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Dateline: 1 March 2000 Early Edition
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Jim's Folly?
So the Labour/Alliance coalition has announced a corporate makeover of the Ministry of Commerce such that it is now The Ministry of Economic Development -- but is this going to be the much awaited a kick-start for NZ's knowledge based economy (KBE)?

Well let's hope so, but it's probably too early to tell.

However, Anderton seems determined to focus on bringing job to the smaller provincial centres and that would imply, especially in light of the example industry shown on TV last night, that he'll be promoting low-skill, low-tech, labour-intensive businesses -- exactly the wrong thing! No matter how well this country makes beads and blankets, we're never going to really get ahead unless we join the 21st century and start producing products and services that aren't rendered uncompetitive by our huge distance from key markets.

While his goals of providing full employment are laudable, they're also extremely naive -- and I worry when someone that naive is given responsibility for $100 million of taxpayer money.

Also, if Anderton is looking to rely on "career bureaucrats" to staff this new Ministry of Economic Development then we're probably dead in the water. The government, and it's bureaucracies have proven beyond doubt that they simply don't have the foggiest idea about the demands and mechanisms of a knowledge-based economy.

Never was this more obvious when Anderton proudly announced that there would be $100 million fed into this scheme over the next three years.

Excuse me? THREE YEARS?

Given that we're already half a decade behind everyone else, doesn't the government think that waiting three years for this whole thing to gel is an unacceptably slow pace?

The other problem with this announcement is that it still doesn't address NZ's dearth of skilled hi-tech workers. What good will it be providing venture capital and support services for hi-tech industries if there are no trained personnel to staff them?

Call me a skeptic but this sounds like nothing more than a re-invented tax-funded job subsidy scheme which is doomed to do little but soak up huge amounts of money in order to provide dead-end jobs for a tiny percentage of our unemployed.

If Anderton really wants jobs for everyone then he should realise that the best way to achieve this is to feed the nation's universities so that they are able to churn out the essential skilled workforce we need. At the same time it should provide an economic climate that attracts international venture capitalists and investors who will pour many times more than the tiny $100 million that the government has mooted into the local economy.

The unskilled labour force will soon find plenty of jobs if we develop a hi-tech industry-base. As the wealth of the hi-tech workers increases, so will their demand for goods and services provided by the rest of the NZ labour force.

The rich are more likely to hire a gardening and lawn-mowing service than the poor. The rich are more likely to build new houses, do more shopping and generally spend more money.

We only have to look at the USA to see how a technology-driven economic boom has created a huge number of jobs for the unskilled and previously unemployed.

Here are my suggestions for the sensible spending of NZ taxpayer funds to help kickstart this KBE:

  • Slash sci-tech university courses to 1/3 their current cost on condition that students remain in New Zealand for at least 5 years after they graduate. If they want to leave NZ before that time then they have to pay the balance of their course fees first.

  • Offer some real tax breaks for those who are prepared to invest in bonafide local technology businesses. While it could be argued that this will cut into the government's tax-take, it will most certainly create new jobs and attract overseas investment capital. The net tax position is likely to be to the country's advantage due to the greater amount of PAYE and GST being paid through the arrival of overseas investment capital that would have otherwise ended up in some other country.

  • The government should form an action-group which must include a number of the movers and shakers in NZ's hi-tech industries -- the people who have had to live with silly regulations, frustrating bureaucracy and burdensome tax regulations each and every day that they have worked to build their own successful hi-tech businesses. This group would offset the sloth and inefficiency intrinsic to a purely government bureaucracy and provide plenty of "inside information" to allow better targeting of the governments funding and efforts.
I actually have a long list of other ideas that I believe the government should be considering to get this show on the road -- but it is clear that Jim knows all and doesn't need any input from mere mortals.

Unfortunately, with no evidence to the contrary, I have a horrible fear that we're going to see the government handing out small handfuls of money to fund the start-up of tiny provincial enterprises making handbags out of lentils -- only to see the vast majority of them go belly-up because they'll still be faced with battling against an outrageous bureaucracy and mountains of red-tape.

A tip for the government: It's not going to be what you do that counts -- it's going to be what you're prepared stop doing that will give this nation's KBE a kick-start.

As always, your comments are gladly received.


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