The government isn’t a cash machine for fledgling IT start-ups, according trade minister Tim Groser, who was addressing the NZ Technology Trade and Investment Forum in Auckland yesterday.
“We can’t convert the New Zealand government into an ATM machine for ICT companies,” he told the audience.
“But what the Ministry of Science and Innovation and the New Zealand Trade and Enterprise have got is little pots of money - in the case of MSI a little bit larger pot - in which they make decisions of this nature. I fully understand the sensitivity of this issue around capital markets. I fully understand that this is probably the single greatest constraint but I don’t believe we are going to solve this by making the government an ATM machine.”
The MIS receives $770 million funding (of which $15 million goes to running the Ministry and the remainder is invested in the sector), and the NZTE receives $152 million.
Groser was answering a question from a delegate who asked if the government, which is one of the largest ICT spenders, could look internally for IT providers, as this would provide local companies with a launching pad from which to go overseas.
Earlier in his speech Groser said Chinese investment in New Zealand and Australia is inevitable. “There is no conceivable way, with US$3 trillion in foreign exchange reserves, that China is not going to play a big part in integrating our economies into their own economic futures and we will be the beneficiaries of it.”
He said that currently Chinese investment in New Zealand is $3-5 billion, which he described as “tiny” compared to Australia, “which has $100 billion invested in this country.”
Groser, who has been involved in international trade deals since the Closer Economic Relations agreement with Australia was signed in 1983, said he understands the sensitivity from people around foreign investment.
Tech companies export
“The real fight in this country is to divert resources from the non-trading sector into the trading sector,” Groser said.
He highlighted the role of the technology sector, and referenced the TIN (Technology Investment Network) 2011 report that was previewed at the forum.
The TIN100 report shows that the overall technology companies performed stronger in 2011, than the previous year. The top 100 companies had revenues ranging from $12 million to $1.1 billion and the top ten emerging companies, on average, doubled in size in 2011.
New Zealand Beachhead Advisory Board chair Wayne Norrie earlier told the conference that kiwi tech companies go offshore early and that 92 percent of IT start ups sell into export markets.
Chinese investment in Australasia is “certain to rise and rise strongly, but this should not be viewed as a threat, but rather as an opportunity”, Huawei Australia and former Victoria premier John Brumby told the forum.
He noted that ministers Tim Groser, Steven Joyce and Bill English have visited China recently. “As a former minister and premier who visited China many times I can tell you that these visits are invaluable. And as a recently appointed director of Huawei in Australia, I can also tell you that the time these Ministers spent with Huawei in China was very much appreciated. We certainly hope that this high level interaction can continue.”
He says that Huawei’s presence in Australia is a good model for engagement between Australasia and China. Eighty percent of staff in Huawei’s Australian employees are local and staff numbers are set to double from 300 to 600 by the end of this year. In addition, Huawei has appointed a local board of directors.
Huawei is also looking to partner with local institutions. In Australia, for example, it is working with the Institute for a Broadband Enabled Society at Melbourne University.
“Huawei is currently talking to a number of tertiary providers in New Zealand about establishing similar partnerships here – and these partnerships will be good for students, good for universities, and good for innovation.”