In the last few months three public agencies have each released a major report with far-reaching implications for the future economic and social development of New Zealand.
First, in its latest report. the Productivity Commission estimated that New Zealand’s frontier firms lag up to 45% in productivity behind comparators in other small advanced economies; low added value, inadequate technological investment and poor management skills are among the deficiencies identified.
Second, the Office of the Prime Minister’s Science Advisor (OPMCSA) released its report on the future of commercial fishing, revealing a profitable sector but one also that is in many respects a fragmented and fractious one that still follows the mode of an extractive industry.
Finally, the Climate Change Commission (CCC) finalised its report on what New Zealand needs to do if it is to be “climate resilient” and come close to playing its part in containing the global rise in emissions.
The significance of these reports is that they emanate from independent public agencies with varying but complementary mandates (economic, environmental, primary production), that they come at a point when New Zealand needs to consider its basic development model in the wake of the COVID-19 pandemic, and that they touch upon many of the same issues, in particular an excessive reliance on quantity over quality, on the depletion of natural capital, on low-tech methods, and on low-skilled, often temporary, migrant labour.
This formula is particularly evident in many of our major industries, such as dairying, fishing, and tourism. New Zealand has long been an economy over-reliant on extractive industries, commodity exports, and outside capital and expertise.
The Helen Clark Foundation, with NZIER, has made the case for a higher minimum wage here and the current government has bravely announced that it wants a “reset” to an economy with greater added value, higher capital investment and skilled labour, less reliance on depleting natural capital and emitting carbon, and more emphasis on quality over quantity, and training our own rather than importing.
The break from the past provided by the pandemic provides that opportunity for a reset, but what are the possible models and pathways forwards?
The report on commercial fishing is a significant one because it involved all industry players and critics, it was convened by an independent science-based agency – the Office of the Prime Minister’s Chief Science Advisor, Dame Juliet Gerrard – and it brings out many of the issues that have been brought to a head by the Climate Change and Productivity Commissions.
New Zealand was ahead of its time with the fishing industry in introducing a fishing management quota system in 1986. In principle, this allowed the government to set fish catch targets according to the carrying capacity of the underlying ecosystem. Forty years later we still have a major fish export industry, but at the same time nine fish stocks are classified as collapsed and another dozen or so are either over-fished or at risk of over-fishing, suggesting that the quotas are not being set in line with the ecosystem’s capacity. Nevertheless, the concept of the carrying capacity of the underlying ecosystem is something that could be developed for other resource-extraction industries, such as dairying.
New Zealand was also ahead of its time in inserting into the legislation governing fishing in 1996 requirements that much more explicitly spelt out an ecosystem approach to fisheries management (EAFM). In other words, fish may be the target, but fish stocks are in turn part of and supported by a wider ecosystem. Unfortunately, these principles have not been applied with any fortitude, but again, this is the kind of model that dairying and other resource-extractive industries could usefully take up. Instead, of regarding the pollution of waterways as an inevitable if regrettable by-product of a foundational industry, the ecosystem could and should be seen as an essential support.
While New Zealand may have set up some useful guidelines in legislation, there are examples from other countries where the fishing industry has done much more to protect its future in a sustainable way. For example, in Iceland the tonnage of cod landed has intentionally been halved since the 1980s, while industry returns have doubled; this has been through extracting much more value from the fish. This is the country’s major industry, so great care has been taken. There are 60 by-product industries in a country of just over a quarter of a million, and people in the fishing industry are among the most highly paid in the workforce.
With the recent demonstrations from the farming sector visible on our city streets, we can see how these different forces come together in a very focused way: climate change, environmental degradation, productivity in our primary industries, and the opportunity provided by COVID for a reconsideration of our basic development model.
The Chief Science Advisor’s report focuses on commercial fishing industry but it may provide us with a few pointers to the way ahead elsewhere in the primary sector where we want environmental protection, productivity, innovation, high-value outcomes, and the alignment of key players and institutions.
Chair of The Helen Clark Foundation, an independent public policy think tank.
Published on STUFF website, 29th July 2021