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Cabinet Paper DEV-21-SUB-0222: Progressing the economic recovery and rebuild: Opportunities for industry policy
1.1Proposes that our ongoing efforts toward accelerating the economic recovery and rebuild from COVID-19 should be focused toward advancing a high wage, low emissions economy.
1.2Proposes to make industry policy a stronger focus for driving further progress toward this goal.
1.3Sets expectations about improving alignment and coherence across industry policy and what future initiatives should look like.
Relation to government priorities
2This paper is concerned with progressing the Government’s overarching goal of accelerating the recovery and rebuild from COVID-19 (as set out in the Speech from the Throne). It also identifies opportunities within the Government’s economic strategy to help achieve our priority of responding to climate change.
3As we begin transitioning to a new COVID normal, it is timely to start refocussing our economic strategy and identifying the biggest opportunities to make further progress. Important for this is having a shared vision of the bigger picture of Government’s economic goals and priorities.
4I propose that our ongoing efforts toward accelerating the economic recovery and rebuild from COVID-19 should be focused toward the goal of advancing a high wage, low emissions economy. Higher wages will be achieved by lifting productivity through increasing the value of what we produce and by creating the conditions for workers to share in those gains. A focus on lifting value and emissions reduction is already reflected in our economic programme, and our Government is pursuing a range of major reforms that aim to help tackle long-standing economic challenges. Efforts to make further progress should, where possible, leverage and build off existing programmes.
5Industry policy is a means by which the Government can shape the direction of economic development in a way that contributes to the wellbeing of New Zealanders. Our Government currently employs a wide range of policies to enable the transformation and transition of firms and industries. A more active and strategic role for the public sector in collaborating with the private sector can help to ensure that the direction of investment, innovation and enterprise is well aligned with both large-scale societal challenges, and with achieving an economic system that serves our collective aspirations.
6It is my expectation that existing programmes supporting industries and firms should be working together and should have greater coherence. They may need to be progressively re-examined in terms of their consistency with the Government’s economic strategy, particularly the challenge of meeting New Zealand’s long-term emission reduction and climate resilience objectives.
7I recognise the need for further action in this space. I expect that initiatives should demonstrate clearly how they will help the transition to a high wage, low emissions economy. In particular, we need clear governance for decision-making and project selection, measures of success and plans for evaluation, a time horizon for planned investments and an exit strategy for reallocating resources away from those investments that are not succeeding.
8The Government’s engagement with our social partners, including through the Future of Work forum, has provided a strong basis on which to work more closely with businesses, unions, and iwi in addressing major societal challenges. A commitment to tripartite engagement and to the Crown-Māori economic partnership should be a key feature of the way in which the Government formulates and enacts its industry policy.
9In considering proposals for funding in Budget 2022, I expect to give priority to those initiatives which can clearly demonstrate a consistency with the principles and directions set out in this paper. Climate change will be a key focus of our investment as a Government in Budget 22, so it will be crucial to demonstrate how our economic strategy is aligned with that imperative.