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Government, Innovation, Exports and the Technology Vacuum

Economist Bill Rosenberg writing in the DomPost (Opinion Piece, Friday 11th August 2017) tackled the widely held misconception that minimal government is good government, and especially in regard to business development and the development of the economy.

Throughout the wealthy countries of the OECD, governments are proactive in developing innovative, competitive and growing technology-based economies. They create environments where businesses grow through easy access to science and technology, where businesses work together and collaborate as opportunities emerge, and where resources are focused on science and technology development and transfer that’s good for business development.

Take the UK position ‘…….The overarching objective is to create a coherent framework within which we can improve how well the UK innovation system identifies opportunities, builds capabilities and infrastructures, and allocates financial and skilled resources and co-ordinates across relevant actors.’

In contrast, and since the 1980’s deregulation of our economy, our governments have adopted a passive - almost hands free approach - to developing an innovative economy and to the development of business.

The outcome of this is that we have very poor interactions between business and researchers, and very few business facing centres of technology – and even the government’s own manufacturing - focused technology centre (Industrial Research Limited) recently collapsed through low sales. I call it the technology vacuum. This dysfunctionality was first revealed in the authoritative report Powering Innovation way back in 2011.

In contrast, we have a superb science system, led by the Centres of Research Excellence, but nearly all the science research vote is allocated to university scientists on the basis of best science and not to research needs informed by business.

Notwithstanding this, our manufacturing sector includes sophisticated exporters like Buckley Systems and Fisher and Paykel Healthcare, and there is an emerging group of exciting businesses. However, the new paradigm amongst wealthy nations is to be preeminent in advanced manufacturing as manufacturing especially has extensive spillovers to the wider economy. As a consequence new manufacturing technologies and processes are appearing, markets are becoming more competitive, and large multinational companies are adapting their businesses to tackle the very niche markets that our companies supply.

We also have exciting but unrealised opportunities in medical technologies, ICT and textiles, but our manufactured food, agritechnology and biotechnology sectors are fragmented and underperform.

Government, having stripped itself of all its technology capability, needs to form a new Innovation Council comprising the universities, business and NZTE, to look into the situation in each of our fifteen important export sectors and to work out how to assist them better. Each has its own issues and opportunities. These initiatives will give businesses better access to the science and technology capability in our universities, they will create environments that encourage more coordination, collaboration and innovation between export businesses, and they will deliver OECD type energised innovative environments.

Only our government can make these changes. It is time for New Zealanders to remind government that governments create innovative economies not markets. Much more effort is needed to bring Sir Paul Callaghan’s dream of a sophisticated technology-based export sector to reality to assure our future standard of living and to enable us to be less reliant on commodity agriculture exports and tourism.

16 October 2017