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NZ never to rise above digital user: Govt report

Paul Brislen, Editor. 27 February 2019, 7:03 am

The New Zealand Productivity Commission has worked with its Australian counterpart to produce a report into the digital sector in both countries and how to develop it and to address any constraints that may inadvertently be holding back the development of a digital economy.

The upshot: don't bother.

The report, Growing the digital economy in Australia and New Zealand, starts off by pointing out that most New Zealand and Australian companies are users of technology rather than developers and that given the all-pervasive nature of digital technology in our economy ("[T]here is little to differentiate the digital economy from the broader economy; in other words, the digital economy is the economy,") there is little point trying to change anything from this end of the world.

"Rather than overcoming the distance between Australia, New Zealand and the rest of the world, digital technologies have increased the returns to scale and agglomeration. Most digital innovation and its commercialisation occurs in other countries, and proximity to innovation centres is increasingly important for firms and entrepreneurs," says the report which recommends not trying to drag most of our economy into the 21st century because it's simply too costly.

"Government programmes to lift digital 'laggards' that target digital skills or capabilities are unlikely to make much difference to firm performance. Similarly, efforts to build national digital niches or champions face stiff international competition."

Instead, the report focuses on making it easier for staff, research and capital to move between the two countries. Data sharing, mutual regulations on financial matters such as open banking and allowing New Zealand researchers access to Australia's new data sharing framework are about as far as the recommendations go.

Even those companies that do exist in this part of the world and are digitally inclined tend to get short shrift.

"There are numerous examples of innovation by Australian and New Zealand firms, but most are not at the forefront of digital invention and production. Firms have high levels of access to the internet and a sizable proportion of firms use the internet for sales. Yet, adoption of digital technologies varies widely by industry and by firms within industries. The rate of diffusion of different digital technologies likely reflects the costs and benefits of their application by industry and rational individual decisions by firms."

Needless to say, this report has not gone down well with the local industry, and NZRise co-chair and Catalyst founder, Don Christie, told the New Zealand Herald that the report is "sickening".

"It is extremely offensive to those of us who spend our lives building and promoting Kiwi products and services," Don told the Herald.

"There really is nothing here about opportunities for our sector or how we might achieve some core government goals. It's very outdated thinking and very disappointing."

The full report can be read here.


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