In my short 33 years on this planet we’ve seen phenomenal technological, economic and social change, and it’s realistic to expect the next 33 will see even more, even faster change.
You can see it in the non-descript warehouse near Auckland Airport where Rocket Lab are building carbon fibre rockers, powered by 3D-printed electric-powered motors, or in enterprising companies, like Xero, based in the Land of the Long White Cloud, and selling globally through the cloud. These are two great examples that highlight the potential, but we shouldn’t delude ourselves a few innovative companies make an innovative economy.
Recently we have seen disturbing economic news. There’s the economic slowdown in China, dairy prices recently have plunged a further 10 percent, and the two latest polls showed a sharp dip in consumers’ confidence. Worryingly, it’s not a short-term phenomenon. Data has just been released by the Greens showing that the tradable part of the economy has stagnated compared to the non-tradable sector and the gap between the two has now reached its largest since 2000.
When you drill down past the spin, National’s entire economic strategy is flawed. Kiwis work incredibly hard, in fact some of the longest hours in the developed world, but our wages are in the bottom half of the OECD. Meanwhile our costs of living are judged the highest in terms of purchasing power. Our economy, according to official measures, has simplified and we have become more dependent on commodities over the last seven years. We still spend less than half the OECD average on Research and Development.
We aren’t building the high wage industries or enough of the innovative companies to compete into the future. We are digging ourselves deeper into a long-term economic hole. The plan seems to cram more cows on paddocks and hope for oil.
The current path National has New Zealand on clearly isn’t working, and to paraphrase the saying, when you find yourself a hole – or an oil well or a coal shaft – it’s time to stop digging.
In the recent Budget, the Government made a token effort to look like they were doing something to diversify the economy away from low-value commodities to higher-value innovation, but in reality when you look at the science and innovation data this hypothesis is well and truly disproved. Steven Joyce’s approach has been to keep funding in the bottom half of the OECD, to pick winners with his growth grants – mostly those on the larger end of the spectrum – and finance special prizes for special industries they like, like the film industry, while scientists and researchers urge a change of direction.
A better way to support our economy to thrive is to build a genuine innovation economy. It’s a plan for a richer, smarter New Zealand that sees Kiwis in work, competing globally and coming up with the products, IP and services for the coming century’s economy. It’s one that looks to the future, is open to the world and looks to future trends.
Our economy had been fundamentally changed by globalisation and technology. We can hide from it and do the things we’ve always done and get the same results we have seen as our economic performance continues to slide down the comparative rankings, or we can embrace innovation and prosper. As a county dependent on exports we must be flexible, enterprising and future focused – focus on what Sir Paul Callaghan said were the niches and our strengths.
The Greens’ vision is for an economy where we add value to exports and get off the commodity treadmill – there is a limit to milk powder exports and we are seeing it in our polluted rivers. There’s no limit to the export of ideas, services and software. In a Green economy, productivity increases and Kiwis work smarter not harder. If we don’t embrace innovation, PwC’s digital strategy and data leader Greg Doone says, we run the risk that we continue being a fast follower – but because the speed of change is so great, we’ll end up following yesterday’s trends.
To get there we need to adequately fund R&D to get into the top half of the developed world. We need to support a culture of education and this starts in schools. We need to make sure students have an opportunity to study at the tertiary level and the courses are there to get ready for the jobs that haven’t even been created. We need to get the right settings to encourage the Internet economy with new infrastructure like a second Internet cable, support for start-ups like in the games sector and leadership like a Chief Technology Officer – as called for by Rod Dury.
It’s time to press Ctrl-Alt-Delete and reboot to a smarter, greener, fairer economy.