Williamson: state must take active role in technology

The conversion of Maurice Williamson is complete. The communications minister has given a speech declaring that the state must take a more active role in fostering technological development.

The state must take a more active role in fostering technological development, says Communications Minister Maurice Williamson.

"For someone like me, who has always been a great advocate of the free market, this is like swearing in church, but the government needs to get more involved," Williamson told the IIR broadband conference in Auckland last week.

Better liaison between government, tertiary institutions, business and the Crown Research Institutes about training needs and future business trends is needed, he says.

A recent trip to Finland and Ireland - both of which take a far more hands-on approach and provide tax breaks for high-tech industries to invest - prompted this re-think. That, plus a growing unease in government and business about the imbalance of qualification's in New Zealand graduates, ie high numbers of law and arts graduates and low numbers of graduates in the science and computing fields.

Both Ireland and Finland were "basket cases" a decade ago, Williamson says. Both of them, however, made the decision to foster high-tech industries. Finnish technology giant Nokia, he says, used to specialise in gum boots and toilet paper until the late 1980s.

Ireland provides tax breaks, with high-tech firms such as Intel paying only 10% company tax.

"Ireland is now the second biggest provider of software in the world. Intel invests $26 billion in plant in that country ... the tax break helps, but they wouldn't go there if the skills weren't there."

Both countries are comparatively prescriptive about the sort of graduates they want.

While people can study what they would like to, the government only funds as many places as it thinks is necessary - once it has consulted with the business sector.

Of New Zealand's public good research funding, almost half still goes to traditional agricultural industries. This, he says, also needs to shift - mid-century, 33% of the world's disposable income was spent on food, whereas today it is 14%.

The move signalled by Williamson - there are likely to be specific policies announced in August - does not represent a wholesale rejection of the economic model of the past 15 years. Rather, it is recognition that it is not enough.

The analogy the Finns use is planting a crop. Finnish policy makers suggested that New Zealand has put the right preparation in, with deregulated labour and telecommunications markets, low inflation and sound fiscal management.

"They said, 'we think you've been standing on the side of the field looking at this lovely black soil, and saying it looks good but not much is growing'. Cabinet now realise this - most of them anyway."

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