Industry bodies see fair shake for ICT in innovation report

NZ Rise, InternetNZ and NZICT assess the Ministry of Science and Innovation's report on promoting the tech industry

The Ministry of Science and Innnovation released its Powering Innovation report earlier this month, which is aimed at developing New Zealand’s “high-value manufacturing and services sector”

At the launch of the report, prime minister John Key promised funding of up to $150 million over the next five years to establish a new organsiation to promote the hi tech industry. Provisionally called Advanced Technology New Zealand (ATNZ), it would be based on Industrial Research Ltd, a Crown Research Institute in Wellington but with additional sites in Auckland and Christchurch.

Stephen Bell gauged reaction to the report from ICT interest groups NZ Rise, InternetNZ and NZICT.

NZRise says “benefits will be indirect”

NZRise, representing local ICT industry, is equivocal about the government’s drive toward increasing opportunities for the ICT industry.

While there are some good ideas in the report there is “nothing transformational for New Zealand IT businesses” says president Don Christie. The major effect in the short term will be on the staff of Industrial Research Ltd (IRL), the other Crown Research Institutes and universities, he says.

Christie referred Computerworld’s inquiry to NZ Rise member and local entrepreneur Dave Moscovitz, as he has more direct expertise in the operation of innovative Kiwi firms.

“There isn’t anything that really directly affects NZ-owned IT companies per se,” says Moskovitz, “but creating a stronger local innovation system has to be good for local businesses.”

He has doubts about the philosophy of selecting “niche” industry areas for particular focus. “This [approach] cuts both ways,” Moskovitz says. “I’m not sure I like the government trying to pick winners, but in the sectors it chooses, there should be an uplift in activity and skills.”

He singles out the following of the panel’s recommendations as good for local ICT firms but in an indirect sense:

• Pouring resource into producing a new generation of innovators is likely to be good for local businesses, as it increases the available local skill base and the risk appetite.

• Increasing public investment in R&D will help generate a more highly skilled local workforce.

• Boosting the Crown Research Institute IRL into something more useful will help to increase the local skill base.

“So my take is that while there is no direct impact, the indirect effects should be quite positive for local businesses,” he concludes.

Christie contrasts the indirect New Zealand approach with the more specific stimulus of local industry that is characteristic of United States government agencies. “The US has its ‘military-industrial complex’, DARPA [Defence Advanced Research Projects Agency], NASA et al investing very heavily in R&D.” DARPA was responsible for ARPAnet, an important forerunner of the internet.

In contrast “New Zealand has a government that barely purchases from local companies, let alone invests,” Christie says. “We don’t have the cash to do what the US is doing either publicly or privately, so we have to be smarter in giving companies a local market to get cash flowing round our industries. Given the NZ government represents 30 percent to 40 percent of the local market, it needs to be using its procurement muscle far more wisely to encourage local innovation.

“So, whilst many of the recommendations make some sense, there is much more that could be said and done. For example, there was no mention of openness and in particular the ‘open source science’ paradigm that [trade and climate-change minister] Tim Groser was so keen on some months ago.”

Christie emphasises that he and Moskovitz have only so far had time to read the 27-page summary report, not the full 111-page document. Also, “the issues we are concerned with are probably broader than their remit, but it is difficult to see how they can achieve their goals without a broader change in thinking and context,” Christie says.

InternetNZ says report “treats ICT fairly”

InternetNZ CEO Vikram Kumar reckons ICT gets fair treatment in the report. Its potential is not analysed in detail, but “it’s treated equally to other sectors,” in a report which very much approaches innovation “at the macro level” and is concerned with setting the environment to encourage innovation overall, he says.

The lack of some more “micro-level” attention to industries with innovative potential is perhaps to be regretted, he says. He sees the role of small-scale startup ventures as understated in the report. There seems to be an underlying assumption that large companies are best equipped to innovate, using R&D from universities and other large-scale establishments.

Similarly, references in the report to government involvement are predominantly related to central government, Kumar says. There is insufficient attention to the role of local government bodies, which can be strong and effective champions of technology implementation in their local area.

The report is good in terms of its overall approach, he says. “There’s not much that’s breathtakingly new,” he says, but perhaps it shouldn’t be about new ideas so much as following up previously canvassed suggestions and “getting things done”.

NZICT sees strategy as “positive”

NZICT CEO Candace Kinser also sees positive signs in the strategy. The expansion of IRL “will bring about a more defined approach in linking the R&D providers with the technology sector, which includes our members,” she says.

The raising of IRL’s Auckland and Christchurch presence will help links with companies there and cross links across the whole country, she says.

The theme of cross-links between “research and industry and the economic development agencies and investment groups” is one that has been explored a number of times before, “but that doesn’t mean it hasn’t worked and we should stop trying”, Kinser says. “The awareness and signals from government are there and it’s now up to the agencies to connect.”

The report rightly flags the need to identify and build appropriate skills, from school right through to post-doctorate level, and to identify remaining gaps that can be filled by a constructive immigration policy, Kinser says.

We need to grow awareness of what our industry can do to enhance the business growth of New Zealand as a whole, she says. The report calls for the high-tech industry to concentrate on niche areas, another familiar message but nonetheless one that deserves to be emphasised.

One particularly encouraging recommendation is that a small proportion of New Zealand’s superannuation and ACC funds be directed to funding technology development, she says.

“It’s often said the money is not here; it is here, but it tends to be invested overseas.”

The Advanced Technology New Zealand institute, to be based on an expanded IRL is a good approach to half of the equation, Kinser says, “but where are the entrepreneurs to commercialise these ideas, to get funding and turn them into businesses?”

Strategies for that element are not elaborated so much in the report, “and that worries me a little,” she says.

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