By Keith Newman (wordman@wordworx.co.nz)
Over the past 20-years there have been many calls to diversify and shift the economy onto a basis more in keeping with the 21st century. Lack of action to back up all the revolutionary ideas put forward in the past has created a scepticism about state-run talkfests.
Promotional material for the Catching the Knowledge Wave project to be run by the government and Auckland University in August is full of hype and rhetoric and has left many wondering how real world outcomes can be achieved without some serious visionary leadership and financial investment.
Successive governments asked Harvard Business School alumni Michael Porter to come up with a prescription for our economic ills. He warned our 1950s economy would continue to decline unless government and business took notice of the march of technology, entered the free market and became more responsive.
Many business leaders took to his ideas while the government took us through the painful process of privatising, reducing subsidies and opening up our markets to the world. Nearly a decade on Porter returned telling us we’d done the difficult things but beaten ourselves up in the process, taking the ideology of the free market to the extreme. He said the government should have been stimulating our thinking, retraining the workforce, investing in science and technology, encouraging innovation and capitalising on our uniqueness. Instead we got the hands-off treatment. What we need, he told us is an ‘energising national vision’ of what New Zealand could be. We must invest in clustering establishing technology incubators where like-minded people work together benefiting from each other’s contributions and fostering innovation.
In the five years since, venture capital industry has come into its own and even the government is considering backing its own investment vehicle. Earlier this year to the surprise of the entire industry science minister Pete Hodgson promised to ask the government for ‘tens of millions of dollars’ for a venture capital fund to back great Kiwi innovations, in tandem with private sector funding.
However the other key factor tax writes off and incentives to invest in research and development so international firms are more likely to locate here, continues to fall on deaf ears. The banking fraternity also remains unconvinced that there is any security in intellectual property and continue to propagate the myth that only bricks and mortar have any lasting value.
In recent months we’ve been on the talkfest track again with the Labour Alliance government giving the hands-off philosophy of the previous party the old heave ho. The new focus on removing the roadblocks to the knowledge economy kicked off with the e-Commerce Summit last November and continues through a series of roadshows around the country to inspire the private sector to get with the program. The summit made it appear as if the Government was leading the way into a new era. But the technically literate present at the Aotea Centre may as well have been at an Amway conference. Our politicians who’re mostly still struggling to come to terms with e-mail, were preaching to the converted.
While echoing industry concerns and attempting to make peace with the business community, much of what was said simply picked up the old pieces and threw them up in the air again. We’d heard the platitudes often enough: Venture capital must be encouraged, changes made within education and the immigration policy overhauled. To ease the way for e-commerce activity the Government is however, pushing through a raft of legislation, which has been in the too hard bin for too loo long. This will make hacking a crime, recognise electronic documents and provide consumer, intellectual property and privacy protection.
A private sector-based e-Commerce Action Team is currently being put together to oversee business initiatives and advise the government on how the nation’s e-commerce plans can be streamlined.
The knowledge economy is about like-minded individuals and organisations creating virtual communities and marketplaces. The e-word cuts out the paper chain, reduces queues and bureaucracy and results in efficiency and profitability. More haste means less waste. Smaller businesses must learn to use the Internet and intranets, and partner with likeminded firms to gain access to the tools, Web exposure and buying power with suppliers and distributors. Successful companies of the future will form tight electronic clusters with their supply chains. They will be reluctant to do business with those unable to order, invoice and settle on-line. Pretty soon the Government will make similar distinctions as it seeks to become ‘a model user’ of e-commerce. Any company wanting a slice of public sector business must be e-commerce capable.
Proposals and suggestions on how to get the nation up and running with the e-commerce vision are being posted on the Ministry of Economic Development e-commerce Web site. The future of e-commerce and the knowledge economy depends on equitable access to high-speed communications throughout the country not just in selected central business districts. Competition is the key and without a firm directive from the government and a heavy hand ready to come down on those who abuse their dominant position in the market we all suffer.
While some positive things have come from the government’s Telecommunications Inquiry, many of its more inspired recommendations were ultimately sidelined. The position of Telecommunications Commissioner will be advertised in time for legislation changes designed to provide an improved framework for competition. The industry will fund the Telecommunications Office, housed within the Commerce Commission. The job description and funding process is part of work under way in the Ministry of Economic Development to prepare for the new regime.
Legislation will be introduced in March or April which will require wholesaling of Telecom’s fixed network services and regulation of the interconnection process, enshrine a revised Kiwi Share agreement embracing Internet access and requiring Telecom to upgrade its network to provide a minimum level of service for surfing
We are world leaders in the use of ATMs and eftpos with a unique centralised banking system. We have the Kiwi Share, ensuring free local calling – including Internet access – for all households. Our uptake of the Internet is at critical mass and the cost of access relatively low.
What we haven’t done is invested in winners, created the right support infrastructure, championed the knowledge economy or marketed ourselves to the world. While we have the expertise and the ideas are hi-tech, compared to our OECD peers, the number of technical graduates in engineering and computer sciences and the amount spent on research and development is abysmal.
A survey of 103 scientists revealed 58% would not recommend taking up a career in science. The pay was poor, the funding scarce and the career path unattractive. Meanwhile the number of young people even vaguely interested in a career in science and engineering continued to decline.
We’re still short on supplying the real stimulation, vision and leadership the marketplace needs to inspire growth in leading edge industries. We’ve analysed how Israel, Ireland, Singapore and Finland transformed from flagging economies to success stories. We’ve listened to the experts, had endless input from industry groups and for a decade deliberated, pontificated, puzzled and pondered. In the wake of inaction the top echelon of business leaders has left the nation, uplifted their investments and almost $12 billion of our business assets have been sold off overseas.
We are still at the crossroad when we should have determined a clear direction a decade ago and be well down the track to impressing the world. We need a long- term strategy for e-commerce and the knowledge economy that extends way past any political party’s term of power. Granted the proposed Catching the Knowledge Wave gathering is another step in the right direction if it focuses on what will create the most employment and wealth for the most people.
So who are the 300 invited guests who will listen to the so-called international experts? Will they be the same in-crowd who always turns up to these events? Will it simply be politicians, heads of large corporates and technology company executives patting themselves on the back and feeding on their own hype? Or will the focus be on our struggling small businesses, budding entrepreneurs and innovators who need a lot more than kind words right now? They need action to get the tax department off their back and the government waking up to the potential of their intellectual property and helping to promote their ideas and products to world markets. Rather than clobbering sunrise science, new media and technology start-ups we should be helping them with tax breaks and research and development incentives. The right approach would attract investment, curb the burgeoning brain drain and put something of substance other than ‘lifestyle’ and ‘clean, green and keen’ in the global marketing brochure.
It’s time to get clicking – to invest in the technology, policies and a vision that embraces 21st century business practices and promotes national pride in our creativity and hi-tech know how. The Web is our window on the world, giving New Zealand equal opportunity alongside any competitor anywhere. We pull the blinds at our own peril.
