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Paul Swain’s Address To Southland E-Commerce Event

I am delighted to be here at the E-commerce Southland Event.

This is the seventh such event that we’ve held, and I am always very encouraged by the enthusiasm of the people attending.

Southland is an innovative and booming centre and I believe your businesses have much to gain by embracing the opportunities that the use of e-commerce have to offer.

There are four topics I want to talk about today.

First, I want to discuss the Growth and Innovation framework that the Prime Minister released last week, which summed up the Government’s vision for New Zealand.

Secondly I want to talk about e-commerce in New Zealand and the story so far.

I want to tell you about the Broadband Pilots which the government is supporting in a number of regions, and in which Southland is playing a very important part.

And lastly I want to look at where we go to from here.

Last week the Prime Minister released the Growth and Innovation framework for New Zealand - it’s aim is to return New Zealand's per capita income to the top half of the OECD rankings and maintain that standing.

The framework document brings together initiatives already taken with new initiatives to speed up growth in four key areas:

1. Enhancing the Innovation System
Over the past two years the government has been lifting research and development spending; developing new strategies for tertiary education; announcing funding for new centres of research excellence; and backing innovative business start ups through support for business incubators and the establishment of the Venture Investment Fund.

New work will include entrepreneur support strategies; more support for mentoring programmes, incubators, and cluster development; improving our intellectual property framework to ensure New Zealand gets full value from its innovations; and encouraging tertiary education institutions and Crown research institutes to be more active across the innovation system.

2. Developing Skills and Talent for New Zealand
The government will keep investing as much as it can in education and industry training; adapting its immigration policies so that they help New Zealand's search for specialist talent and skills; and enlisting the talents of New Zealanders living off shore.

The new Tertiary Education Strategy, to be released in the first half of this year, and the Tertiary Education Commission being established in July, will be working to get better alignment between tertiary education and New Zealand's development goals.

We also aim to build stronger links between employers and tertiary education and training providers to minimise gaps between emerging skills shortages and education and training responses. It is important that we make use of the talents of all New Zealanders

The new Talent Visa and the Skills Shortage Work Permit come into effect in the first half of this year. The World Class New Zealanders initiative being led by Industry New Zealand aims to build networks of talented New Zealanders based overseas, and to use those networks to establish exchanges and mentoring for young talented people and entrepreneurs. Related private sector initiatives are also underway.

3. Increasing New Zealand's Global Connectedness
The focus here is on attracting quality foreign investment; aggressive export promotion; and improved national branding of New Zealand.

Trade New Zealand is looking at making premises available offshore for new exporters to develop marketing bases and for incubators for small and medium sized businesses to establish themselves in new markets.

Industry New Zealand's Business Grow programme is focusing on those companies which have the ability both to grow quickly and to grow their exports quickly.

In seeking to rebrand New Zealand as an upmarket, innovative, dynamic economy, the government is leveraging off both the release of The Lord of the Rings and the defence of the America's Cup

4. Focusing Government's Resources
The government has decided to focus on three key areas, biotechnology, information and communications technology and creative industries. Each of which not only has considerable growth potential, but which also has high potential spill-over effects for growth in other sectors.

Biotechnology, for example, has spill-over effects for the primary sectors and the processing of their goods, and for the pharmaceutical and other industries.

Creative industries not only underpin the effective branding and marketing of all New Zealand goods and services, but also can, through areas such as design, have a major impact on industrial output.

The information communications technology industry – the area I am responsible for - has been singled out because while it is an ‘industry’ in its own right, it is an enabler for other industries to grow and expand through e-commerce, e-government, telecommunications and the like and has huge export potential.

If we think that ICT essentially means the vendor (selling) industry covering all products, services and telecommunications products and services ie software/hardware and telecom products and services – it is interesting to look at the industry’s value to New Zealand.

In the year 2000 the ICT industry was responsible for $11.1 billion of business transactions - an increase of 6.9% over 1999.

Over 42,000 people are employed in the industry and there are over 7,300 registered enterprises in ICT in New Zealand.

15,600 people are directly involved in computer and related consultancy services, total exports sales of IT hardware and software in 2000 amounted to almost one billion New Zealand dollars.

However, it is not just the contribution of the sector itself that is important but the way ICT acts as an enabler in stimulating other parts of the economy.

Perhaps the most critical enabler is telecommunications and networking, especially the Internet. In 2001, the government placed a heavy emphasis on telecommunications with the passage of the Telecommunications Act and appointment of the Telecommunications Commissioner.

In the past week the Harvard Centre for International Development announced a major international assessment of 75 countries’ capacities to exploit ICT, the Network Readiness Index. It ranks New Zealand at 11, equal to Canada and just ahead of Australia.

MED and Statistics NZ have also just released the results of a Business Practices Survey conducted in July 2001.

The survey showed that 88% of businesses have a PC, 79% use the Internet and 36% operate a web site.

What it demonstrates is that businesses are making heavy use of the Internet for access to information and for dealing with customers and others using email.

Many firms have a web site which advertises their products. But despite New Zealand having the fourth highest proportion of secure web sites in the world, actual numbers of businesses equipped to carry out secure transactions on line are low. This is an issue that will need to be addressed by, in particular the banking industry. It will also need a wider education campaign, to compare the relatively high levels of security that are currently available for internet transactions with the low level security in more traditional types of transactions such as cheques and credit card numbers being given out over the telephone.

The story so far
What has the government been doing to encourage the uptake of e-commerce in New Zealand?

We have been doing a number of things over the past two years. We held an e-commerce summit in Auckland in 2000 where we released an e-commerce strategy. In line with recommendations in that strategy we have been holding regional events such as this and set up the E-commerce Action Team which I will talk more about soon.

Much of what the government has being doing has been getting the fundamentals right.

In the area of ICT that has meant things like getting the Telecommunications Act passed - introducing the Electronic Transactions Bill, developing key strategies in e-commerce, e- Government and broadband.

These are supported by wider initiatives in education, business development assistance through Industry New Zealand, the science and innovation advisory council (SIAC), the Venture Capital fund, skills and talent initiatives and FDI.

Not to mention reducing compliance costs, protection of intellectual property and so forth.

E-commerce Strategy
The Strategy we released in 2000 identified three key roles for government:
•Leadership and communication
•Building capability; and
•Ensuring an enabling regulatory environment
Lets look at some of the work that is being done under each heading.

Leadership and communication
Our target is that by 2004 the Internet will be the dominant means of enabling ready access to government information, services and processes.

On July 1 the new e-government portal is due to go live and an e-procurement pilot is due to start in April. A secure e-mail service between government departments - SEE – now involves 13 Agencies and is growing.

Building capability
The second role for government is building capability and helping build business e-commerce skills.

Key achievements so far have included:
- Issuing the e-commerce Guide - over 8000 copies have been distributed and copies are available from BIZ offices, from MED or online
- New information constantly being posted on the net at
- Industry NZ’s Biz programme’s eight module e-commerce training programme aimed at SMEs
- E-commerce and e-business strategies included as qualifying categories in the Enterprise Award Scheme administered by Industry NZ
- TradeNZ implementing their e-commerce strategy aimed at exporters, and an increasing number of their services are available online.
- The introduction of the Electronic Transactions Bill, the Crimes Amendment Bill the Model Code for Consumer Protection, there has been progress on intellectual property and the passage of the Telecommunications Act.

I mentioned earlier E-Commerce Action Team – or ECAT. ECAT is a group of private and public sector people focussed on helping advance the government’s e-commerce strategy, and encouraging and promoting the adoption of e-commerce within the private sector and across the regions.

A key information tool in all this is the ECAT web site Here you can find a wealth of information about e-commerce in New Zealand - I encourage all of you to visit it, and join the Network. So far more than 128 organisations, businesses and individuals have registered.

Strategy audit
At the end of last year we audited the e-commerce strategy. Of the 60 actions outlined in the original strategy we found much had been achieved – we are doing well – but we must do better.

Let’s take a look at some of the success stories:
Greymouth potter Barrie Paine used e-commerce to overcome distance. At first Barrie knew nothing about computers, including how to plug in. So he decided to learn. Today he’s selling more than 10 per cent of his goods online. He talks with people from around the globe, he sells his products worldwide.
Silk Road Adventures Ltd, another Greymouth company, are niche market travel planners and ecotourism operators. Silk Road specialise in organising tours to the heartland countries of Central Asia. It is now in fact a multinational company. Director Pat Reedy has contractors all round the world who help her to put together the tours, and this global partnering is made possible through the Internet and email.
Auckland firm Reliance Transport won last year’s E-commerce Summit Registration Prize, which was a $25 000 fully functioning e-commerce website provided by Microsoft. Reliance had a static website and email capability, so they had already put their toe in the water. The project provided a lot of lessons about the benefits as well as the difficulties of implementing a full e-commerce platform. Reliance learnt that education and making businesses aware of their trading partner’s capabilities are a key component of an e-commerce strategy.

Last week sixteen new case studies were added to the ECAT website. Two examples of these case studies are Metro Urgent Ltd and DC Bodyboard World.
Metro Urgent Ltd, a courier company in Hamilton, used ICTs to make its business more efficient and allow it to build up its customer database without high advertising costs. To this end it installed a piece of software designed to computerise the company's manual ticket reference system. The only major resource that was required to do this was outside expertise.

The software has saved Metro Urgent Ltd money, time, and human errors in job details. Metro has had positive feedback from their customers about the new system and it is estimated that 20% of Metro's customers find out about the business from the website.
Information Communications Technologies play a vital role in the operations of DC Bodyboard World as they allow it to reach a small-dispersed niche in a cost-effective manner.

The introduction of ICT technology into the organisation's operations and the use of an online catalogue transformed this business into a profitable one.

What is it? You may have seen adverts on TV where Peter Jackson was able to sit in Wellington and direct scenes taking place in Queenstown and Waikato. Broadband makes that possible.

It also makes it possible for children in Tuatapere to be taught by teachers in Christchurch, doctors in remote areas to get second opinions and farmers in Waikato to bid on stock auctions in Napier.

It’s the nervous system of the new economy and my most important challenge.

The government has set the goal that all kiwi communities can access two-way high-speed Internet services by the end of 2003.

Last year Cabinet committed $300 000 to five pilots throughout New Zealand, including one in Southland, to find ways of improving broadband access in rural and provincial areas.

The challenge they face is that the further we are from the main urban centres the less likely it is that broadband is available. Not because there is no use for it but because there are few economic incentives and higher technical risks for suppliers. Our task is to work together to improve those incentives through testing, bundling demand and technology.

Where do we go to from here?
I would like to see you continue the local push for e-commerce.

Encouraging small business people to attend seminars and courses is important. I would like to see you linking into the ECAT network and making full use of the resources available there.

And I would like to see you all supporting the broadband pilot under Steve Canny’s guidance.

This is all about working together to build a better New Zealand - one where all can participate in the knowledge economy game, and which strives to lift our game internationally.

It's up to all of us. Time is of the essence.

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