF World Economic Outlook Database (April 2008)
Sample is world’s 40 wealthiest countries by GDP per capita (PPP), excluding
those that did not exist as independent states in 1987
Real GDP per Capita growth
rate required for NZ
to return to Top 10 by 2025
What role can Wellington play?
“Since many of the essential determinants of
economic performance appear to reside in regions,
national policies will be necessary but not sufficient.”
- Michael Porter
Successful cities set a virtuous cycle in
motion
Business
Activity
Increases
Wealth Is Created
+
Tax Base Grows
New Businesses Emerge,
Established Business Grow
Well-paid Jobs
Are Created
Civic Amenities
And Infrastructure
Improve
Skilled Labour
Supply Grows
Quality Of
Life Improves
Source:
The Boston Consulting Group
wild at heart Wellington Airport
Insert image of Wellington Airport today
Working together to connect
Wellington to the world
WIAL Passenger Numbers: 1998-08
(Thousands of Pax, Year to March)
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603
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446
373
4,418
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3,123
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3,454
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- NBR, October 2, 2008
•
The Public Transport Management Act will allow councils to redefine
“partnership” as a “Victorian marriage” with the councils as “father”
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Councils will determine what consumers need and design services and
fares to meet these perceived needs
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They will then tender closely-specified service contracts to private operators
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Operators will win contracts by offering minimum compliance at least cost
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Councils (i.e. ratepayers) will carry revenue risk from patronage fluctuations
•
Councils will attempt to ensure contract compliance with a battery of “sticks
and carrots” and costly systems to monitor performance.
In closing…
 The time has come for New Zealand to commit to an ambitious,
measurable goal
 Wellington needs to set its own ambitious, measurable goal
- Given what we have to work with, we should set ourselves a growth
target higher than the overall New Zealand goal
 The community needs to understand the virtuous cycle
- We need economic growth so we can afford the social,
environmental and cultural elements of our vision for Wellington
 All sectors have a role to play, we need a spirit of genuine partnership
- Public and private sector pursuing the same goal…
- …But recognising and respecting each others’ respective roles