Reboot to an innovation economy, an Internet economy and a clean economy

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.

3DYou 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.

5 Comments Posted

  1. I so wish Gareth was right about this. It is true, the Government tends to back what it perceives as winners, so it depresses me that our so-called “primary industries” are agriculture and tourism, both of which have productivity below the OECD average. So the more we do, statistically, the lower New Zealand’s productivity. Given these blinkers, I was surprised and gratified that the Gov stepped in and benefited the film industry when it needed them most.

    But…… the high technology, leading edge, even open source world that Gareth talks of is not fostered by government, but by entrepreneurs, who get financed by those willing to take a chance. New Zealand lacks entrepreneurs big time, but even worse, lacks investment capability. Just in the last day or two we’ve had Rod Dury of Xero stating Local investors don’t understand tech companies. Apple and CIsco didn’t start and get big by having government funded R&D and other support; both companies started as as two people with an idea and some gumption, and they went for it, and wrote a little history along the way.

    This is all particularly frustrating as New Zealand is the second easiest country on the planet to start a business, and we have a lot of really sharp people. If there was an investment culture based on accepting the risk that it might not work out, we could truly be rockstars.

  2. The slow down in China is good news and de- industrialisation anywhere is good news. Technology is not just a means for profit nor manufacture nor using up the shrinking resources like there is no tomorrow.

    While we limit our thinking to grand schemes trumping the existing mess then our focus follows that of Paul Callaghan who placed growth of business ahead of the planet and community. Small minded preoccupation.

    When innovation thinking moves through a path to using less, conserving and restoring the planet / soil we live on, providing needs from local communities and resources, sorting out the parasites who run the international banking / power scam, and as previously pointed out, relying on open source not corporate piracy, our future will brighten with some hope.

    Finite resources, finite materials budgeted for long term support of planned communities, negative pollution and a rich wealth of ideas to be shared about better ways to exist.

    We don’t need to perpetuate the elitist myths.

  3. The development of Linux as a cheap and accessible computer base has been incredibly fast and I am sure a huge boost to technological advance. The fact it is based on open source licensing has allowed the phenomenal interchange of ideas. An open source license in a sense copyrights to the community so developers sell their programs but don’t make money from controlling the knowledge.

    In this day of urgent need to develop green clean technology this approach is a must and I believe any R&D money the community/tax payer provides to development should be earmarked as open source. Otherwise corporate investors who are strangling the present economy will strangle the advances.

  4. It is unfortunately not JUST National that has the problem. Labour is not a lot better.

    The problems of the NZ economy are partly based in the delusion that you can control your own country if you do not control your own money. This was the problem that scuppered Muldoon (he had to control the money suppy and did not). Rogernomics attacked the wrong problem.

    Real money represents work done. Not work imagined and not debt.

    Every dollar in every wallet in every pocket of every person in every city in every country of this planet was created as a representation of debt.

    The further problem is that we have as an article of religious faith, based on that same era of errors, that if we have to support or subsidize production of goods we shouldn’t produce them. This is based on the neo-liberal interpretation of comparative advantage… which is wrong.

    The theory of comparative advantage (most New Zealanders think it is a law of economics). holds only in conditions that would cause their heads to explode.

    You can find in Samuelson’s analysis… “Movement of money and technology across borders is prohibited,” among the restrictions on the theory. What happens when those things aren’t true?

    In that case the advantages of Comparative Advantage do not accrue equally. Most of the advantage goes to organizations that transcend the national borders of mere sovereign states. So the Multi-national corporations are fully behind it, and fully behind the propaganda being spread about it, and fully represented and informed in the discussions around things like the TPPA… while the citizens of the countries being raped are shut out.

    In some proposals apparently for as much as 5 years AFTER the agreement is made. They want to keep it secret even after they agree to it.

    There are some serious problems with what this government is doing in terms of trade. It is transforming New Zealand into a third world country reliant on commodity sales and resource extraction for everything.

    The process has been going on for some time now, and our economic weakness isn’t just about commodity weakness and fragility… it has a substantial component of our capital being tied up in Auckland houses with mortgages paid to what are mostly foreign banks. Utterly ruinous lack of investment in New Zealand.

    Discussions of removing some of the electrification that has been done on the North Island so we don’t support those electric locomotives with expensive kiwi labour and become more reliant on diesel? The question should be how long it takes to electrify the link to Hamilton and make it run at a high enough speed to actually make it worthwhile. A good 200 kph link there would make for a 40 minute commute.

    Crazy stuff…

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