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Swain Tuanz Conference - Hilton Hotel, Auckland

Hon Paul Swain

30 May 2001 Speech Notes

EMBARGOED TO DELIVERY

5:30 pm - Tuanz Conference - Hilton Hotel, Auckland

Thanks for the invitation to speak to you today - it's always a pleasure to have the opportunity to speak to such a strong representative group of such an important industry for New Zealand.

Can I begin by congratulating your leadership team, Judith and Ernie, for their leadership over the past year or so. I have thoroughly enjoyed working with them, and consider Tuanz has an important role to play in turning the digital divide into digital opportunity. More about that later.

You asked me to speak about the government's vision for New Zealand's participation in the knowledge economy.

This is a huge topic and clearly I won't be able to cover everything. What I want to try and do is to outline the key issues faced by the government now and to indicate some of the steps we have taken to resolve them.

I will also address some specific issues in my own portfolio areas relating to the telecommunications industry, e-commerce and finally the critical issue for me this year - the roll out of broadband throughout New Zealand.

Modernising the economy

The greatest challenge facing New Zealand right now is the modernisation of our economy.

We do have some advantages. We are a predominantly English speaking nation with a stable government and good working environment. We are in the right time zone, have good infrastructure by and large and our education and skills are well regarded.

But we have to change from a country that is overly dependent on commodities to one where information and knowledge both add and generate value for traditional and new products and services.

This does not mean turning our backs on our traditional sectors. The primary product sector accounts for about 67% of export earnings. The sector's R&D, technological developments and expertise make us one of the best and most efficient food producers in the world.

Fencepost.co.nz, RD1 and Woolnet are great examples of how new economy tools are being applied to this traditional industry.

We've got to be world class and in the end world leaders of the new economy and we're on a path to achieving this.

The most important thing we did was to reject the old, last century thinking that governments have no role in economic development. They do. This government has rolled its sleeves up, and is working in partnership with business and communities to provide opportunities for all New Zealanders.

The government has started getting the infrastructural support in place for this modernisation programme. We have, among other things:

- Established Industry New Zealand.

- Established support for regional economic development.

- Introduced venture capital funding for start-ups.

- Developed an incubator programme

- Designed a major overhaul of the tertiary education system

- And we are refocussing of our immigration policy to target business and skills areas including IT.

We are using a whole of government approach. The e-government programme is helping to break down the old 'silos' in the public sector. We are making sure that government agencies are focussed on common goals.

Of course the government is only one player in this. Industry itself has to up its performance as well.

We need to work in partnership to not only provide greater opportunities for New Zealanders, but to encourage greater investment, growth and ultimately better life-styles for New Zealanders.

I would like now to turn to some of the critical issues in my area.

Telecommunications

I've focussed on the telecommunications industry because to me it is critical to the modernisation programme. It is the backbone of the new economy, the platform from which many of the private and public sector initiatives are launched.

You will be aware now that the Telecommunications Bill is in the Commerce Select Committee and is receiving submissions.

This is a groundbreaking piece of legislation - for the first time we have established a framework for ensuring that the telecommunications industry can move forward in an orderly way.

Our objective is to encourage greater competition and more investment in this industry, and a better deal for consumers.

Since privatisation the regulatory regime has been less than satisfactory and although there has been increased investment this has been despite the lack of a robust regulation regime.

What we know is we could do better in New Zealand. The bill is about a framework for dispute resolution, it uses the principle of as much market as possible and as much government as necessary.

It outlines the steps that are taken when a dispute occurs and puts the emphasis on the industry players resolving the dispute but provides for a telecommunications commissioner to make a determination when no other solution can be found.

What the industry wants is timely dispute resolution and this will give it to them.

The key elements of the Telecommunications Bill are:

- The establishment of a new Telecommunications Commissioner operating from within the Commerce Commission;

- Regulation of key services including interconnection with Telecom's fixed telephone network, wholesaling of Telecom's fixed network services, fixed to mobile and number portability.

- An updated Kiwi Share, including bringing basic Internet access to virtually all New Zealanders by upgrading Telecom's network to provide 9.6kbps data capability to 99% and 14.4kbps to 95% of residential lines.

While this is before the select committee, the work has already started. The job for the Telecommunications Commissioner has been advertised here and overseas. The vexed question of industry contribution to the kiwi share is being addressed. As well as the contribution that each carrier will make to the funding of the Telecommunications Commissioner. And an economic study on number portability is underway.

These issues will ultimately be the responsibility of the Telecommunications Commissioner to resolve but I want whoever gets the job to be able to hit the ground running so we don't waste time.

My expectation is that the legislation will pass by September with the Telecommunications Commissioner starting a few weeks after that.

I know that some of you have been promoting local loop unbundling as the way forward. I must say that following my recent trip to England and Ireland I am convinced that we were wise not to cloud this brand new framework with what is the most complicated and technical issue being faced by European countries.

However, I was advised by both the Irish and the British regulators that they aren't far away from resolving some of these problems. And that there will be very good information on how to proceed with local loop unbundling in the not too distant future - should we decide to go down that path.

This issue can be addressed in the future. We have the framework to deal with it.

E-commerce

The second issue I want to address is e-commerce. The adoption of e-commerce, particularly in the small to medium sized sector is a critical issue for New Zealand.

You'll recall the successful e-commerce summit last year that demonstrated a partnership between government and business.

At that event the government laid out its draft strategy. From that strategy we identified the government's role in moving New Zealand into the knowledge economy.

- Providing leadership, by being a model user, through the e-government strategy released last month - which can be viewed at www.e-government.govt.nz.

- Building the e-commerce capability of business by facilitating building business e-commerce skills.

- Ensuring an enabling regulatory environment through reforming the telecommunications regulatory environment, creating an equivalent legal framework for electronic transactions and paper-based transactions, and introducing anti-hacking legislation.

The E-Commerce Action Team was established earlier this year. It is a three-part partnership model between business, government and the wider community. It consists of a core team of sectoral representatives and e-commerce savvy individuals, a wider ECAT network and a web site (www.ecommerce.govt.nz/ecat). The aim of the core ECAT is to develop a six-quarter action plan that will strengthen awareness of and accelerate the adoption of e-commerce across NZ business, particularly small and medium businesses.

I would like to thank Mark Jeffries chairman of the eBusiness Group, for being part of ECAT and working to promote e-commerce uptake in New Zealand.

I'm pleased to report that there have been some outstanding results already.

Two examples spring immediately to mind - the Institute of Chartered Accountants of New Zealand and Local Government New Zealand. They have briefed me on progress they are making on the implementation of strategies throughout their organisations. I know that there is also considerable work going in the tourism and agricultural sectors and there is more to come.

E-government

In tandem with this is the e-government strategy launched by the Prime Minister and Minister of State Services a few weeks ago.

The strategy sets out a plan to work towards New Zealand being a world leader in e-government and defines three essential characteristics of e-government:

- Convenience and satisfaction

- Integration and efficiency

- Participation

The strategy outlines specific deliverables and milestones that will be reviewed and updated every six months. On the basis of thinking big, starting small and scaling quickly you will see very good progress being made on this over the next year.

Of particular interest to me is e-procurement and I am pleased to say this issue is taking a priority with plans to roll out e-procurement by June 2002.

Research

Another related issue is the importance of good information. One of our promises at the e-commerce summit was that we would be engaging in research so that we have a base to work from.

The E-commerce Strategy recognised that there was a need for more accurate information the levels of e-commerce in New Zealand about the impact e-commerce is having on society. The government has commissioned a number of projects in order to address this need.

(i) Waikato University has been conducting a major study of e-business impact in New Zealand. The survey, of 1229 New Zealand businesses employing 10 or more people, found very high levels of basic electronic activities for communication purposes such as email and websites, but limited capability for web-based transactions.

Approximately half the companies had websites, but only one in five websites were capable of secure transactions, and one in seven received payments online.

(ii) MED has commissioned some further survey work from the Waikato researchers to assess the level of 'netreadiness' in certain key industry groups. A 'netreadiness' index is a measure suggested by John Sifonis, one of the key note speakers at the E-commerce Summit in November last year, as a means of monitoring the state of e--business preparedness across a range of industries, and over time. This initial survey will produce some baseline figures and it is expected that the work will be extended over time and across other industry sectors. The first results should be available by mid-July.

(iii) The IRD, co-sponsored by MED, has commissioned a survey to determine the level of business activity relating to e-commerce. Results from this survey should be available sometime in July.

(iv) MED is commissioning an analytical study of the macroeconomic effects of the application of information and communications technologies.

(v) MED and Statistics New Zealand have been for some time planning a major survey of business capability, looking at business planning processes, management capabilities and other factors. The survey will also look at business use of information technologies, using similar survey questions to those suggested by the OECD. This will allow for direct comparison of New

Zealand business IT usage with a number of other countries who have undertaken similar surveys, including Australia, Canada and Norway. This survey will start at the end of July, and preliminary reports should be available around October this year. A full report will be available in March 2002.

Broadband

I would like now to turn to the issue of broadband. If the telecommunications regulatory regime was my priority last year, this year it is broadband. This has been reinforced by my trip to England, Ireland and the US.

All countries are trying to resolve this issue particularly in rural and provincial areas and we have a window of opportunity.

There is now a sense of urgency with this work. You may be aware that the Prime Minister has asked me to chair a group of ministers who are involved in what we consider to be our digital initiatives.

This group includes Jim Anderton - regional economic development, Steve Maharey - tertiary education, Trevor Mallard - e-government and education and Pete Hodgson - industry assistance and research, science and technology.

The issue here is to get a coordinated approach across government's initiatives. The key thing we have identified is broadband and I am in the process of preparing a paper to take to Cabinet by mid-year.

Currently there are a number of initiatives in this space going on around the country. These include projects in Northland, Waikato, New Plymouth, Wairarapa, Hutt City, Timaru and Otago-Southland. These are just the ones that I am aware of - of course there will be others.

The key question is how government can help to get better telecommunications services in rural and provincial New Zealand.

We will be setting bold targets for all New Zealanders to have high-speed internet access. We need to be able to market New Zealand as a place where you can work, play or learn with the same high-speed internet access as you would in any of the major cities. This is a big challenge for us but we must do it.

The role of government includes a number of key areas.

- Promoting the business case for regional broadband.

- Identifying the local commitment to delivery.

- Facilitating the bundling of local demand in consultation with local government where necessary.

- And using in a smart and intelligent way the instruments the government has at its disposal including BCL and spectrum.

More details on this will be announced shortly but I want to say that I will be inviting TUANZ - who have already shown an enthusiasm for this issue - to be involved with us in this work.

Conclusion

If we are to achieve our vision of New Zealand being a leader in the knowledge economy race, government, business and wider community leadership need to work together for our national interest. We are determined to play our part, you must play yours. There is no time to lose. The future of New Zealand is at stake.

ENDS


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