Going digital: A tale of two Budgets
Many small and mid-sized New Zealand businesses had to scramble to introduce digital tools to keep their employees productive and their customers connected during the lockdown.
There's hope now that those businesses that have so far lagged in embracing e-commerce and digital platforms will have now seen the light and forge ahead with what is known in the technology vendor world as their "digital transformation".
I'm less optimistic that will happen. I've been chasing a builder for a quote for the last two weeks. I'd be happy if he just answered his phone and text messages. I can't see him launching a website or offering payments options via mobile Eftpos any time soon. Thousands of New Zealand businesses are in the same camp, despite the wide availability of the technology, muddling along the way they've always done.
But governments around the world rightly see Covid-19 as an opportunity to push along digitalisation of the economy and reap the productivity gains and efficiencies that are widely recognised to go hand in hand with that.
The hawker centre goes digital
Last week, Singapore unveiled its Fortitude Budget, which followed the Solidarity Budget in April, the Resilience Budget in March and the regular annual Budget in February. The latest NZ$33 billion injection of Covid-19 relief funding brought to over $100 billion the funds committed to the Covid recovery. The latest instalment includes $560 million to support businesses' digital transformation, including support for e-payments, adopting digital solutions and deepening digital capabilities.
"Those who are willing to transform will not be left behind," Singapore's Deputy Prime Minister, Heng Swee Keat, told the country's parliament last week.
The city-state of 5.6 million people has for the last couple of decades been internationally lauded for its uptake of technology and incentives for research and development and foreign investment.
But like New Zealand, it too is a nation of small businesses and many of the digital transformation measures are aimed at them moving away from cash and embracing e-commerce. There's a practical public health element to that. In Singapore's hawker street food centres, wet markets and industrial canteens where immigrant workers gather for lunch, cash is still king.
Pushing vendors towards e-commerce will lessen the risk of the virus hitching a ride on banknotes. But it is also in line with Singapore's strategy to drive uptake of its e-payment system PayNow, a type of peer to peer payment system that is linked to a user's mobile phone number and their Singapore national identification number (NRIC). It lets users make payments to merchants simply by scanning a QR code, much as AliPay and WeChat Pay users have been doing in China for years.
Singapore now has 2.8 million PayNow users, and funding of SG$300 ($335) a month for five months will be offered to get small merchants e-payment ready.
The hard-hit hospitality and retail sectors in Singapore can also tap into SG$5,000 ($5,585) to adopt e-invoicing and Paynow Corporate, the version of the e-payments system aimed at larger businesses, institutions and government departments. Yet more money is set aside to help businesses that are already e-commerce enabled to adopt "advanced digital solutions".
Funding will also go towards developing digital learning platforms and technologies to improve e-learning at high school and tertiary levels.
Singapore has seized the opportunity in Covid-19 to accelerate the nation's digital transformation so e-payments and e-invoicing become the norm.
Not so transformational
Contrast that with New Zealand where much energy was devoted in the private sector simply to enabling more Eftpos terminals for contactless payments during the lockdown, a move that rekindled the debate about the high fees merchants face in offering Paywave transactions.
The QR-code, mobile-driven e-commerce revolution underway in China and Singapore, where messaging, e-commerce, banking and entertainment converge on the phone seamlessly and with low transaction costs, seems a world away from our approach.
Eftpos remains a great system, though increasingly outmoded as the tech giants and credit card companies muscle in with their own technology and desire to corner the market in mobile payments and clip the ticket along the way.
Our own government gave what amounts to a token nod to digital transformation in its own Covid-19 recovery Budget. A $10 million fund is being set up to "provide incentives and grants to encourage e-commerce, train more digital advisors and provide information and support for SMEs wanting to incorporate e-commerce into their business models".
$12.5 million will go towards progressing the trans-Tasman e-invoicing regime between New Zealand and Australia, which aims to make it easier for us to transact business online with our closest neighbour. A further $9.7 million will go into the Better for Business programme to make it easier for businesses to deal with the government.
So there are a few things there along the lines of Singapore's progressive thinking on assisting SMEs to go digital. But the commitment amounts to less than a tenth of what Singapore is investing. The ambition and financial commitment in each country are poles apart.
No appetite for national ID
With $20 billion or so in Covid-19 contingency funding still unallocated, there's still an opportunity for the Government to learn from its fellow "small advanced economy" and take Singapore's lead. A true smart city, Singapore's style of government affords it the opportunity to push through change that is less likely to be accepted here.
For instance, Kiwis have long rejected moves to issue each citizen with a personal ID number, which in reality would make everything from online transactions to digital contact tracing that much easier. Many small business owners still think the IRD is out to spy on them, so like to keep things less formal.
But there are intermediate steps we can take, such as offering the training and some financial support pull my builder into the digital age. The benefits that would flow to the entire economy would be great if we saw Covid-19 as the opportunity it is to fast track our own digital transformation.
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