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Helen Clark Address To IPENZ Conference

Rt Hon Helen Clark
Prime Minister

ADDRESS TO

Institution of Professional Engineers New Zealand Conference

Waipuna Conference Centre
Auckland

1.45 pm


Friday 9 March 2001

Thank you for the invitation to open your conference today.

In March last your President, Tony Gibson, and Professor Peter Brothers of the Auckland University School of Engineering, came to see me to discuss the ideas and suggestions of the Institution of Professional Engineers about how to develop a knowledge economy.

We also discussed the need for new legislation to replace the outdated Engineers Registration Act of 1924.

I am happy to report that since that meeting a year ago a lot has happened both in generating policy to promote a knowledge economy and society and on updating the statute under which you operate. I will comment on both today.

First, and briefly, a comment on your statute.

The Chartered Professional Engineers Bill came to Parliament as a private members bill and was referred to the Commerce Select Committee.

A set of amendments in a Supplementary Order Paper has been prepared. The Select Committee has sought and been granted an extension of time for its report back to Parliament until 28 June to enable full discussion of the changes proposed. While the legislative programme is tight, we would certainly like to see the Bill passed in this Parliamentary term.

Now to the knowledge economy.

This Institution is playing a leading role in the debate how about how to build the knowledge economy.

Your theme at this conference, "Wealth Creation by Design ¡V Building Innovative Capability", reflects that.

You are acutely aware of how the New Zealand economy has long been underperforming, and of the need for action to transform it.

The government has been thinking, planning, and acting along very similar lines. We are not prepared to be passive bystanders while New Zealand declines.

In my lifetime, we have slid steadily down the rankings of developed countries from third in 1950 to the mid twenties today.

Other countries have shown a ready capacity to transform and rebuild their economies around knowledge, skill, science, and technology. We must do the same. We are in a race to maintain and improve living standards and it's a race we have to win if we are to keep our first world living standards and status.

We New Zealanders have the capacity to pull our country back into the top half of the OECD if we put our minds to it. We are already there with our employment levels.

Right now economic confidence is running high in New Zealand, buoyed by the strong export and tourism sectors.

While the international economy has been slowing, the outlook for New Zealand for the year continues to be positive, both for GDP growth and employment growth.

There is, however, no room for complacency. The government is acutely aware of the extent to which the present recovery has been driven by better weather, better commodity prices, and a very competitive dollar. Our country can't count on striking that trifecta year in and year out! That's why our government is putting so much emphasis now on taking the economy up market so that it is less dependent on factors beyond our control and more driven by the talents, skills, discoveries, and entrepreneurship of our people.

Over the next ten years the government is looking for a big transformation in the state of the economy. We are prepared to play our part in that by bringing leadership, brokerage, facilitation, a sound policy framework, and funding, where appropriate to the task. But the changes which are required can't be achieved by the government acting alone. We seek to lead an attitudinal change which will see New Zealand as a whole embracing an innovation vision and embracing innovation and technology in everything we do.

Last year we established the new Science and Innovation Advisory Council (SIAC) to advise us on how to develop an innovation strategy for New Zealand.

The Council has been a breath of fresh air for both its breadth of vision and its pragmatism.

The vision we are developing sees New Zealanders as innovators to the world, turning great ideas into great ventures. Achieving that change requires the attitude change I referred to earlier; a first class education system; and both world class research and science and the capacity to turn its discoveries into wealth generating activities for New Zealand.

To date we have taken a number of steps which position New Zealand to achieve that innovation vision.

„h Over many months now I and key ministers have been stressing the need for economic transformation and seeking wide consensus for the steps which must be taken. My prime ministerial statement which opened this year's parliamentary session sets out our thinking.
„h We have held three major and successful business forums to discuss with the business community what must be done. There is a high level of convergence in our thinking.
„h This year we are a partner with the University of Auckland in the Knowledge Wave Project, which has a key objective of developing a broad consensus around what must be done to build a knowledge economy and society.
„h Clearly the education system has a huge role to play in bringing about the change which has to happen. The Tertiary Education Advisory Commission report released this week provides a clear direction. We want a tertiary sector which aims for excellence and avoids spreading resources thinly across institutions. We want greater specialisation, we want centres of excellence, and we want the funding tools to graduate more people in areas of qualification and skill shortage from the advanced degrees to the trades. We are prepared to set priorities so that the tertiary sector can respond better to the needs of the economy and society.

The TEAC report is open for public consultation until 7 April, and the government will make decisions on it by mid year.
„h Improvements in industry training are also on the agenda. A major discussion paper on the way forward will be released next week. In the past year we have not only significantly increased funding for skills training, but also launched a new Modern Apprenticeships Scheme. Apprenticeship training again has a high profile and industry training people tell me they are now getting far more interest in trade and technical training from young people. This apprenticeship programme has substantial funding and is essential for helping fill the growing skills gaps in the economy.
„h One of our preoccupations is how to commercialise more of the science and research output of our universities and Crown Research Institutes.

The concern that much of the research and technology generated by higher education institutions is not fully exploited ¡V or not exploited at all ¡V has not been unique to New Zealand.

In recent years many industrialised countries have implemented policies to enhance innovation and competitiveness through increased and intensified collaboration between universities and private companies.

In the United States, for example, legislation was introduced in the early 1980s to allow universities to patent or copyright results of federally funded research activities and market them in their own name.

In Canada two years ago, an expert panel on the commercialisation of university research recommended that universities adopt policies requiring researchers to disclose all research results with commercial potential to their institution and to make this a condition of eligibility for federal research funding!

Here in New Zealand our universities too have become increasingly conscious of the value of transferring knowledge generated by their researchers into commercial ventures.

University companies are engaged these days in activities ranging from the management of contract research, consultancy services, and business incubation to the full commercialisation of the new knowledge or product.

The government is looking at ways to support these activities, to support parallel activities generated by the Crown Research Institutes, and to support the development of fledgling knowledge- and technology- based companies.

Late last year the Minister of Research, Science and Technology, Pete Hodgson visited Israel and Silicon Valley to study their success in spinning off new economy businesses.

New policy proposals are now being developed for government support for incubators and for seed capital.

Next week Pete Hodgson has invited representatives of nineteen potential incubators to Wellington to work on finalising policy for incubator development to ensure that it can meet their needs.

And last week Mr Hodgson announced the government's intention to become actively involved as an investor in the venture capital market at the seed capital stage. That end of the venture capital market is underdeveloped in New Zealand. The government's aim is to accelerate its development in partnership with the private sector and then to step aside when momentum has been built.

Our capital contribution, which will be significant, will go into a fund of funds, managed by government-appointed private sector managers. They will over time invest in a series of drop-down funds in which the government anticipates being a minority investor.

This means that in the not too distant future the emerging successes in the incubators and other new knowledge and technology-based companies can expect better access to capital to develop their products and services.

„h Funding for science and research activity is also a priority for the government. Last year we lifted the government budget for it by ten per cent, with half that increase directed to the private sector. We also issued a discussion paper on how the tax system should treat research and development expenditure. Submissions on the document are now being analysed and the input from business has been very constructive.

Last year this Institution of Professional Engineers ran eighteen regional seminars on "Choosing the Future". Many constructive proposals came forward about industry and business growth.

Government programmes in this area are being driven out of Jim Anderton's Ministry of Economic Development and the new Industry New Zealand. They are working on identifying industries with good growth potential and on how to attract more investment into them. The wood processing industry is a top priority for attention right now as the wall of wood from earlier planting is coming on stream and the country needs rapid improvements in its skills base and infrastructure to make the most of it.

There are numerous other initiatives on the government's agenda this year to lift New Zealand's economic performance. They include enterprise awards to small and innovative companies to give them a chance to grow; increased targets for skilled and business migration; a big e-commerce, e-business, and e-government agenda; development of a joint public-private sector tourism strategy; more effective competition law and new legislation governing the electricity and telecommunications sectors to promote competition, and a new takeover code and new insider trading law to lift confidence in our share market.

Overall, therefore, we have a very substantial government agenda to promote economic rebuilding, modernisation and transformation around our innovation vision.

The aim is a more prosperous society to complement our superb New Zealand lifestyle and natural attributes. We want a happier and more harmonious society with a shared vision for the future.

I thank IPENZ for its very constructive input to the national debate about innovation, the knowledge economy, and our country's future and have pleasure in opening this conference.

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