A recent OECD survey showing New Zealand with the second-lowest unemployment rate among OECD countries and the second-longest average working week contains a clear message for the economy and the ICT industry, says HiGrowth project executive director Garth Biggs.
“We can’t employ more people or demand more time from them,” he says. That means economic growth can only come from increased productivity and the best way of achieving that is with more use of ICT in appropriate ways, he told an audience of ICT users and vendors at a New Zealand Computer Society breakfast last week.
The HiGrowth project for ICT was founded in the wake of government reports that identified ICT, biotechnology and creative industries such as movie-making as three potential engines of growth.
The project has begun to identify some of the crucial handicaps to growing the ICT industry, says Biggs. The shortage of graduates coming out of education with their eyes on an ICT career is well known. Methods of tackling that problem include publishing a magazine (with Computerworld publisher IDG) directed at senior school students about to enter university and aimed at getting them interested in the application of ICT in what Biggs calls “sexy” fields, “like mixing music and creating computer games”.
HiGrowth is also working with the Ministry of Education on increasing the relevance of senior-level school ICT courses.
On the mainstream economic front, HiGrowth is pushing for amendments to the law on taxing employee share options. At present, the tax is almost an encouragement to sell shares as soon as the employee gets them and keep the benefit as cash, which Biggs says does not give the employee a stake in the company’s growth. In fact, it makes it more likely that they will use the money to finance a search for another job, he says.
The mechanism by which losses in early years can be offset to reduce tax on later profits also needs reform, Biggs says. As presently structured, such stored tax-credit is lost if the company is taken over; and in today’s ICT market there is a good chance of a successful small company becoming a takeover target.
Biggs played down the “100 ICT companies with $100m turnover” target which had unwittingly, he said, achieved prominence as the main aim of the HiGrowth project. It had led companies already making more than $100 million — like Gen-i under Biggs’ leadership — and those making only $15 million, without a hope of sevenfold growth, to dismiss the project as not relevant to them.
The emphasis is, rather, on creating a business environment to benefit companies of all sizes, Biggs says — “to raise the tide so everyone’s boat floats upwards”.