Adaptability is the key to a successful economy and Southland businesses need to be flexible to adjust to changing markets, Treasury chief executive Gabriel Makhlouf says.

Mr Makhlouf was in Invercargill yesterday to meet Southland businesspeople and visit the Alliance Group's Lorneville plant.

He said he wanted to gain a better understanding of growth in the region and talk to businesspeople about what was supporting or holding back development.

The benefits of exploiting Southland's natural mineral wealth and the extent to which it could it be done without damaging the environment were discussed at length in the meetings.

"Southland needs to explore and identify its potential and be receptive to it . . . you produce a lot of energy nearby but I was told today there was not enough to go around."

Mr Makhlouf was asked about Solid Energy and the Tiwai Point aluminium smelter getting financial help from the Government, which he did not want to discuss.

"We need to let the Solid Energy work through its challenges. The company says it's still a viable business, we just need to work out what it is."

He said jobs were created by business and not the Government, which created the framework to support business. "I am always hesitant about the Government creating jobs," he said.

He said he did not want to get involved with Tiwai's commercial discussions.

Productivity was too low in New Zealand and the Treasury was exploring how it could be improved in order to compete properly in global markets, he said. Relying on the exchange rate was not the way to do it.

"There is very little the Government can do about the exchange rate. If there was a magic button we would have pressed it by now."

The Treasury's view was the current level of the exchange rate would last for a while and business should be planning on the basis that it would remain high.

New Zealand needed to rethink its concept of manufacturing, away from the massive industrial process to becoming specialist such as the Alliance group.

It was up to the business community to figure out how to exploit natural resources in the region and start manufacturing.

Discussions also included skilled labour and immigration.

Southland Chamber of Commerce chief executive Richard Hay said he asked Mr Makhlouf about a policy to assist migrants to come to the Southland to set up a business.

Mr Hay said road funding was a big issue that was discussed.

Southland's $20 million in road funding expired within two years and it was uncertain if the region would see it all spent because it was taking too long to approve projects, it he said.

He asked Mr Makhlouf if there could be an extension or to give it a push so that money was not put back in the "Auckland pot".

- © Fairfax NZ News

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