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Dateline: 7 February 2000 Early Edition
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Government's KBE Promises Derailed
Last year the opposition benches of parliament were lined with politicians decrying the National-lead coalition government's lack of action in respect to fostering a knowledge based economy (KBE) in this country.

Labour promised that ensuring New Zealand became and remained competitive in the modern hi-tech global economy would be one of its first priorities -- they even promised to investigate the vexatious matter of Telecom's 0867 system which effectively forces all ISPs to obtain their dial-up access through Telecom's circuits.

So lets see how they're doing...

First up -- that critical 0867 inquiry has been put on the back-burner, unlikely to be carried out until much later this year.

Secondly -- we have the king-hit delivered to TVNZ's plans to introduce a state-of-the-art digital TV system that includes broadband Internet access.

And, as of April 1, all those high-earning entrepreneurs and technology professionals who have left (or are about to leave) will be further encouraged to ply their trade overseas by a boost to the top rate of personal income tax.

What's more, even though the new government seems to have found time to lift income tax, they have still done absolutely tangeable about redressing the significantly punitive tax regime as it applies to R&D spending in this country -- further encouraging bright young people and companies with burgeoning hi-tech ideas to depart for pastures green(er).

When it comes to fostering a KBE in this country we seem to have jumped out of the frying pan and into the fire.

I'm sure the government and their defenders would respond that they've only been in power for a little over 3 months so it's unfair to be so critical.

My response would be to say that three months is a long time in the hi-tech world. During those three short months, the Nasdaq technology-heavy market index in the USA increased its value by over 40 percent (while New Zealand's market's languish) and the very face of the hi-tech world and global KBE has already undergone some significant transformations.

AOL and Time Warner merged, Mannesman and Vodafone have likewise agreed to join forces and place significant emphasis on wireless Net access, and a raft of other commercial and technological changes are sweeping those countries that recognise the importance of building a robust KBE.

The very fact that New Zealand's stock market has remained almost stagnant for the past 12 months is a clear indicator that, despite increased sales of imported goods and a nice low unemployment rate, this country simply isn't positioning itself to take advantage of the benefits that a KBE can offer and which our peers are reaping on a massive scale.

I don't want to sound too negative about this (although I'm becoming increasingly despondent that any of our politicians will ever pull their head out of the trough long enough to see how quickly our near-third-world fate is creeping up on us) so I'm going to make a suggestion...

To be blunt -- any country that can have a "Minister of Racing" (Annette King) can surely find the budget, time and justification for creating a portfolio exclusively charged with creating, fostering and sustaining a KBE in this country. This portfolio would be too important tack on the end of a long list of the long list of other portfolios given to some poor tech-illiterate member of cabinet -- it must be the exclusive job of one person -- and that person must have a background, skills and experience commensurate with the demands of the role.

And before anyone suggests that as "Minister for Economic Development", this is the job of Jim Anderton -- please don't. Jim certainly doesn't qualify for the demands that the role would place on the person in that position and his seeming distrust of the capitalist system which fosters such massive profits as those seen in the KBE sector would surely compromise his own ideologies.

So... as a nation, we have a choice. Ignore the global move to hi-tech knowledge based industries and stick to our lo-tech commodity products such as meat, wool and timber -- or take full advantage of the wealth of bright, entrepreneurial Kiwis that we presently export to the USA, Europe and Australia and, by creating an environment that retains or lures them back, make New Zealand an economic force to be reckoned with -- just like Israel, Ireland and Finland.

Unfortunately time is running out. The rest of the field has already left the starting blocks and is coming around to lap us. If we don't start making some really concerted efforts to address our KBE-unfriendly environment then we should at least start preparing for the "poor nation" status into which we will eventually sink.

And if you don't believe me -- most of our key markets are already taking advantage of hi-tech advances to improve their own food production efficiencies which makes our primary products less attractive. Add to this the cost of shipping over the 16,000 Km that distances us from our key markets and the future becomes increasingly clear.

The KBE may be the only opportunity we get to move into an area where that 16,000 Km divide becomes of no consequence -- but it appears that our priorities are so screwed that we'd rather have a minister overseeing horse racing than one working to ensure we take advantage of this once in a century chance.


As always, your comments are gladly received.


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