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Competition, ICT key to unlocking services’ potential

Competition, ICT key to unlocking services’ potential

The Productivity Commission has released its draft recommendations on how to increase competition and the use of information and communications technology (ICT) in New Zealand’s service industries.

The 2nd interim report, now out for consultation, looks at ways to encourage consumers to put more competitive pressure on service suppliers, improve competition law, reduce barriers to international trade in services, raise the level of ICT skills in the workforce and increase the uptake of cloud computing.
“Sharpening competition and increasing the use of ICT could provide a much-needed boost to New Zealand’s services sector, from tourism to software design, and by extension the whole economy”, says Commission Chair Murray Sherwin.

“Services make up nearly three-quarters of New Zealand’s GDP and the price of services affects the cost of goods, including our exports. Service industries are critical to New Zealand’s international competitiveness, but they don’t perform as well as they do in Australia and the United Kingdom.

“Competition drives innovation and gives consumers more choice, better products and lower prices. Many businesses supply services to other firms, so giving consumers access to more information and improving competition law would make New Zealand firms more competitive on a world stage.

“The Commission recommends measures to increase consumer pressure on competition, more use of market studies to examine competition issues, reducing barriers to overseas firms operating in New Zealand and reforming New Zealand’s approach to determining a misuse of market power in section 36 of the Commerce Act.

“ICT is revolutionising the way that services operate. However, New Zealand has yet to experience the full productivity benefits of ICT, in part due to the lack of skilled ICT professionals and ICT-savvy managers, and the high initial cost of ICT services.

“Streamlining the process for filling ICT jobs from overseas and helping ICT graduates to adapt to the workplace would increase the number of employees and managers with ICT skills.

“Cloud computing has great potential to create a level playing field for New Zealand services firms by reducing the costs of setting up ICT services, but firms need encouragement to adopt cloud-based services.”

The Commission is seeking feedback on the questions, findings and recommendations contained in the report by 7 March. The final report will be provided to referring Ministers by 30 April.


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