 | Issue: | Asia-Pacific 2004 |
| Article no.: | 2 | |
| Topic: | New Zealand’s ICT Starts There! | |
| Author: | The Hon. Jim Anderton | |
| Title: | Minister for Economic, Industry, and Regional Development | |
| Organisation: | New Zealand | |
| PDF size: | 108KB |
About author
The Hon. Jim Anderton is New Zealand’s Minister for Economic, Industry, and Regional Development, Associate Minister of Health, and leader of the Progressive Party, the minority coalition partner in the current Labour/Progressive New Zealand government. He was Deputy Prime Minister in the previous government, from November 1999 to July 2002. The Ministry of Economic Development was set up at Mr Anderton’s initiative as a condition of joining the coalition government in 1999. He was first elected to Parliament in 1984 and has been a member since then. He was previously President of the New Zealand Labour Party (1979–84). Before entering Parliament he was a City Councillor and regional Councillor for Auckland for some 20 years, and was, for 13 years, the Chief Executive of Anderton Holdings, a manufacturing engineering company. He is the author of a book of 12 essays on remarkable and undervalued New Zealanders entitled Unsung heroes, published in 1999. His interests include chess, classical guitar, cricket and golf.
Article abstract
New Zealand has for a long time earned its living as an exporter of agricultural commodities and is not geographically well placed to compete in distant market places. However, one of the best ways in which New Zealand business can achieve sustainable long-term economic growth is through the use of pervasive electronic connectivity. The current New Zealand coalition government believes that it must play a key part in encouraging the use of ICT and has set itself ambitious connectivity targets.
Full Article
There’s an old story about a traveller in Ireland stopping at a rural cottage to ask the best way to Dublin. The Irishman he addressed thought about it for a bit and then said: “Well, sir, if I was setting out for Dublin, I wouldn’t start from here.” In a curious way the primary dilemma facing anyone who undertakes the task of economic development in New Zealand parallels this tale. By reason of its history and its geographical location, New Zealand, as an international trader earning a living from the export of largely agricultural commodities in a world which does not and has never owed us a living, is not well placed to compete in the world’s diverse and distant market places. If we were setting out today to run a sustainable and growing international trading economy, then, like the Irish traveller, we probably wouldn’t set out from here. But, like the same traveller, we have no choice. We set out from where we are or not at all. There’s nothing new about this challenge. Since New Zealand was settled we’ve had to deal with the problems that this has entailed. In the nineteenth century for example, problems in commodities markets and problems in the international financial markets left our economy in the doldrums. New Zealand suffered a net loss of population as many settlers decamped for Australia and other places such as Argentina. Thanks to the creative thinking of a small group of political leaders and entrepreneurs, New Zealand pulled itself up by its own bootstraps and made the necessary adjustments to the real world in which we had to trade and survive. Politician Julius Vogel saw that New Zealand needed infrastructure so he created a comprehensive system of railways to ensure that agricultural commodities could be got to ports of departure for export. Parallel to that, he conducted a flexible and wide ranging immigration policy underwritten by the government, which ensured that New Zealand had the engineering and agricultural expertise it needed. Even more important, agricultural manager William Davidson reorganised the domestic processing systems to take advantage of new techniques to produce butter and cheese for export and created new systems of slaughterhouses for sheep, and a system for refrigerated transport and reception in London to get these commodities to market. Subsequent government initiatives created agricultural research facilities to increase productivity and quality standards, and landholdings were reorganised to emphasise family farms for dairy production as the basis of our economy. The result was that, for nearly a century, New Zealand could function and prosper as a primary supplier of bulk basic foodstuffs to Britain. But many New Zealanders were also aware that nothing is for ever in the world of international trading. When Britain joined the then EEC in the 1970s, far-sighted policy makers were aware that we had to find a different basis for our economy if we were to continue to enjoy our position as one of the world’s more prosperous nations within the the Organisation for Economic Co-operation and Development (OECD). Since then, we have been making that transition. Britain, which once took 80 per cent of New Zealand’s exports, is now well down the list behind Australia, the United States, Japan and China. We have diversified into numerous niche markets and are working hard at developing more. But everyone is aware from past history that creative ways to diversify and add value to our products have to be found. Within that context, it is apparent that one of the best ways in which New Zealand business can achieve sustainable long-term economic growth is through the use of pervasive electronic connectivity. Global ICT is growing at between 4 and 7 per cent annually, for a total spend currently estimated at US$852 billion a year. Everywhere, public and private sector organisations are using ICT to increase their productivity, enhance their transactions with customers and suppliers, and streamline supply chains. They are embedding software in the everyday products they market. New Zealand’s economic future requires us to be abreast or ahead of these developments for a number of reasons. First, ICT is important to us domestically. It contributes $5 billion or 4.7 per cent to our GDP and generates 41,000 full-time jobs. This is important since our economy, small by world standards, must rely on its skilled workforce to deliver added value. ICT employees deliver something like twice the value of average employees because of the significantly higher levels of skills entailed. Similarly, in world terms, even the largest of New Zealand enterprises are mostly small. To operate globally they need rapid, flexible communications. Success in world markets is, itself, a growth factor because it assists the entry into those markets of other New Zealand products. We can target niche products and services in the small to medium enterprises sector and scale up our ICT components production relatively easily to meet demand at low marginal cost. In itself, the ICT sector makes a significant contribution to our overseas earnings by marketing hardware, software and services. Since 1994, for example, ICT export earnings have grown over 23 per cent per annum and now amount to over $1 billion. Of the 7,500 IT firms in New Zealand, over 500 earn more than a million dollars each year. Whatever our achievements in these fields, we know there are challenges to meet to make the best of the potential which these developments presage. Many of the IT firms on which we rely to take us into that strategic future are small and operate in isolation from one another. They often lack capital and specialist business skills as a result and have a limited offshore presence. They need to find strategic investors. Although the contribution of 4.7 per cent that the industry makes to our GDP is significant, it is still only 60 per cent of the OECD average. We are not utilising ICT as fully as we might to make New Zealand businesses internationally competitive. The prospect of future skills shortages in this area is a significant problem that needs to be addressed now. High-technology careers need to be promoted to young people, and we need to not only encourage the immigration of those who have these skills to New Zealand but to use them effectively when we acquire them. Our own demographic projections suggest that over the next several decades a great many more people are likely to retire from the various workforces within the OECD than will join it. This will particularly include those with high levels of professional and technical skill. New Zealand will face a highly competitive international labour market in attracting such skills and needs to act now to avoid a crisis later on. This may mean we need to encourage important shifts in cultural perceptions by New Zealanders. This problem is being addressed by, among others, the Chambers of Commerce, particularly in our largest city and primary business location, Auckland, where systems have been set up to marry individual skill holders to skills gaps in business and industry. The current New Zealand coalition government, in which I play a senior role as the minister who is centrally concerned with our future sustainable economic development, believes that the government has a key part to play in encouraging the use of ICT as a tool for development. We do not think that this can simply be left to the marketplace. These developments need to be actively encouraged to deliver the economic and business outcomes we need, and with them the resources to underwrite the sort of society and communities that New Zealanders and those who need to be attracted to live and work here want to enjoy. In education, for example, the government has followed a comprehensive strategy for the past three years, guided by the objective that all learners in our school systems will emerge with the ability to use ICT to develop the skills and knowledge they need personally and to participate fully in the global community. To achieve this the government is underwriting a wide range of initiatives, including: providing high speed Internet access for all schools and most provincial communities by the end of this year; pilot projects with business linking ICT objectives in education to business needs; a partnership with Australian educational authorities to develop digital learning objectives; saving teachers and schools some of the personal and institutional costs of developing IT capability and skills; providing software free to schools; and developing a bi-lingual education portal to meet the needs of New Zealand’s indigenous Maori population.* The government recognises how critical the ICT connection is to release the potential of communities and create the value in business that generates sustainable regional economic growth. We therefore place significant emphasis on partnership with communities and business in making sure that they have the information content and applications, and that they are equipped to make the most effective use of them. Reasons of cost and availability, and a still patchy understanding in some areas of the value of ICT, has meant that New Zealand has been slower than some OECD countries in adopting international standards for broadband use, especially by residential users. The government has moved to bridge this gap by setting ambitious but achievable targets for availability of fibre to the premises of medium-sized business in all major towns and minimum two way access capability of at least 10 Mbit/sec for all rural residences and businesses by 2010. We recognise the substantial investment this will represent for the private sector and are committed to a multiple regime to underwrite that target by, for example: developing a regulatory regime that encourages competition, and ensures low entry thresholds for new entrants and new technologies; ensuring that the government’s own ICTs provide best-practice models; and the widespread provision of information, training and other support for business and the community. In some fields we give direct grants to minimise commercial risk in remote and rural regions or in crucial fields such as health, education, research, and development. The bottom line payoff has delivered some spectacular successes. In a very real sense, The Lord of the Rings trilogy could not have happened without the imaginative combination of creative enterprise and cutting-edge use of ICT, underwritten by New Zealand government initiatives and funding which recognised the enormous spin-off this could deliver for the New Zealand export economy. Although it may be the best known, Peter Jackson’s achievement is only one of tens of dozens. Take the case of Navman, an Auckland company established in 1988, which has developed an innovative marine navigation system. It took New Zealand’s recognised expertise in the field of deep-sea yachting and combined this with state-of-the-art electronic communications technology, and it won widespread recognition as the leader in its field. Last year it forged an international business partnership with the Brunswick Corporation, which brought New Zealand $56 million in investment and gave it access to markets in the United States, Asia and Europe. Its turnover is now set to grow from $100 million to $1 billion a year over the next five years. This has enabled it to create some 200 high-technology jobs, by far the largest group of these in New Zealand, and to remain located in New Zealand. The government was happy to give this every encouragement to ensure its success. Instances of success like this underline the fact that the New Zealand government takes these developments very seriously. We can see their crucial importance to the economic future of New Zealand for decades to come, and we have to get it right. We have a clear awareness of where we set out from, and where we need to go. And although we’re not at Dublin yet by a very long chalk, we’re making good progress on the journey.
