The ICT Taskforce’s goal of 100 ICT companies with sales of $100m a year apiece by 2012 was accepted by all the industry representatives connected with the taskforce as reasonable and appropriate, says IT minister Paul Swain.
"I was the only one whose palms were sweating."
It was recently suggested that, with rationalisation going on in the industry, particularly among systems integrators, it might be better to aim at one or a few large companies which could truly be of international standard.
New Zealand is a country of small and medium-sized businesses, responds SolNet chairman Murray McNae, head of the taskforce. It is part of the culture for innovation to happen in a number of pockets. Many of the companies expected to form the magic 100 will be existing small companies that have grown, as well as startups, he says.
He confidently expects SolNet telecomms tools subsidary OpenCloud to be one of these, "and in much less than 10 years". McNae points to uniformly positive meetings by chief executive Peter Barralet on a recent trip to talk to potential clients and partners in the US and Europe.
"This is a 10-year target and we should not be distracted by the short-term problem of rationalisation in the industry," says taskforce member John Donovan. "If we get 100 companies, some of them will be very large."
The taskforce report emphasises the need for government to provide the right business environment. Tax changes that would make investment in New Zealand companies more attractive and employee stock option plans more feasible are under discussion, and IRD officials taking part in these discussions have been very positive in their attitude, Swain says. Part of the task will be clarifying the treatment of research and development; what can be deducted as the expense is incurred and what has to be capitalised. "We thought we had clarified it, but advice on some of the issues is somewhat conflicting."
He deflected detailed discussion on tax incentives as premature, however, and stressed the greater importance of retaining and encouraging appropriate skills for IT.
Here there is a distinct signal that certain kinds of education with ICT potential, such as the teaching of maths, science and logic, may be funded to a preferential degree.
Uniform pay rates for teachers constitute an obstacle to paying ICT-relevant teachers enough to keep them in the profession, the report says.
Students New Zealand hopes to inculcate with ICT skills will be in part from overseas, the taskforce acknowledges. There is also a need, it says, at least in the short term, to encourage immigration of appropriately skilled people.
This, some commentators at the report’s presentation suggested, sits ill-at-ease with anti-immigrant sentiment being whipped up in Parliament by Winston Peters, and and apparent nod in that direction by the government with the new English requirements imposed last week on intending immigrants.
Swain dismissed the latter as no more than the skills test previously required of university students and unlikely to have significant effect.
Skills needed are not just on the technical side; New Zealand shows a distinct lack of entrepreneurial and management skills sufficient to take its companies to an international market, and those skills must be nurtured too, the report says.
The industry must play its part in achieving the objectives, Swain emphasises; the government can’t do it all.
Government agencies may, however, help by awarding more business to local ICT companies, Swain says, hinting that chief executives could be required to report periodically on their agencies’ performance in that regard.
Swain says David Harris (of Pegasus Mail) with his comments about New Zealand’s "national inferiority complex" and failure to reward its achievers was "bang on".
"Without losing the Kiwi culture, we have to be more aggressive in promoting our successes." Moves in this direction are evident from the increasing number of business awards sponsored and the large attendances at presentation events for these awards, he says.
As part of the America’s Cup display in Auckland there is a booth showcasing the achievement of the developers of the boat, alongside the more attention-getting figures on the water, and this part of the display is attracting encouraging interest, says taskforce member Ian Taylor, of Dunedin's Taylormade.
The report is a draft, and comments will be called for at public meetings in Auckland, Wellington and Christchurch, by physical mail and email. The taskforce will reconvene in February to formulate a final document.
The text of the draft report is available (in .pdf format) here.