Hon Jim Anderton

Minister for Economic, Industry and Regional Development
Minister of Forestry
Associate Minister of Health

Progressive Leader

25 July 2005 Media release

Good progress on taskforce recommendations

More than sixty initiatives to grow the economy, ranging from changes in the tax system to encouraging more students to study science and technology, are underway as a result of four Growth and Innovation Framework sector taskforces.

A report outlining progress on implementing the recommendations from the four sector taskforces: Biotechnology, Information and Communications Technology (ICT), Design and Screen Production, was released today by Jim Anderton, Minister for Economic, Industry and Regional Development.

“Engaging with key enabling sectors in the economy is essential if we are to lift our level of economic growth and raising living standards for all New Zealanders. These four sectors were identified for special attention because of their high growth potential and because their technologies or capabilities make them enablers of activity across the economy generally.

"A key element of the government’s growth strategy is to increase the level of innovation in the economy. These sectors also have the potential to strengthen our ability to innovate," Jim Anderton said.

The 2003/04 Budget provided a $110 million contingency over four years to fund the implementation of initiatives in response to the Taskforce reports.

“This progress report shows that with government and industry working together, we are making real progress in lifting New Zealand’s economic performance,” Jim Anderton said.

Some of the highlights include:

- The $12.5 million “Better by Design” strategy aimed at assisting New Zealand companies to use world class design to better compete in export markets was kicked off in May this year with an international design conference in Auckland attended by more than 800 business people. Implementation of the strategy, which contains a raft of practical initiatives, is overseen by the Better by Design Advisory Board made up of key design leaders;

- The Futureintech programme, a Government-funded initiative of the Institution of Professional Engineers, has been set up to encourage more young Kiwis to become technologists, engineers and scientists.

- The 321 Go Global programme, run by entrepreneurship centre the ICEHOUSE is successfully running courses for owners and senior managers of New Zealand companies focusing on offshore markets and anticipating substantial growth over the next 12 months.

- The $12 million Australia New Zealand Biotechnology Partnership Fund (ANZBPF), administered by NZTE, has been established to facilitate and accelerate trans-Tasman biotechnology industry collaboration - developing greater regional critical mass will give Australian and New Zealand biotech companies better access to global market opportunities.

- the Large Budget Screen Grant scheme has been set up to attract large film productions to New Zealand, and Major Regional Initiatives (MRIs) have been developed in both Wellington and Auckland to assist with building infrastructure for the screen industry.

- Administered by the Tertiary Education Commission, the Growth and Innovation Pilots provide funding for tertiary education organisations to deepen linkages with the biotechnology, design, and ICT sectors.

“Clearly steady progress is being made in implementing the components of the four growth strategies and we can look forward to the spin-offs for other sectors also. The experience with these four Taskforces proved the value of engaging with sectors and led the Government to establish the Food and Beverage Sector Taskforce, which is due to complete its work by June 2006,” said Mr Anderton

For information about the Growth and Innovation Framework as whole, see www.gif.med.govt.nz

The original reports of four GIF Sector Taskforces are available at: http://www.nzte.govt.nz/section/13680.aspx

The suite of six cabinet papers responding to the Taskforces’ reports are available at: http://www.med.govt.nz/irdev/econ_dev/growth-innovation/overview-cross/index.html

ENDS

July 25 2005

GIF Progress Report Questions & Answers

What is the Growth & Innovation Framework?

Prime Minister Helen Clark set out the Government’s approach to economic development in the February 2002 document Growing an Innovative New Zealand. This strategy has come to be known as the Growth and Innovation Framework, or GIF.

The GIF strategy stressed the importance of sound foundations for national development:

good fiscal management
sound monetary policy
a competitive, open economy
social cohesion
a healthy, well-educated population
a solid research and development framework

However, these alone are not enough to deliver the standard of living, the social services and the environmental protection that New Zealanders aspire to. It was necessary to identify key areas where action would increase economic growth, namely: strengthening the innovation system, developing skills and talents, increasing international connections, and engaging with sectors.

Why were the GIF Sectors given priority?

Groups of firms often have issues in common that affect their opportunities for growth. This tends to be the case with firms selling similar products and services. Engaging with sectors enables the government to identify and tackle sector-specific problems. Sector engagement is one of the four original pillars of the GIF, and in May 2002 the Government established four Taskforces for the following sectors:

Biotechnology
Information and Communications Technology (ICT)
Design
Screen Production

These sectors were singled out due to their high growth potential and because their technologies and services enable economic growth across the economy. For example, firms in many industries can improve their competitiveness by using design to differentiate their products and services and lower costs. The rationale for focusing resources was to create critical mass, scale (in order to compete globally) and specialisation.

Why were the GIF Taskforces established?

The Taskforces were established for each of the four GIF sectors in order to identify initiatives needed to stimulate growth in the sector and to optimise the enabling attributes of the sector across the economy. The Taskforces were intended to provide a focal point for the partnership between industry and government and to develop action plans for the next ten years.

It was decided that the commercial sector should shape the direction of development in the sector and that the Government’s role should initially be limited to facilitating discussion. Accordingly membership of the GIF taskforces was made up of private sector experts and business leaders. The Taskforces were not policy-based groups, and the insights provided were predominantly based on direct experience in each sector. Each taskforce subsequently produced a report with recommendations for both industry and government.

What level of public funding has been provided to implement Taskforce initiatives?

Government policy, including industry and regional development, immigration and tertiary education policy, aims to address the kinds of issues that the Taskforces have raised. This means many of the recommendations will be addressed through existing government work programmes and will be funded from existing baselines. In some cases, the specific issues raised by the Taskforces, for example the need to further grow commercial and entrepreneurial skills, will require additional funding from the GIF contingency allocation.

In the 2003/2004 Budget, the government set aside a contingency of $110 million over four years to implement initiatives in response to recommendations from these taskforces. In September 2003, Cabinet approved a suite of initiatives, including new initiatives in education, industry training, awareness raising, building management capability, and a set of new programmes to promote greater use of design by New Zealand businesses.

Why were industry bodies established?

All four Taskforces proposed the establishment of industry governed bodies to oversee the implementation of their individual sector growth strategies. As part of its response to the Taskforces, the Government provided funding for new industry governed bodies in ICT (HiGrowth), Biotechnology (NZBio), Screen Production (the Screen Council) and Design (the Better by Design Advisory Board). Industry bodies are important to the development of co-ordination and leadership capability in these emerging sectors and to drive achievement of the growth targets.

What progress has been made in fulfilling the Taskforce’s recommendations?

Steady progress has been made in implementing the components of the four growth strategies. In terms of their assessment of implementation progress, the feedback from all four GIF Sector bodies is positive.

The GIF Taskforce process has been successful in focusing the attention of government agencies on the very wide range of issues faced by the high-growth potential high-tech sectors. A very significant amount of work has resulted, with just a few examples being changes in the regulatory framework, education initiatives directed at increasing skill availability, building management capability of high-growth firms, facilitation of international biotechnology partnerships particularly with Australia, support for building screen production infrastructure and promotion of design to New Zealand businesses.
In addition there have been a number of intangible benefits, such as the stimulation of a wider debate in the Screen and ICT sectors on how best to co-ordinate and grow their industries, improved linkages within industry and between industry and government and improved understanding by both government and industry of the issues each faces.

More tangential benefits include the development by government of a comprehensive Digital Strategy for New Zealand, and funding for research into the potential of biotechnology as a horizontal enabler of the primary sector.

When will the GIF sector initiatives be evaluated?

Evaluation of government initiatives is critical to ensuring we are on the right track. In recent years, the government has made significant progress with the evaluation of the efficiency and effectiveness of public investment. The Ministry of Economic Development is responsible for evaluation of sector strategies, and the first such evaluation is currently slated for completion in June 2006.

Will there be other sector engagements?

Sector Engagement has been a feature of the government's approach to economic development since January 2001 when work began on a Wood Processing Strategy. Since then, New Zealand Trade and Enterprise in partnership with other agencies has developed strategies in other sectors such as the Textile, Clothing, Footwear and Carpet sector. A more recent example is the formation of an industry Taskforce in December 2004 to initiate an engagement with the Food and Beverage sector.

Because raising the rate of sustainable economic growth requires all sectors to contribute to higher growth, the government will, over time, engage with all "economically significant sectors" i.e. all sectors which do, or could potentially, make a substantial contribution to sustainable economic growth based on their contribution to GDP, potential to grow and the value they can add across a range of other sectors.

Information and Communications (ICT) Taskforce:

Update on Implementing Recommendations July 2005

Since the Information and Communications Technology (ICT) Taskforce released its proposals for the growing the industry in June 2003, there has been significant progress by both industry and government towards implementing the recommendations.

The Taskforce, made up of successful private sector entrepreneurs, reported to the Government with an ambitious 10-year vision to lift the contribution of the ICT sector to the economy from 4.3% of GDP in 2002 to 10% by 2012.

Key developments in New Zealand ICT over the last two years include:

Growth of 9.1% in the sector in 2003 to $5.56 billion net contribution to GDP (figures for 2004 are not yet available).

- the creation of the industry-governed HiGrowth Project, to drive the implementation of the Taskforce’s recommendations, and ICT NZ, an umbrella organisation comprising key industry groups.

- greater in-market support for new entrant ICT companies in North America, the United Kingdom and Dubai through the NZTE Beachhead programme. A total of 38 companies have participated in the programme to date.

- The development of an industry grouping, O2NZ, to collaborate in securing and delivering outsource services in the UK market.

- training company ‘The Icehouse’ has been contracted to develop an Entrepreneur Executive Development Programme under the brand 321 Go Global. Over 150 executives have attended short seminars, and 53 (drawn from 34 companies) have participated in the full nine month programme, comprised of a number of three-day residential workshops.

- $5.6 million has been provided over four years to fund the Futureintech programme, which is aimed at implementing a national awareness programme to encourage more secondary students into ICT careers and raise the profile of the sector generally.

- The Taskforce placed high priority on the need for improved alignment and timeliness of ICT statistics, and Statistics New Zealand was accordingly funded $6.038 million over four years to redesign, develop and implement new surveys.

- The Business Law Reform Bill, which was enacted in April 2004, and The Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 both addressed several concerns of the Taskforce regarding the regulatory environment.

For more information see http://www.higrowth.co.nz

Biotechnology Taskforce:

Update on Implementing Recommendations July 2005

In 2003 the Biotechnology Taskforce outlined an ambitious yet achievable 10-year growth strategy and a detailed 28 point framework for action. Although New Zealand already had world-class expertise in biotechnology fields as diverse as medical research and horticulture, the Taskforce recognised that in order to make a substantial contribution on the international stage New Zealand needed to develop a greater critical mass.

The progress over the last two years is evidence of a coherent strategy for growing the industry well into the future. The implementation of the Taskforce’s recommendations and the parallel Biotechnology Strategy has seen the following significant developments:

- the creation of the industry body, NZBio, to facilitate coordinated action in the sector and help ensure the sector keeps on target in delivering its own actions and those that need partnership between government and industry.

- New Zealand’s inclusion in the Australia New Zealand Biotechnology Alliance.

- development of an IP development and management manual for New Zealand’s life sciences.

- development of a framework for measuring growth of the sector;

- commitments toward significant new private capital investment through the New Zealand Venture Investment Fund.

- introduction of tax legislation to remove some of the restrictions on the transfer of losses from special partnerships.

- changes to the Hazardous Substances & New Organisms Act, which have streamlined processes and reduced uncertainty for applicants.

- support for new and expanded research funding instruments, such as research consortia and pre-seed funding that meet the particular investment needs of biotechnology development.

- completion of a Biotechnology Learning Hub to provide quality teaching resources in biotechnology to New Zealand schools.

For more information the New Zealand Biotechnology Strategy is at:http://www.morst.govt.nz/uploadedfiles/Documents/Publications/Govt%20policy%20statements/BiotechFinal2.pdf

The NZBio website is at: http://www.nzbio.org.nz

Screen Production Industry Taskforce:

Update on Implementing Recommendations July 2005

The Screen Production Industry Taskforce was established in 2002 after the Government’s Growth and Innovation Framework identified the Creative sector as having a high growth potential and the likelihood that such growth would have a beneficial effect for other sectors.

The Taskforce’s recommendations addressed four key themes: the development of an industry body; a well-disposed business environment for screen production; improved marketing; and education and training. The Taskforce considered that focusing on these areas would support the New Zealand screen industry to achieve sustainable foreign exchange earnings of $400 million a year by 2008.

Key developments over the past two years include:

- The creation of the industry-run New Zealand Screen Council in June 2004 to oversee the implementation of the Taskforce recommendations and mobilise industry involvement.

- The Screen Council has established an Education and Training Working Group with representation from across industry bodies to focus on the skills and talent in the industry. As part of these efforts the Council has co-funded the Film Business School in Martinborough as well as New Zealand’s participation in Enterprise Tasman: Business Strategies for Independent Producers.

- The Screen Council has also established a working party to work with IRD to examine taxation issues facing the industry.

- The approval of criteria for the Large Budget Screen Production Grant to facilitate production of large internationally financed films in New Zealand.

- Both Wellington and Auckland were granted $2 million for Major Regional Initiatives to assist in the construction of world-class soundstages.

- The Government has committed to providing an additional $578,000 a year for the next two years to Film New Zealand, the industry body established to facilitate overseas productions in New Zealand.

- The development of a Screen Production Survey by Statistics New Zealand to gain a greater understanding of the industry’s size, value and contribution to the economy. This survey is scheduled for circulation in August this year.

For more information see http://www.nzscreencouncil.co.nz

Design Taskforce:

Update on Implementing Recommendations July 2005

Since the industry-led Design Taskforce released its recommendations in May 2003, there has been a focus on educating and encouraging New Zealand businesses to understand and utilise design as a competitive business strategy.

The Government allocated $12.5 million for implementing the Design Strategy, which had a vision of “New Zealand design moving the world”. Supporting objectives included increasing the level of annual design fees and royalties from international clients, more design professionals in the industry, increased success in international awards and more businesses engaging design professionals.

The last two years have seen significant progress in promoting the growth of New Zealand businesses through design leadership. Key developments in the last two years include:

- The creation of the Better by Design Advisory Board, an industry body established to pursue the Taskforce’s strategy and provide strategic input into the implementation of initiatives.

- The successful Better by Design Conference held in Auckland in March of this year was a world-class event to raise the profile of design among New Zealand business.

- The Icehouse (affiliated with Auckland University Business School) has been contracted by the Tertiary Education Commission to develop and deliver a Design Management and Strategy programme. The programme will run for two years, with the first course being available from September 2005.

- The Tertiary Education Commission has also developed Student Design Internship and Graduate Design Internship programmes.

- The release of a Design Resource Directory providing a listing of recognised practising designers, including a guide to businesses on working with professional designers.

- An auditing/mentoring programme to assist businesses to put practical steps in place to increase their design capability.

- The establishment of a programme to assist businesses carry out their first design project and understand how design can be of benefit to their business.

- Three Design Schools are offering business undergraduate and postgraduate courses in design strategy. These are the first courses of this type in New Zealand.

For more information see: http:// www.betterbydesign.org.nz/

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