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Speech - Steps towards the Knowledge Economy

Steps towards the Knowledge Economy

Launch of eBanz
The Electronic Business Association of New Zealand
Wednesday February 9, 2000

Thank you for the opportunity to address you today at this the launch of your new association. And congratulations to TUANZ for having the foresight and imagination to create a new association dedicated to the electronic commerce sector.

I say imagination, because imagination is a key word to describe the difference between an industrial based economy and a knowledge based economy.

Ideas and concepts. Innovation and intellectual capital. They all spring from imagination.

Historians can tell us about the agricultural economy, or the industrial economy. Perhaps the historians of the future will be able to give us a better understanding of the knowledge economy than I can here today.

"What is the knowledge economy?"

That's a reasonable question and one which is often asked, included, I am told, by Kim Hill, very publicly on National Radio.

Yet, by the very nature of her work, Kim Hill is a knowledge economy worker. Her vocation requires her to take a piece of information, apply reasoning and analysis and produce a product. You could not replace Kim Hill with a computer or another machine.

The silver and maroon "Fuel" coffee vendor carts seen around town are another example of a knowledge industry. The carts have been specially designed, the staff undergo serious training. The location and even the music is planned. Growing coffee beans is part of the agricultural economy. Roasting them is part of the industrial. But identifying a niche such as buying and drinking great coffee on the footpath, and packaging the act in the way that Fuel has is part of the knowledge economy.

So what I want to talk to you about today is how we can capture these wide ranging benefits of the knowledge economy - what steps can we take to improve our uptake?

I'm also going to concentrate on three main areas where the Government has already signalled its intentions: Education, Communities and Infrastructure.

I'm going to start off talking about adult and community education. It's often a forgotten part of the education sector but one which the new Government is keen to support.

We've got to remember that 80% of the 2010 workforce is already in the workforce today. If technology continues to change business at the present rate it is those people who will need to be trained in information age skills and I see adult and community education as playing an important role in that.
In a nutshell, people are the first step towards a knowledge economy. We need as many people as possible with the ability to think about and create new ideas and to innovate. We must develop a culture whereby people do see education and learning as a life-long necesity.

Our Pathways and Networks initiatives are focused on providing the skills we need in the knowledge economy - where they are needed - and for the people who need them
- in communities

Education in its broadest form is perhaps the most important asset we can give to New Zealanders; to workers, to unemployed, to Maori and of course our children.
The Government's emphasis will be on community based training through a redesigned Training Opportunity Programme in conjunction with Skill New Zealand and our proposals for employers to develop training strategies. I hope to see government; business; communities; and individuals working together, preparing for, and accepting with confidence and skill, the inevitable changes that technology is bringing to business and the workplace.

I have an ambitious agenda to improve the quality of our education systems, but it is broader than that. The Government is only one player in this game. Businesses, industry associations, communities and individuals all need to recognise that they have a major role to play as well. In the much more dynamic ECommerce environment that is developing, lifelong learning has a lot more permanent ring to it than a lifelong job.

And ECommerce and the Internet are themselves powerful resources to enable people to continue learning on-line both with, and independently of, formal education institutions.

At an industry level, prior to the election, the Labour party proposed a range of ECommerce
initiatives it intended to progress when in Government. Among those was a guide for small/medium sized businesses on electronic commerce and an electronic commerce summit.

We recognise that the Internet is both a great opportunity and a great threat to many small businesses. In many instances the opportunities far outweigh the threats. The indications are that New Zealand is well placed internationally in many of the areas that are important when it comes to technology uptake - from use of PCs to our ability to adapt and innovate.

The creation and use of networks - such as the Internet - is a fundamental ingredient for generating wealth in the New Economy. As the network grows the value of being connected to it grows exponentially. For example, a connection to the Internet in the year 2000 with 250 Million users is far more valuable - yet less expensive - than a connection was in 1994 with 6 million users.

Not only is it a source of knowledge, it is a source of business - locally and globally - it is a source of improved efficiency for business chain processes from ordering and stock control to payment and banking. It's a source of contacts and of niche marketing opportunities.
Just as we want to ensure that our employees are knowledge enabled we also want to ensure our managers are knowledge enabled. Industry and Business Associations such as EBANZ, have a significant leadership role to play. The Government can provide information, direction and guidelines, but it is you, the business leaders of the country, who must convert that information into "knowledge" and use it to your best advantage.

The ECommerce summit and guidelines will be about helping business to identify and create these opportunities.

Just as ECommerce has the potential to overcome some of New Zealand's traditional disadvantages - such as distance from markets and the size of our businesses - so it also has the the potential to empower our disadvantaged communities to participate as well.

The Internet can enhance already existing community structures, such as in the Maori community which already has a cultural structure in place that facilitates networks and co-operation.
And the knowledge economy is not just something for the big cities, it is crucial to regional development as well. High tech has a role to play in small towns, and the Internet increasingly makes this possible. What better example than the news that a Masterton electronics company is monitoring 50,000 vending machines around the world for CocaCola.

In the knowledge economy, geography becomes less important. On the Internet, distance is just a keystroke away. What we as Government and you as business leaders have to learn is how best to help workers, enterprises and regions innovate, adapt and manage the risks of increased turbulence so they can create new jobs and new wealth.

Clearly community groups, local government, regionally based businesses all have a role to play in adapting the benefits of ECommerce to their requirements.

With that in mind, following on from the ECommerce summit, the Government's intention is to develop an ECommerce strategy for New Zealand. This will not be tablets of stone handed down by the Government - the intention is to have a consultative process which engages communities.

I have used this quote of Peter Drucker's to introduce the next slide.

It is easy to fall into the trap of putting issues into compartments. To many of you, ECommerce is about a new way of doing business. You may consider that the pressing issue to be addressed is the ability to form contracts on the Internet securely, or the impact that people buying goods over the Internet has on your local market. Or you might think of it in terms of your children's education.

But we must put it in a much wider context than that, and that is what this quote does.

This slide illustrates the complexity of the issues surrounding an ECommerce strategy. But to be accurate many of the issues outlined here overlap each other and of course a simple heading such as protecting citizens rights carries a multitude of issues below it.

I do not want to delve into each and every aspect listed here - you are rightly more interested in the particular issues that affect you directly as business people but I will briefly run through one or two.

We have signalled that the Government will introduce an Electronic Transactions Bill which will cover key issues such as the validity of contracts formed electronically and the acceptability of digital signature.

But the requirements go further than this. Other legislation is also affected and it will probably be necessary to look at:
· copyright,
· consumer protection,
· computer crime such as hacking
· international trade law
· occupational regulation legislation - for example the Auctioneers Act
· Laws covering the security and privacy of transmissions.

Because many of these issues have an international dimension much of it will require negotiation and agreement with our trading partners which takes us into the area of International Law.

The range of changes required and the implication that changes will be ongoing has led the Ministry of Commerce to propose a new process to speed up the passage of business legislation through Parliament.

Innovation is a very important driver of a knowledge economy, and of ECommerce. And innovation thrives on diversity - on a broad range of ideas, knowledge, talents and skills. Which means enabling the broadest range of people to participate in society and the economy and make their contribution. We hear a lot about the digital divide - the gap between the information haves and have nots. The Internet however is neither good nor bad in this context. Instead it acts like an amplifier. On the one hand it amplifies existing social and economic gaps. On the other hand it also amplifies the opportunities to address those gaps through networking and new forms of education and learning.

I have spoken on this aspect earlier from a lifelong learning perspective. But I would also make the point that as business people you see the demand side of this issue - you need web designers, Java programmers, network engineers. On the supply side where do we get them - schools, universities, immigration, retraining? - Are we producing enough of these people? - if not why not?
Hence the emphasis this government places on social inclusion in relation to ICT. If we want to optimise the talents of our people to contribute to the knowledge economy and to ECommerce, then we'll need as many people as possible to be e-literate; to understand how to exploit the opportunities provided by the Internet; and to have access to the technologies and the appropriate bandwidth.

Those who are e-literate and connected have access to greater opportunities by an order of magnitude. Those who are not e-literate, who cannot become connected, or who do not realise the value in being connected, are left that much further behind.

The Internet is a key technology that will enable New Zealand's individuals, communities and regions to leap frog in terms of economic and social development, but to realise this potential we need to develop policies aimed at reducing any digital divide in New Zealand.

If as business people you want to have the biggest and best possible pool of potential customers, suppliers, business partners and workers, you too need to look at what you can do alongside government to reduce the digital divide.

So, That is just a quick view of the legal and social implications of the changes we have to factor into a strategy. Two items from a list that contains ten or a dozen similar issues.

Finally I wish to turn to the third of my footprints - Infrastructure.

I have already covered the first two of these issues to some degree. Clearly we have to have the human resource available and the education system is an infrastructure for the development of a knowledge economy.
Also in the area of the Law. The Government has said it will introduce an Electronic Transaction Bill and as I mentioned earlier the range of legislative issues that follow will be considerable.

I will just spend a few moments on the last two points here.
Clearly the ability to develop a knowledge economy and electronic commerce are dependant upon the availability of a first class communications infrastructure. The costs of those infrastructure services must not disadvantage New Zealand producers and users of ECommerce services. The ability of our companies to compete with overseas competitors is dependent upon this infrastructure. The Government's review of telecommunications will establish whether the current regulatory environment is serving us as well as it might.

Finally, there is the matter of e-Government. The Government sees that the
same forces driving business to move from the industrial age to the
information age are impacting upon government. Just as business has to adapt to survive and flourish, government itself has to change.

The Government wants to support ECommerce by acting as a leader and a model user and a key enabler. What will this mean in practice? I have already talked about things that the government will be doing as an enabler - our plans in areas such as education and the legal environment fit here.

In terms of acting as a leader, this is where the Government will be 'walking the talk' about being smarter about how information and technology is used by its agencies. Leadership here involves selectively harnessing the technologies and business models of ECommerce to enable provision of better quality, higher value goods and services to our stakeholders. Being clear about why and how to do this requires clear vision. Right now we are working to refresh the previous Government's vision to provide government agencies with a " star to steer by" as they move toward EGovernment. Departmental Chief Executives are working together to identify the opportunities of EGovernment, and achieve them. They and the Government are committed to providing a high level of service to New Zealanders using the same basic means you will use to be effective in the world of eCommerce.

When it comes to being a model user, we are fortunate that the Government sector already has some excellent examples of innovation to draw on. For example, the Companies Office won the KPMG award last year for its web based services. We need more innovation of this kind, and we need to get better about scaling up our successes where there are benefits from doing so. This does not mean taking audacious risks. Like your own businesses, Government uptake of eCommerce technologies and processes has to be predicated on sensible criteria, and has to be well implemented.

The industrial age is drawing to a close for Government in the same way that
it is for business.

Finally I will come back to my original footprint slide.

I hope that in the short time available I have been able to give you an overview of the range and complexity of issues that are involved in moving to a knowledge economy.

The Government has laid out some ambitious and challenging tasks for itself, but as a country if we are to reap the full benefits of a knowledge economy we all have to participate in the journey.

The establishment today of an association dedicated to electronic business is a great sign that you and others like you understand the need to participate and show leadership.

Congratulations and may your association go from strength to strength.

Thank You


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