Island Life: Q+A. Fill in the blanks.
145 Responses
First ←Older Page 1 2 3 4 5 6 Newer→ Last
-
Rob, accepting that things have changed somewhat, it still doesn't explain why we're going absolutely nowhere on productivity. Much as National love to blame Labour for "squandering their nine years of power", I just don't see what more could've been done on the government side. We've got a highly literate workforce by international standards, even by the standards of our "competitors", and it's not like our tax system is in the least unusual in its treatment of capital purchases. Hell, Labour even brought in an R&D tax credit, which is more than National can claim.
Unless I've missed something fundamental, the productivity issue is with choices made by business, not with the government. Or are National meaning that Labour made it too attractive to be in primary production, at the expense of high-tech, low-footprint production? No, I don't actually think that's what they mean, but it's the only failing I can pinpoint.
-
A couple of things:
Firstly, I don't know if you noticed but I ain't making this a 'Labour bad/National good' argument. Partisan face-pulling tends to make things less rather than more clear, as well as being a bit of a bore.
Secondly: productivity. If there is any change there tends to be a lag before it shows up in any statitistics - I was told why, once, but the subtleties eluded me then and still do. But I did a bunch of interviews with various sector groups in the late 1990s and it was about the only thing the CTU economist (Peter Conway) and the Manufacturers Federation ceo (Simon ARnold) agreed on.
Thirdly, we actually don't - depsite your re-assertion of this - have a particularly literate or numerate workforce. To re-state what I said earlier, whatever the average might be we've got a large group at the bottom end of the scale on both these measures.
A lot of those were unemployed 10-12 years ago but have been drawn into the workforce over recent years.
That's a good thing, obviously, But it has the paradoxical effect of pulling down the average per capita output per worker (I have seen some Dept of Labour stuff on this, it is probably now somewhere on their web site).
Finally: your comment about productivity issue resting with decisions made by business and not govt : I'd say it rests pretty much with both.
-
If there is any change there tends to be a lag before it shows up in any statitistics
That at least makes intuitive sense to me. You put in a bunch of new plant, and it takes time to install it, to train people to use it, to change over from the old kit, and for the extra profit (which ultimately becomes "productivity") to appear and be recognised in the accounts.
Apropos per capita productivity - yes, if you have low structural unemployment, then the least productive workers are still employed, and drag down the average. So perhaps we are concerned about the wrong thing (low productivity). Perhaps we should be happy that even the innumerate and illiterate are engaged in work and paying taxes. Perhaps merely maximising productivity is bad.
To tell the truth, having moaned about business' reluctance to invest (and I stand by that moan) I do somewhat understand it. When you become more productive, this implies that you are selling your extra production to someone. In NZ, expansion of production in any sector except the purely intellectural hits a huge barrier called "the ocean" which tends to limit ambition, compared to the possibilities afforded by a continental location.
-
In NZ, expansion of production in any sector except the purely intellectural hits a huge barrier called "the ocean" which tends to limit ambition, compared to the possibilities afforded by a continental location.
Hence the need to be encouraging more businesses who don't sell atoms to the rest of the world. That means software, creative, hi-tech and professional services industries, not dairy and meat. There are a few things that help with that - oh, like R&D credits.
Ironic for the supposed party of business to be stuffing that up and reinforcing the delusion that our future is just more farming. There's a reason our streams are polluted, and there's only so many of them you can hide the externalities in. Call that ambition?
-
Perhaps we should be happy that even the innumerate and illiterate are engaged in work and paying taxes. Perhaps merely maximising productivity is bad.
Paradoxically, nations like France have high productivity rates as well as high unemployment, by way of bolshie workers being replaced with robots.
The States & other New World nations are grappling with the same issue of functional illiteracy as well, to varying degrees.
In NZ, expansion of production in any sector except the purely intellectural hits a huge barrier called "the ocean" which tends to limit ambition, compared to the possibilities afforded by a continental location.
In other words, the "bach, boat & Beemer" school of thought.
Yet another reason to secure our digital trade routes - while FTTx is good, it'll be not much more than 8-lane digital freeway from Morrinsville to Matamata without the "digital trade routes".
-
Ironic for the supposed party of business to be stuffing that up and reinforcing the delusion that our future is just more farming. There's a reason our streams are polluted, and there's only so many of them you can hide the externalities in. Call that ambition?
And with the current econo-political thinking (or lack of it) weighted towards the size of one's Range Rover rather than the size of one's brain, it'll be an uphill drive.
Once again, I've dug up this journalistic oasis from the Granny:
-
Firstly, I don't know if you noticed but I ain't making this a 'Labour bad/National good' argument. Partisan face-pulling tends to make things less rather than more clear, as well as being a bit of a bore.
Yes, I didn't phrase it terribly well. It was more a general observation than something aimed at any of the contributors here. Labour's been getting an awful lot of flak from a lot of places for the lack of movement on productivity, but I don't see how they could've done very much more to encourage changes. Other than, obviously, discouraging primary production and instead moving to "soft" products as Stephen suggests.
If there is any change there tends to be a lag before it shows up in any statitistics - I was told why, once, but the subtleties eluded me then and still do.
Well, stats do tend to be a year or so behind current, so that's one issue. There's also the lag, as Stephen says, between installing improved kit and getting maximum return, unless it's something that's fully automated and can run at maximum capacity entirely of its own volition. Regardless, 2004/2005 is now four years in the past. We should've seen something by now, and we haven't. Our productivity has remained stagnant for the entire period. Allowing for all kinds of delays in RoI and reporting and all the rest, four years should be showing something. It's not.
Thirdly, we actually don't have a particularly literate or numerate workforce.
Since there's been a dearth of evidence from either side of this thread about this, I went looking. Turns out we're upper-third of the OECD for "prose literacy" but that's the best we do. We're in the lower half for "document literacy" and "quantitative literacy", according to the International Adult Literacy Survey (IALS). The caveat is that the data on which that's based is now between 12 and 16 years old, and we've implemented programmes in the intervening period to try and improve those metrics in the adult workforce. There hasn't been a repeat of the IALS that I could find, so we're stuck with data that's very old. Accepting that we have a lot of functionally-illiterate/innumerate workers, that survey also positions us quite close to the US, UK and Australia in all three categories. So we're not in a particularly disparate place against the usual comparison nations, or weren't 13 years ago, and that brings us back in a circle of asking why productivity is so much lower here than in countries that have similar workforce literacy/numeracy characteristics.
It's interesting that "educated" literacy doesn't add up to functional literacy. The Wikipedia article on literacy in the US has some pretty startling facts about literature engagement post education (see in the citations section). I wonder what the figures are here, and wouldn't be surprised if they're fairly similar. We're not quite the TV culture that the US is, but not too far off.
-
That means software, creative, hi-tech and professional services industries, not dairy and meat. There are a few things that help with that - oh, like R&D credits.
Let 'nerds' drive us all into future
Out of curiosity, I went and looked for figures on NZ's current R&D spend as a percentage of GDP. According to the article that DeepRed linked to, in 1997 it was 1.1%. For 2008, based on a GDP of NZD 135.7b and R&D spend of NZD 2.14b, I get a figure of 1.57%. Someone want to check my numbers? If that's accurate, and certainly the data sources are credible, then we've not done very much to progress the transition to some kind of balance in the sources of income. That's got to be bad for overall productivity, no matter how much money business is investing on capital goods. Also, as a side note, a document on the Stats NZ website that I now can't find again showed a decrease in return on capital balance over the last financial year. Not much of one, but still a decrease.
-
Matt Poole.... without assessing the validity of your data, but taking at face value...
You say going from 1.1% to 1.57% of GDP is "not very much"
I say it's increased more than 40%.
That seems quite a rise to me?
-
Fletcher, that's a 40% increase over a period of 11 years. In my book, a mean increase of less than 4% per year equates to "not very much". If it had been a 40% increase over even five years that'd be something to talk about, but it's over more than a decade. It also compares to a 2002 average for the OECD of 2.26%, which is the latest figure I could find in a hurry. So we're about 1/3 behind the OECD average, if not more given how many articles I've seen in my Googling that talk about countries throwing large extra sums at their R&D efforts.
-
That means software, creative, hi-tech and professional services industries, not dairy and meat. There are a few things that help with that - oh, like R&D credits.
A good chunk of productivity comes with experience, learning and then shifting to a higher gear once you have the current level "inate" in your business/industry. In that sense, dairy and meat are very good candidates for high-productivity industries in NZ.
And there is a tension there between absolute productivity and relative sectoral productivity globally. If we can operate our dairy and meat industries as a global leader, there is benefit in that over being just an average software producer. -
NBH,
Regarding Matthew's literacy stats above, IALS pretty much has been repeated - or rather it's been replaced by a more refined version called the ALL survey, conducted here in 2006. The findings from ALL, including some limited international comparisons, are here:
http://www.educationcounts.govt.nz/themes/research/all -
And there is a tension there between absolute productivity and relative sectoral productivity globally. If we can operate our dairy and meat industries as a global leader, there is benefit in that over being just an average software producer.
However, if we make that choice as a country then we must accept an inevitable and significant decline in our position within the OECD for all measures of wealth. You don't make money from primary products, you just don't. The whole tangible consumables thing is generally a loser unless you can make serious value-add, and there's only so much you can do with pastoral produce.
There are, too, hard limits on how much milk, meat and wool we can produce. No matter how good we are, how efficient, we have a finite supply of land, and an even more finite supply of land that's useful for working stock. The head-per-hectare count isn't moving, either, and that's your real limit on just how much you can yield. Whatever we can manage to trick out of our stock, others can do too. We're a very small country, physically, making the limits that much more significant. In time, once agricultural subsidies are consigned to the dustbin of history (I'm not holding my breath on that happening in the next 20 years, either), we may well be able to compete in output as well as quality, but for now we're on the wrong side of a battle that's got lots of very inefficient producers being supported by large economies.
The other big negative to primary produce is that its price is set by world markets in which we're a very, very small player. Fonterra may be a monstrous milk supplier, but even it can't do much about the global supply/demand relationships. How much money has been knocked out of our economy in the last six months with the precipitous decline in the world price of dairy products? That's not healthy.
-
About dairy and meat: I do support what I understand Craig Norgate and others are pushing for - to export our expertise in farming, not the raw products (which is really what I was referring to hurriedly above). So long as we own an ongoing share of the result, not just sell our knowledge for a few one-off baubles. Like kiwifruit.
-
Like kiwifruit.
So you're thinking more like Zespri?
-
Yes, if it means investing in high value branded specialisation as opposed to the 80s tactic of selling our vines directly to competing countries to grow.
-
How do you rate the performance to date of Anne Tolley as Minister of Education?
Very Good (31.0%, 23 Votes)
Good (28.0%, 21 Votes)
Average (19.0%, 14 Votes)
Very Poor (14.0%, 10 Votes)
Poor (8.0%, 6 Votes)
Total Voters: 74I would like to know how on earth the majority of voters in this poll from Kiwiblog (as at a few seconds ago) gave Anne Tolley 'very good' or 'good' - BASED ON WHAT????
i voted very poor -
also with regards to NZ literacy/numeracy - ASAIK we perform well at the higher levels of achievement but have a loooong tail of failing students
-
to export our expertise in farming, not the raw products (which is really what I was referring to hurriedly above). So long as we own an ongoing share of the result, not just sell our knowledge for a few one-off baubles. Like kiwifruit.
That way will still not earn us significant sums. Think about it. Fonterra is by far the largest company in NZ by turnover, but still only the sixth-largest dairy company in the world (says [http://en.wikipedia.org/wiki/Fonterra|Wikipedia]]. I'll take its word for that much). It also has a turnover of roughly NZD20b (again, Wikipedia). The world's largest dairy company, Danone, reportedly had around NZD35b in revenue for 2008, across all its operations (it's the parent of Kraft Foods, so spreads well beyond dairy). Let's say, for ease of calculation, that the other four average NZD27.5b in annual revenue each. In this hypothetical world, Fonterra comes up with some genius production method that manages to licence to these other five producers, for a whopping 2% (seriously, 2% of revenue would be an insane licence value) of annual revenue each. That's a grand total of NZD2.9b. Yes, that's 2.1% of our GDP, but it's also concentrated into one company, in one industry, and doesn't compare so well to, say, Microsoft, which with USD60b in revenue last year turns over more than three-quarters of NZ's national GDP. I know which of those two I'd rather have.
-
to export our expertise in farming, not the raw products (which is really what I was referring to hurriedly above). So long as we own an ongoing share of the result, not just sell our knowledge for a few one-off baubles. Like kiwifruit.
That way will still not earn us significant sums. Think about it. Fonterra is by far the largest company in NZ by turnover, but still only the sixth-largest dairy company in the world (says [http://en.wikipedia.org/wiki/Fonterra|Wikipedia]]. I'll take its word for that much). It also has a turnover of roughly NZD20b (again, Wikipedia). The world's largest dairy company, Danone, reportedly had around NZD35b in revenue for 2008, across all its operations (it's the parent of Kraft Foods, so spreads well beyond dairy). Let's say, for ease of calculation, that the other four average NZD27.5b in annual revenue each. In this hypothetical world, Fonterra comes up with some genius production method that manages to licence to these other five producers, for a whopping 2% (seriously, 2% of revenue would be an insane licence value) of annual revenue each. That's a grand total of NZD2.9b. Yes, that's 2.1% of our GDP, but it's also concentrated into one company, in one industry, and doesn't compare so well to, say, Microsoft, which with USD60b in revenue last year turns over more than three-quarters of NZ's national GDP. I know which of those two I'd rather have.
-
performance to date of Anne Tolley as Minister of Education?
Very Good (31.0%, 23 Votes)
BASED ON WHAT????The answer's right there: you only need 23 people to select that answer, for whatever random reason, possibly linked to limited literacy skills. ("Oh. Minister of Education? Education is good. So, Minister of Education is good." Baaaa.)
More seriously: a poll that small, of self-selecting respondents, can only produce meaningless numbers. -
The answer's right there: you only need 23 people to select that answer, for whatever random reason, possibly linked to limited literacy skills. ("Oh. Minister of Education? Education is good. So, Minister of Education is good." Baaaa.)
More seriously: a poll that small, of self-selecting respondents, can only produce meaningless numbers.Margin of error: ≈ ± 89.3%.
-
One issue I remember being raised in terms of (comparative) R&D spend is that countries that have tax breaks are more likely to make damn sure all their R&D spend gets classified as such.
-
Lyndon, that's hardly surprising. It will be interesting to see what effect the demise of the R&D credit here has on reported spending.
-
I'm sure the government have plans for R&D - just not a tax credit based approach. I guess we'll see when the Budget arrives. It was a very bad look choosing that to sacrifice to provide some cover for tax cuts for higher income earners, no matter what your perspective on the overall benefits of those.
Matthew, think joint venture rather than licensing - isn't that the approach they're pursuing in Argentina? Remove one major constraint on growth by using another country's arable land, apply our superior expertise to drive wuality and margins - but retain a larger share of the profit (although it requires putting in equity). I haven't followed it closely, but that's what I remember reading.
Post your response…
This topic is closed.