Nash Stuart: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Nash Stuart: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:664;Page:12126] 
STUART NASH (Labour) 
: 
 We have heard some very good speeches on the Tariff (Malaysia Free Trade Agreement) Amendment Bill which is one of those bills on which all parties agree. 
Dr Kennedy Graham 
: Wrong. 
STUART NASH 
: We do not necessarily agree on the philosophy of how New Zealand companies are best going to take advantage of this bill— 
Dr Kennedy Graham 
: Wrong. 
STUART NASH 
: I apologise to Kennedy Graham; the Greens do not agree on this bill which is a real shame because we need to look at what is best for this country going forward and how we will grow our economy in a truly sustainable manner while not really abdicating any of our global responsibilities. I think that these free-trade agreements do a perfect job in that respect. 
I think of our past trade Ministers the Hon Jim Sutton and the Hon Phil Goff. Last night in the Chamber I said that Phil Goff will be New Zealand’s next elected Prime Minister. He will be a very good Prime Minister because he will be the only Prime Minister who has actually worked on the ground negotiating with New Zealand’s partners on free-trade agreements. Phil Goff knows how the world operates; he knows what it takes to grow this economy. When John Key was on the 18th floor trading New Zealand’s currency Phil Goff was on the ground floor out there making it work for New Zealand exporters. That is a huge difference and it will make a great difference to this country next year when Mr Goff is sworn in as our Prime Minister. 
We need to concentrate on the economic benefits of this free-trade agreement. It has been mentioned and it is important that Malaysia is New Zealand’s eighth-largest export market which was worth almost a billion dollars in 2008. Between 2004 and 2008 our exports to Malaysia grew by 80 percent and a classic case of that growth is the education market. Malaysia is a very important and growing education market for New Zealand providers because between 2003 and 2008 the number of Malaysian students in New Zealand as mentioned by my colleague Mr Grant Robertson increased by over 70 percent. Malaysia is New Zealand’s largest source of fee-paying university students and the second-largest source of PhD students. At least one country in the region understands the value of education. Imagine if our Government put the same value on tertiary education as the Malaysians did! Mr Robertson would have nothing to say. He has taken over a shadow portfolio that is full of problems and holes but he is making a great deal of it; I feel sorry for Mr Joyce actually. Education is a major export earner for New Zealand in terms of this free-trade agreement. 
This agreement will eliminate tariffs on 99.5 percent of New Zealand’s current exports by 2016. The remaining 0.5 percent is excluded on the basis of religion and safety so we are talking about alcohol. We have to remember that Malaysia is a Muslim country so alcohol is really the only product of significance in relation to our exports to Malaysia. That product is worth about $1.6 million per annum. In the way our wine marketing is going at the moment we have to get a lot slicker but China is soaking up a lot of our surplus wine. 
The percentage of estimated duties that New Zealand exporters would have to pay will be reduced by 86 percent by 2016. That is about $10 million per annum in duties—not an insignificant factor at all. Malaysia currently has import taxes on over 10000 products it imports from New Zealand. Again the Malaysian market is not insignificant by any stretch of the imagination and it is growing. Let me give another example. New Zealand Steel lines currently face 50 percent tariffs; by 2016 those will be tariff-free. That is a great example of how this free-trade agreement will grow this country’s economy in the niche products we produce. 
Let me tell members a little bit about Malaysia. It has a population of 28 million people so it is quite a big market. Its parliamentary system is very similar to our own; it is based on the Westminster parliamentary model. Malaysia is renowned for its international trade and manufacturing as key sectors of its economy. I think my colleague Maryan Street mentioned that we all understand the potential for our manufacturers to suffer because of this free-trade agreement so manufacturing industries in this country that may be affected have been the last to have phase-out provisions which is very good. 
I do not know whether any member recalls this but Malaysia was severely hit by the 1997 Asian economic crisis; foreign direct investment literally ran out of the country. Share values on the stock exchange dropped by over 75 percent. Malaysia devalued; in fact it pegged the exchange rate. The Finance Minister was sacked and Malaysia started reform. 
When I read that about Malaysia I thought: “Goodness me—sacking the Finance Minister and starting reform—that’s not a bad way!”. I tell Cam Calder that I think he should take that on board. I think he should do a reform and do what Australia has done. National members cannot tell me that Mr John Key is as popular as all that; we can look at what he is doing to ordinary New Zealanders on the ground. People who live in Napier and who are on the medium wage will find that after the Government’s tax cuts they will get $3 more a week. There will be a revolt. I think that this is an opportunity for Cam Calder to shine and to organise to do what they are doing in Australia. He should have a look at the model and then be in. Anyway Malaysia got rid of the pegged rate. It was abandoned in 2005 and Malaysia is now on a managed floating system. But the Malaysian economy has really grown out of that crisis. It sorted itself out; it reformed. It really took off and it is in great shape at the moment. 
Malaysia is now one of the region’s leading education and health care providers which reminds me of quite a funny story. I was in Taiwan earlier this year with three of my colleagues. Taiwan also has a brilliant health care system. One of the features of a lot of these Asian countries is that they really look after their people with health care. Again that is something else we could perhaps learn from. But the Taiwanese were extolling the virtues of their cosmetic surgery sector over there and saying what a wonderful industry they had and how safe it was. They were suggesting that I went back and sampled it. I did not quite know how to take that so if members see me heading over to Taiwan in the next 6 months and I come back with a slightly straightened nose—it was dented by an errant rugby boot about 20 years ago—they will know what has happened. I am only kidding; I am not quite that vain. Maybe that is where John Key is at the moment? 
Coming back to Malaysia I tell members that the statistics about Malaysia and in fact about the whole of Asia show what an important region it has become to New Zealand’s economic growth and prosperity. As Mr Boscawen kindly pointed out before only 15 percent of New Zealand’s exports go to Europe. What a change that is! I do not know whether anyone here remembers the history but we almost went into a state of panic when it was announced that the British Isles were entering the European Economic Community. We thought: “What the hell are we going to do about this?” because we were so inextricably linked to the UK with our exports. We had to have a complete philosophical change in relation to how we viewed the world and I suppose to how we viewed what were then the seeds of globalisation. So we have moved and what a long way we have come. 
However working in Asia and in markets like Malaysia brings its own challenges. There is a different language a different religion a different culture and different customs. We can compare doing business in Australia or England to doing business in a foreign country like Malaysia. In Australia and England we can go along and talk about rugby or cricket go out for a beer and hand over some All Blacks jerseys. We have a lot in common from a cultural sporting and heritage background. But I suggest that doing business in Malaysia is a completely different kettle of fish. I would argue that this free-trade agreement—as with the free-trade agreement with China and a lot of the others we are debating such as that with Hong Kong which we talked about last night—is incredibly important. The real challenge we face as a country is how to really optimise our advantages and our opportunities in this market. My concern is that although this is a very good bill New Zealand companies just do not have the tools to take advantage of it. 
Cam Calder spoke about how the tradable economy has declined and I would like to elaborate on that a little bit. That statistic is brought up a lot and it is a very important statistic; we all have to take a step back and say that that is the case and ask what we are going to do about it. I think what has happened is that as we have changed focus our companies have not had the tools to put marketing in place. As I mentioned 97 percent of our companies are small to medium sized enterprises that employ 19 people or fewer. They do not have the resources to employ full-time international market development managers to go and locate themselves in China Malaysia India or any of those other emerging economic markets that will be so important to our future. 
The previous Labour Government understood the value of marketing and it realised that we needed to do something. That is why Labour increased New Zealand Trade and Enterprise’s funding for market development assistance from $6 million to $54 million. Now there is only $10 million in that international growth fund so I agree with Cam Calder. This is a serious problem but the National Government has cut $110 million I understand from New Zealand Trade and Enterprise. I ask how we will help our country’s companies to take advantage of the opportunities that these free-trade agreements bring. Fonterra is fine and Fletcher Challenge can operate on its own; they are huge multinationals with the resources to do that. But the other 97 percent of New Zealand companies are the ones we really need to lift up and help. New Zealand Trade and Enterprise needs to be our international eyes and ears on the ground but this Government has not provided the funding for that.