Innovation and investment in research are keys to success

Kiwis want to be known for their innovation and creativity.

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Launch of Cariboo's new product using mid micron wool, Octagon Trinity, Worcester Street, Christchurch

It's a pleasure to be here and it's a special pleasure to welcome visitors from overseas to Canterbury. You have come a long way to be here for this proud day for Carol McGeady and for Cariboo.

And in coming all this way, you might notice something about New Zealand that helps produce companies like this one: This is the most isolated place in the world to start an international business. And because we are so far from the rest of the developed world, we are innovative. We are used to having to work things out for ourselves; and we are used to having the freedom to try things out.

A few years ago New Zealand Trade & Enterprise surveyed New Zealanders about how we wanted to be seen by the world. And the questions they asked turned up some interesting answers. The majority of New Zealanders − by far − want us to be known throughout the world for our new ideas.

It's more important to us than winning on the sports field. It's more important than our stunning physical environment and the natural products that come from it.
We want to be known for our innovation, our creativity and our talent.

There is innovation here in the new fibre developed by Mid Micron Wools for Cariboo's export range. The new fibre is such a good product that I understand ten tonnes of it has been used for the first production run − and there are contracts in place to supply more.

It's new technology, with all the advantages we expect in wool: it's fire resistant, warm, light ... and it's soft enough to be suitable for baby products. Investment in research has helped to develop a competitive new product. We need to use science to develop better products because our wool industries have to adapt. R&D helps to add value.

Wool is a billion dollar industry for New Zealand and our ninth largest export earner. Mid-micron accounts for about six percent of the wool industry. But none of us is under any illusions − these are not easy times for wool growers. Prices are about forty percent lower than they were ten years ago.

Our dollar rate has fallen about five percent in recent days − it needed to, because it was at levels that couldn't be sustained on fundamentals. But it is still at high levels and that makes things very tough for wool growers.

There is not much the government can do about these issues in the short term, but we are working on them in a longer sense. To help bring down the value of the dollar and better support our productive sector, the government is leaning against demand in the New Zealand economy. We're taking cash out of the economy, through initiatives like KiwiSaver. That's helping to take the pressure off inflation and interest rates, and that should help our dollar stabilise at a more competitive level.

The government is supporting new research and development, too. In this year's Budget we announced a new tax regime for research and development that will make it easier for businesses and industries to develop the kinds of initiatives you have developed here.
And we announced new market development grants to help business people like Carol open new markets to sell products like the Cariboo Earth range. We're working on trade access issues too.

Here's why that's important: Prices weren't helped last week when China announced its wool quota for this year can be filled. We are working on the first comprehensive trade deal with China that any developed country has negotiated, which can help against that sort of development. But even then, world prices would be influenced by other suppliers who send their production to China, so it's not a panacea.

The industry's long-term health depends on its ability to develop high value markets. Markets where we can achieve a premium for our high environmental standards; markets where we are recognised for our high quality standards and technological innovation.

Those markets depend on integration with high quality manufacturing and products that stimulate consumer demand and interest. Cariboo − and other innovative Kiwi manufacturers − are excellent examples of how we can leverage our strength in primary production.

Last week the popular US show 'The Daily Show' had a short segment about New Zealand. The star of the show, John Stewart, introduced the piece by saying, "You've heard of New Zealand. It's the place where they shot Lord of The Rings!"
There are worse things to be known for than the backdrop to some spectacular scenery and the creators of some of the best creative work on screen ever.

We used to be referred to simply as the place that had 80 million sheep and 3 million people. Now we are on our way to being seen as a place where our sheep, our land and our creative talent merge together to be the source of world leading creativity and ideas. It's not surprising that Cariboo products are in demand in the homes of Hollywood stars.

I congratulate you on the launch of this new line, and wish you every success for the future.