I cannot emphasise enough the urgency of the need to do better. Unemployment has remained far too high for far too long. There are more than two hundred thousand jobless in New Zealand. During the 1997 Superannuation referendum, the Treasury prepared economic forecasts which predicted that unemployment in New Zealand would remain at 6% of the workforce or more for the next fifty years.

That is a social, economic and human catastrophe which we cannot allow to happen.

If we can reduce the level of unemployment, then we will not only make a vast difference to the lives of tens of thousands of people. It will also mean that the government doesn't have to pay out two billion dollars a year in unemployment benefits...and we can spend that money on priorities such as health care and education.

In other words, we owe more overseas than the entire economy produces in a year. We owe overseas the equivalent of about three and a half years worth of exports. Back when the free market policies began, in 1984, our overseas debt amounted to about a year and a half's worth of exports - and that was when the debt was so bad that it was one of the major reasons the Muldoon Government lost office.

In other words, our economy is clearly capable of generating the jobs that are needed. But the creation of those jobs has been maintained at a level that has produced on-going joblessness. The result has been wide-spread, avoidable misery and social dislocation.

"the era of "hands-off" for central government is over. I make no apology for saying that a new era is beginning. It's an era of genuine partnership..."

In many parts of the country that role has been picked up by local authorities as well as through private sector and community initiatives. Economic development agencies have emerged and facilitated a wide range of programmes aimed at attracting new productive investment and fostering local initiatives. The resulting expertise at the local level in many cases far out-strips the abilities of central government, because it is an area that central government has not been actively involved in.

In Southland, local authorities have undertaken a topoclimate study that has produced highly detailed maps revealing the best use for soil and land in the region. The resulting information makes a difference not only to local enterprise, the expertise developed could be applied in other areas of the country.

What New Zealand has lacked is a supportive Government and an economic development dimension to New Zealand's economic policy planning. We intend to provide that dimension in partnership with local authorities and the private sector. We intend to utilise existing structures, as well as opening new mechanisms to harness the creative potential and innovation of New Zealanders

The answers to those questions will not be determined by me in my office in Wellington. The answers will come from partnership between communities, businesses, the scientific innovative sector and Industry New Zealand. The range of partnership contributions the government can make is limited only by the imagination of those involved and the needs of the economy.

No one has a monopoly on the good ideas required to enhance New Zealand's economic development. In principle, anyone should have access to the economic development process. Individuals, trade unions, community groups, private companies, Maori economic entities and local authorities can all play their part.

Successful economies like Ireland, Finland, Scotland and Taiwan have adopted pro-active economic development policies. They have discovered that advantages are created, not endowed. The governments of those countries worked in partnership with the private sector. They identified opportunities that relied on the innovation and skills of their populations and invested in those. They broadened and deepened the industrial base of their economies. And they invested in weak regions.

If we think of the New Zealand experience, local infrastructure in many parts of the country is under-utilised: schools, hospitals, banks, petrol stations and other services are closing. A cycle of decline sets in where people drift away from regional centres, which undermines the viability of remaining services - and the loss of those services drives even more people away. Meanwhile, in places such as Auckland, infrastructure is under stress. It's a continuing struggle to keep pace with the rapid demands of the population migrating to the urban centre.

Brains are in. Brawn is out.

That represents a challenge for an economy like ours, which has been based very heavily on exploitation of our vast natural resources. We need to meet that challenge by transforming the economic base of New Zealand. We're going to invest in job-rich, high-tech, high-skill, high-value new industries.

There is no shortage of good ideas in New Zealand. Mail is stacked up in my office from people who have suggestions for ideas that could contribute to this country's economic development.

Now, of course some of these ideas will not be runners. But what if some of them are? Some of them are sure to include ideas that could contribute very significantly to New Zealand's industrial and economic development. We only need a few successes. Companies like Tait Electronics, CWF Hamilton, and Snowy Peak.

I am supportive of much greater public sector funding for science and R&D through Crown Research Institutes and Universities. The Foundation for Research, Science and Technology has cautioned the Government that a large number of worthwhile projects are being refused funding each year.

There needs to be a high and relatively steady rate of new investment. Investment raises incomes by directly increasing production and employment. It also embodies new technology. This introduces new products, raises outputs per person and improves the competitive position of firms and the country.

The overall number of science graduates New Zealand produces each year compares well with other OECD countries. But we have a very low number of scientists working in research and development compared to other developed countries: Two thirds as many as Australia, the US or Canada and only one third of the number in Japan.

We produce only half the number of engineers as the UK or Canada and a quarter of the number in Germany, France, Finland and Japan. And although the number of engineering graduates has been increasing, much of the increase is made up of overseas students who leave New Zealand after qualifying. More alarmingly, the number of New Zealand students who leave New Zealand after graduating is increasing steadily.

While their work is devalued, so is their opportunity to fulfil their potential through education. Young people entering higher education are punished with a lifetime burden of debt. Unless we can reduce the cost of education, the student debt will in about fifteen years - exceed the entire national debt. What message does that send to young people about the place they have in the community we have created?

The environment we have created permits a sustained, high level of youth unemployment to continue for year after year. Yet we know how destructive of confidence and self-worth unemployment is.

It's in co-operating in partnership to achieve that vision, that central and local government can make the greatest contribution to the quality of life of our young people.

Sources Hon Jim Anderton, Deputy Prime Minister, speech to Economic Development Agency of New Zealand "New partners, new directions" 10 March 20000 Centra Hotel Auckland Airport, Manukau City; keynote address, International Cities of Tomorrow Forum "The new partnership between central and local government" 9 March 2000, Heritage Hotel, Christchurch