Section 2: The Ministry's Strategy for Growth
This section describes the five Strategic Priorities that the Ministry will focus on over the medium term in order to contribute to the Growth and Innovation Framework and so help achieve the Government’s economic objective. It also describes the Ministry’s wider set of Business Environment Outcomes and illustrates its outcome framework
Creating an Environment for Growth
The Government wants to grow an inclusive, innovative economy for the benefit of all. Given this goal, the Government's economic objective referred to earlier, and the Ministry's own sphere of influence and operation, the Ministry's objective is to ensure that
the business environment promotes a higher rate of sustainable income growth for New Zealanders.
This is the Ministry's major outcome and the main focus of our work. Its achievement relies on contributions from different agencies across the public sector. As the Ministry's productivity model in Figure 1 illustrates, improvements in the business environment are one of the means by which Government supports enhanced productivity and thus improved growth rates.
Focusing on the Priorities
From our wide range of our activities we have identified five strategic priorities that we believe will make the biggest contribution to improving growth in New Zealand over the next 3-5 years. These were identified through reviewing international experience on what drives productivity improvement as well as more domestically focused research and information on the main issues and challenges facing the New Zealand economy. They represent the areas that we will be emphasising to help strengthen the foundations of the economy and promote and facilitate innovation. Other agencies will focus on different aspects of the Government's Growth and Innovation Framework.
The strategic priorities are outlined briefly below and described more extensively in the next Section.
SP1: Facilitate the Alignment of Economic Development Activities across the Public Sector
The Ministry of Economic Development can directly affect many of the conditions in the business environment, but we have less influence over other important factors such as labour market and educational outcomes, and environmental management. The more alignment and consistency there is between government policy and services across all these related areas, the greater the likely impact on productivity and thus income growth. Therefore, the Ministry needs to promote this alignment and foster the conditions to enable the collaboration upon which growth depends.
SP2 Improve International Connections, Particularly with Australia
International connections enable growth. Trading internationally not only gives firms access to larger markets: it may also lead to productivity improvements as businesses embrace new technologies and production methods to compete with foreign firms. This is particularly important for New Zealand, because the domestic market is small and a long way from major global markets. The Ministry will therefore work with other agencies to co-ordinate New Zealand's regulatory environment more closely with those of our major trading partners and to promote stronger business networks. In particular, we will focus on creating a Single Economic Market with Australia, and on aligning Australian and New Zealand's economic development policies to strengthen the Australasian economy as a whole.
SP3 Stimulate Enhanced Entrepreneurial and Innovative Capability of New Zealand Firms
An improved rate of growth relies on businesses and individual entrepreneurs, but the performance of New Zealand businesses is variable and relatively few evolve into world class firms. Business success requires entrepreneurs continually to spot opportunities, and to produce and market innovative products that consumers want. This strategic priority focuses on improving both the ability and the motivation of entrepreneurs to do so. It involves a mix of policies that create the conditions to spur innovation (such as competition and consumer demand) plus other more facilitative policies that seek to improve the ability of firms to identify opportunities and translate them into commercial success.
SP4 Improve the Regulatory Environment for Business
One of the most important ways government influences the business environment is through the regulation of business activity. Among other things, such regulation sets standards for goods and services; provides incentives for innovation; encourages competition in markets; and provides assurance to investors. Government also regulates to achieve a wide variety of non-economic objectives such as environmental protection, protection of civil rights, and health. The Ministry will promote improvements in the quality of all regulations so as to minimise the compliance burden and provide as much certainty and flexibility as possible. We will also work to ensure that regulations designed to achieve non-economic outcomes do not unnecessarily impede the Government's economic objective.
SP5 Improve the Quality and Reliability of Key Infrastructure Services
Effective infrastructure - such as electricity, transport, communications and water distribution systems - is crucial to New Zealand's productive capacity and growth prospects. Shortages in supply or volatility in prices can have major economic and social effects, and can be exacerbated by our challenging geography and widely dispersed population. Government policy needs to promote security of supply for businesses and consumers. It also needs to encourage and enable private sector investment in infrastructure, and ensure that public infrastructure investments are co-ordinated, timely and targeted well. The Ministry and other agencies are already working together to identify how Government can act most effectively in this regard, but translating this into action will be a priority for this Ministry over at least the medium term.
The Ministry's Broader Outcome Framework
The Ministry's Strategic Priorities describe the things we will be putting particular emphasis on in order to best promote growth. However, we undertake a range of other activities that may contribute less directly to growth but are nevertheless important in maintaining and improving the environment for business. This wider set of activities is captured by the Ministry's Business Environment Outcomes.
We cannot achieve all of these outcomes on our own: many require contributions from Crown entities and other departments. This is reflected in our Alignment Outcome, and also in the fact that MED has agreed a shared outcome with the Ministry of Foreign Affairs and Trade, and linked outcomes with the Ministry of Research, Science and Technology (see the discussion under SPs 2 and 3). However, the Ministry does have a major role in achieving all our Business Environment Outcomes, either through developing policy for implementation by other agencies, or through the services provided by our own Business Services branch.
Economic development is a complex business, and our Ministry undertakes a wide range of activities in order to promote it. We have opted to portray this breadth of activity in our outcome framework so as to provide clarity of focus for our staff.
The outcome framework is illustrated in the following diagram. Section 4 of the SOI provides more information about the work we will be doing to achieve the Business Environment Outcomes.
Figure 2: The MED's Outcome Framework
The above diagram illustrates the things MED will be focusing upon over the next three years.
- Increasing economic development: the top section shows the Economic Development Outcome, and a highly schematic illustration of the way changes to the business environment contribute to achieving this outcome. This should be read in conjuction with the Ministry's Productivity Model, shown earlier in Figure 1.
- MED's Intermediate Outcomes: this shows the Alignment Outcome and the Business Environment Outcomes that are being pursued by our diverse business units.
- Strategic Priorities: this illustrates the activities which represent the primary focus of our work and our strategic management effort for the next three years.
- Building Capability: this highlights the four key aspects of our organisational development strategy which are designed to build the capability we need to achieve all of the above.
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