Friday, 7 September 2001 Hon Paul Swain Speech Notes
Embargoed until: Presentation - 8.30pm
3rd Annual NZ CEO/CFO Summit, Millennium Hotel, Queenstown - After dinner address (approx 9.30 pm)
We've heard a lot about the knowledge economy in the last few years.
The recent Knowledge Wave conference highlighted yet again the need for economic transformation in New Zealand.
New Zealanders hold dear certain core values, such as:
„X a decent education for all;
„X world class health care;
„X ample employment opportunities;
„X care for the elderly;
„X a clean environment; and
„X support for citizens to lead full lives
In order to achieve these things, we need to be top economic performers. We need to be a country where information and
knowledge generate new products and services, and new value for traditional products and services.
The emergence of knowledge economies around the world raises the bar for everyone. The whole game of economic prosperity
is moving to a higher, more complex level. The challenge of providing for our citizens depends in large part on our
ability to play the complex knowledge economy game.
As an example of the raised bar, you just have to look at changes in the dairy industry over the last 40 years. We've
gone from many little dairy companies making hard butter, cheddar cheese and milk biscuits to one global dairy company
making spreadable butter and a vast range of other processed dairy foods.
We've got to be world class and in the end world leaders of the new economy, and we're on a path to achieving this.
The most important thing we did was to reject the old, last century thinking that governments have no role in economic
development. They do. This government has rolled its sleeves up, and is working in partnership with business, tertiary
institutions and communities to provide opportunities for all New Zealanders.
And the key word is partnership ¡V we in government can't do it without you ¡V you need to make sure that what we're
doing helps, not hinders what you do. It's about partnership ¡V working together to maximise potential in the interest
of all New Zealanders.
I think one outcome of the Knowledge Wave conference was the feeling that although it is very useful to look at the
strategies employed by countries such as Ireland and Finland, we in New Zealand need to forge our own path to knowledge
based prosperity. We need to take account of our own natural advantages and seize the opportunities that are uniquely
open to us.
And they are considerable ¡V we are a predominantly English speaking nation with a stable government and sound legal
systems. We are in the right time zone, have good infrastructure by and large and our education and skills are well
regarded. We are innovative, adaptable, and have a thirst for new technologies. And of course New Zealand is a great
place to live.
Indeed the knowledge economy is all about opportunities - from fashion and web design, to biotechnology to marino wool.
Opportunities in the emerging environment are there for the taking. Just look at the impact of the Internet on the
choices and aspirations of our young people.
The Internet has empowered our young people to build their own businesses, where before they would have gone into paid
employment. I'm sure many of you know or have heard of college age students who have become net entrepreneurs of one
kind or another.
On the national stage there are people like Jenniffer Anne Hannah of lingerie e-tailerJenniferann.com, Jenene Crossan,
editor of successful online magazine NZGIRL and Ben Dutton co-founder and Managing Director of New Zealand's top
investor information website, ShareChat. All these entrepreneurs are in their twenties, some only just.
In order to operate on that higher level, to be a true knowledge economy, we need what we might call a "knowledge
economy infrastructure" - an infrastructure that supports and nourishes the efforts of our entrepreneurs - old and young
alike. Such an infrastructure includes:
„X higher performing networks, including telecommunications and business networks;
„X improved human and business capability;
„X quality education and training; and
„X an environment that supports innovation and the creation of new value.
Today I want to take you through some of the fundamental elements that drive a knowledge economy, and show you what the
government is doing to ensure we get those elements into the mix in New Zealand.
SIAC
Successful knowledge economies have a dynamic innovation framework. The Science and Innovation Council was set up by the
Prime Minister to advise the Government on that framework.
The Council recently published their proposed Innovation Framework supported by an Innovation Report card. The guts of
this document is the outline of a strategy to support the commercialisation of good ideas, particularly those derived
from scientific research. I encourage you to read this document, which is available from www.siac.govt.nz.
Industry New Zealand/ Foreign Investment
An important theme of the Knowledge Wave conference was the need to be bolder in attracting foreign investment and
expertise in key high-tech areas. And indeed the Government is prepared to be active in chasing investment that is good
for New Zealand.
As an example, Industry New Zealand's Major Investment Fund is designed to support significant new investment in New
Zealand.
In addition, Industry New Zealand has launched a range of business assistance programmes including the Enterprise Award
Scheme and the Business Growth Service to name but a few.
We recently announced the first grant from this fund - $750 000 to support Ericsson Synergy's New Zealand-based centre
for the development of mobile Internet applications. Possible funding on application from existing programmes provided
by the Foundation for Research, Science and Technology will deliver total government backing of up to $1.6 million.
The fact that Expat-kiwi Bill Lloyd is returning to New Zealand to expand his super-yacht building company, Sovereign on
surplus land at Hobsonville Air Force Base was due to the government, through Industry New Zealand, fast tracking the
approval process.
Trade New Zealand
New Zealand of course relies on trade, and being smart in trade is also a key element of the knowledge economy. Trade
New Zealand is undertaking a major e-business initiative to jumpstart New Zealand exporters' access to online trading in
the global economy.
This two-year project (2000-2002) will
„h use internet technology to assist companies to get into export and expand their exports
„h increase New Zealand¡¦s foreign exchange earnings
„h enhance the range of Trade New Zealand¡¦s assistance to exporters through the introduction of new online services
While face-to-face contact will always be important in business, the Internet is an increasingly significant tool in the
global economy. New Zealand exporters can¡¦t afford to get left behind in the new Internet revolution. More about this
in a minute.
Venture Capital Fund and Incubators
Knowledge economies are driven in part by high numbers of business start-ups and spinouts. We must be able to
commercialise new ideas. But new businesses need capital and they need support.
The venture capital market in New Zealand has grown tremendously over the last few years, and is now approaching 800
million dollars. But there is still a gap in the low start-up and seed capital end of the market. This is why the
government is establishing the New Zealand Venture Investment Fund, with capital of $100 million from this year's
Budget. This money will be used to co-invest with the private sector in seed-stage and start-up New Zealand businesses
based on technology or high value-added goods and services.
Incubators
New businesses need more than just cash. Business incubators that provide management expertise and support for start-ups
are also a vital part of the mix.
In July Industry New Zealand announced the first awards under the Government's business incubator support programme. 12
awards were approved worth a total of $950,000. Incubators supported include Massey University's E-centre in Albany, the
Canterbury Innovation Incubator and the Fashion Incubator in Dunedin.
TEAC
Another essential of a knowledge economy is world class tertiary institutions. To support this goal the Government
established The Tertiary Education Advisory Commission in April 2000.
The Commission's task is to identify how New Zealand can develop a more co-operative and collaborative tertiary
education sector that will better assist us in becoming a world-leading knowledge society. The key message is that the
tertiary education system can no longer be seen in isolation from the Government¡¦s wider social and economic
development initiatives and strategies.
We want to see a tertiary education system that will produce the skills, knowledge and innovation that New Zealand needs
to transform our economy, promote social and cultural development, develop closer links with industry and business and
meet the rapidly changing requirements of national and international labour markets.
As a result of the work of the Commission, some decisions have already been made, including establishment of a "Centres
of Research Excellence Fund" and development of a Tertiary Education Strategy.
Education
Primary and secondary education is also crucial. It is no longer good enough to just be able to read, write and
calculate change. Our children need to be experienced in the tools of the digital economy.
There are many initiatives underway to ensure schools have adequate computers and have good connections to the Internet.
As an example the Minister of Education has committed $10 million to four education-based pilots to test and develop IT
delivery systems and give professional development for teachers
Immigration
A knowledge economy needs skills. Indeed New Zealand is in a global competition for skills. We need to train and retain
our best and brightest, but we also need to actively seek much needed skills from overseas.
The Immigration Minister has announced plans to increase the annual number of skilled and business migrants able to
enter New Zealand. One of the targets is to increase the level of skilled knowledge workers that New Zealand desperately
needs to attract in the short term but must produce ourselves in the long term.
E-commerce
Of course fundamental to a knowledge economy is the smart use of e-commerce. Last year we held the e-commerce summit and
released the e-commerce strategy. This year we are focusing on building e-commerce capability across New Zealand.
To this end we have held four Regional E-commerce Events, and more are planned. These have been very successful in
demonstrating the benefits of e-commerce to local businesses. As well in March this year I formed the E-commerce Action
Team (or ECAT) and in July I announced the setting up of the ECAT Network.
The core ECAT is a partnership between the public sector, tertiary sector and business and includes representatives from
across those sectors that have a strong interest in e-commerce.
The ECAT Network is a virtual community of businesses and organisations who have an interest in e-commerce. There are
now 90 network members and we have over 700 people subscribed to our mailing list. The ECAT web site is being developed
into a hub of e-commerce information - www.ecat.govt.nz.
E-government
The e-government strategy was launched in April 2001 ¡V it sets out a plan to work towards New Zealand being a world
leader in e-government and defines three essential characteristics of e-government - convenience and satisfaction;
integration and efficiency; and participation
The strategy outlines specific deliverables and milestones that are being reviewed and updated every six months.
Telecommunications and Broadband
The telecommunications industry is the nervous system of the new economy, the platform from which many of the private
and public sector initiatives are launched.
Since Telecom was privatised in 1989 there have been success stories in this important industry. But it's also been an
industry beset with argument and litigation.
The fact is that the consumer and New Zealand should be getting a better deal and that is why we introduced the
Telecommunications Bill in May.
The Bill is now in the Commerce Select Committee and is due to be reported to Parliament shortly. Our objective is to
encourage greater competition and more investment in this industry, and a better deal for consumers.
As well we have identified better access to high-speed Internet and other services as a key issue, particularly for
those living outside the main centres. We will be setting bold targets for all New Zealanders to have better high-speed
Internet access.
We are currently determining the role of government in this. We will not be an investor, but will help facilitate the
supply side ¡V including BCL and spectrum ¡V and helping local communities ¡V farmers, tourist sector, retailers,
schools, marae, libraries etc ¡V to bundle their communication demand and use that demand to attract better services
from the telcos. Announcements will be made on this shortly.
Conclusion: partnership
As you can see, the Government is taking action on a wide variety of fronts to address many of the issues identified as
crucial by the Knowledge Wave conference - and I have by no means touched on everything we are doing.
But there is one final element of a knowledge economy that is crucial, and that is that knowledge economies tend to
flourish where there is an agreed goal and a sense of partnership in achieving that goal.
It is notable that the government has made a concerted effort to forge linkages and partnerships with the private sector
in many of these initiatives. This is not about the government having all the answers. Instead it is about empowering
the whole community to make a contribution. By working together we can build a better New Zealand - one where all can
participate in the knowledge economy game, and which strives towards those values we hold dear.
It's up to all of us. Time is of the essence.