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Knowledge Wave Trust Conference - PM Speech

Wednesday 19 February 2003

Rt Hon Helen Clark

Prime Minister

Knowledge Wave Trust Conference

Sheraton Hotel


2.00 pm

Wednesday 19 February 2003

Thank you for the opportunity to participate in this opening session of the conference.

Our theme for this session is the New Zealand Leadership Challenge. Our challenge is to relate that to the other three themes set for the conference: economic growth, knowledge, and community.

Leadership we are told in the background material provided for this conference is about rallying people around an idea. Vision and passion, it is suggested, is what sorts leaders out from managers.

If I had wanted to be a manager, I would not have taken a career path which led to the Prime Minister's desk. So let me talk about the vision and passion I have for this country and how I translate that into the initiatives and programmes which can make a difference.

I am a fifth generation New Zealander who has never desired to live anywhere else in the world. I have had the opportunity to travel very widely, officially and privately. For me, nothing compares with the country I was born in and have lived in all my life.

Why is that? I count myself privileged to have grown up in a country which has offered me every opportunity I could ever have dreamed of.

I count myself lucky to live in a country where very different peoples have established a modus vivendi and ways of living alongside each other in relative peace.

I count myself lucky to live in a country of great beauty with wild, open spaces where we can test our physical capacities to their limits.

I count myself lucky to live in a country which produces talented and creative people in all fields, including the arts which means a lot to me.

I count myself lucky to live in a country which for the most part has been regarded as a good international citizen.

These are just some of the reasons why I am passionate about being a New Zealander.

But does that mean that I think our country has reached a level of perfection which cannot be improved on? Of course not. And that is where the need for vision comes in: for vision which will see New Zealand realise its potential as;

- a birthplace of world changing people and ideas,

- a place where people invest in the future,

- a great place to live, learn, work and do business,

- a land where diversity will be valued and reflected in our national identity.

That is the vision articulated in the government's growth through innovation framework. It is a vision which can be widely shared, but there will be much debate about how it is best achieved.

Let me add to that vision my hope and expectation that New Zealand's children in the future will enjoy at least the opportunity my generation had to follow its dreams; that the families of the future will enjoy the security which provides the context for loving and caring homes; and that the grandparents of the future will be valued for their lifelong contribution to our country and enabled to live in dignity in their retirement years.

Much has been written and said about New Zealand's relative decline in prosperity during the second half of the twentieth century.

Much has also been written and said about the desirability of restoring New Zealand's living standards to the top half of the OECD rankings - and the government accepts that as a feasible goal over time.

But that is an objective, not a vision, although achieving the objective will be of great assistance in realising the vision for the future which I have. Opportunity and security are fuelled by prosperity, and prosperity in turn is fuelled by a confident and secure society whose people have the opportunity to succeed.

Visions for the future, I believe, have to be inspired by positive images of what could be.

Inspiration does not come from negative images, from fear mongering, from painting scary pictures of decline.

And visions are not realised by vague and fuzzy slogans and exhortations.

Visions are realised when clear strategies are outlined and practical initiatives are taken.

A change agenda for a nation needs action and commitment from government, but not only from government. It needs action and commitment across the economy and society, from lifting the aspirations and sights of children, young people, and their families, to developing a growth culture in New Zealand business which does not see it sell up when the company is too big for the owner operators to run on their own and enjoy a good quality of life.

In the end the nature of the change agenda will be driven by the values of those in the driver's seat.

In the driver's seat in my government are people who are deeply committed to social cohesion and inclusion, to participation, to partnerships, and to economic growth producing a strong social dividend.

We are people who believe in government of the people, by the people, for the people. We believe that governments govern by consent, that mandates must be sought and trust built in government, and that economies and societies value predictability and certainty as well as a clear sense of direction.

We believe in being explicit about our vision and our agendas. We do not accept the unspoken agenda behind so much of the rhetoric about the need for vision, leadership, and change. Decoding that rhetoric generally reveals discredited and discarded agendas of the 1980s and 1990s which produced growing inequality, social fragmentation and despair in many quarters. The pace of change in those years may have been exciting for some economic elites, but they were simply terrifying to many in broader society.

In our change agenda, we will be looking to work with people, not against them, and to build the maximum possible consensus around vision and goals.

My challenge to everyone attending this conference is to be explicit about their agendas and to put them on the table for debate and scrutiny.

I note the tendency of some to say that others don't have vision simply because they don't happen to share that vision. I don't accept that others' visions for the future can simply be dismissed as non-existent because one doesn't share them!

I do accept absolutely that the leaders of the restructuring of the 1980s and 1990s had a vision, even though I don't share it.

This morning's radio reported an economic leader saying in the context of this conference that the government wasn't serious about economic growth.

Let me assure you that we are deadly serious about growth, as I am sure that economic leader is, but we appear to have a difference over the means of achieving it.

That cluster of themes set for this conference, embracing economic growth, knowledge, and community, implies an acceptance of the need to balance that range of factors when planning our country's future.

But balancing them means not going overboard on some of those factors so that they detract from our ability to deliver on the others.

The art of governing in this respect surely rests on the balance struck between head and heart.

Too much head in the form of economic rationalism can crush the spirit of the community. Too much heart can break the bank.

The policy balance I am seeking sees us building and sustaining solid levels of economic growth which enable us to fund high living standards, high quality public services, and infrastructure sustainably.

Building a momentum behind economic growth requires us to lift our levels of knowledge and skill and to get the whole community involved in the challenge. But if the agenda for growth is based on slashing taxes and spending, then we would not only face an uphill task financing the acquisition of knowledge and skills, but would also face resistance from a disempowered and dispirited community. That is not a path I propose to follow.

The task of government is to back its vision for the future with practical initiatives and programmes to move the country forward.

Faster growth won't be achieved by waving a magic wand. It will be achieved by a series of consistent steps taken towards our goals. Crash through approaches which leave the public wallowing in their wake won't work. Governing by consent follows the leadership which rallies people around how the vision can be achieved.

- The Knowledge Wave Conference 2001 called for a widely shared vision for New Zealand. In the Growth and Innovation Framework the government set out a vision for the future which has the capacity to be widely shared and I have repeated it here today.

- That 2001 conference also said that we needed superlative, highly valued education. We agree. Education and skills training are prioritised not only in the Growth and Innovation Framework but also in government policy initiatives and spending from early childhood education through to tertiary.

A new early childhood education strategy was launched last year after wide consultation with the sector and the community. It aims to lift both quality and participation rates - and that means more investment will be needed. It also aims to increase the involvement of communities whose children are presently underrepresented in early childhood education.

In the compulsory sector we are funding teaching positions well beyond what is required for roll growth; there are major information and communications technology initiatives; and we are beginning a fresh and comprehensive look at how we can improve both teaching and learning.

At the tertiary end, the new Tertiary Education Commission has been set up to drive excellence, participation rates, and collaboration across the sector, and to link what the sector does more to broad national economic, social, and cultural goals. Affordability is a top priority, with progress already made through fee stabilisation and a fairer loans scheme.

We are working closely with industry to address skills shortages, including those as basic as literacy and numeracy. Participation in apprenticeships and industry training in general has soared, and even higher targets have been set.

- Knowledge Wave 2001 proposed improved research and development capability, including networks and centres of excellence.

We absolutely agree that innovative economies and societies owe much to science, research, and development. Last year saw two key new initiatives:

(a) Seven Centres of Research Excellence were established in areas of major importance to New Zealand's economic and social development.

The Centres operate collaboratively across tertiary institutions and, for the most part, also have links to Crown Research Institutes.

(b) Funding for industry-led research consortia was introduced.

These research groups bring Crown Research Institutes and universities together with private sector companies to pursue opportunities with commercial potential.

$33 million of public funding over five years has been more than matched by $44 million from the private sector.

Among the consortia approved to date are those working on biomedical compounds, pastoral green house gas reduction, and wood quality.

More are in the pipeline.

It is well known that New Zealand's science, research, and development spend falls well short of what is common in other developed nations, and the private sector spend falls especially far behind. Improved tax treatment introduced in the last term of Parliament should go some way to improving that, and there may be other initiatives which could be helpful. Progress in this area also needs a commitment to innovation across the public and private sectors.

- Knowledge Wave 2001 called for the celebration, development and funding of entrepreneurs.

In terms of funding and development, there are a lot of government programmes across Industry New Zealand, Trade New Zealand, and the various research and technology agencies which aim to help.

Celebration of entrepreneurs comes with cultural and attitudinal change - and I think it is happening. There is admiration for what the innovative and go ahead entrepreneurs are achieving.

What we know needs to happen is the development of greater depth of management in our up and coming companies. That is highlighted in the report of the Information and Communications Technology Taskforce Report and in much other commentary as well. Companies which grow quickly without a sound management infrastructure to underpin them can soon burn out their founder and chief innovator. At that point our bright ideas are quickly snapped up often by offshore purchasers, and New Zealand loses the opportunity to maximise the benefit from them.

Incubators and venture capital also play a key role in developing the innovators and entrepreneurs of the future, and government has got involved in the funding of both.

Fifteen incubators have been funded by Industry New Zealand's Incubator Development Unit.

The start up companies in the incubators benefit from the collegial work environment and the mentoring and practical business advice available to them on site.

The Venture Investment Fund now has co-investment arrangements with three privately managed seed funds and is currently finalising documentation with two more.

The focus for these funds is on early stage, innovative businesses with potential for high growth.

Already one of the funds has invested in an early expansion stage, software company which is recognised as an industry leader in business intelligence and data visualisation solutions. Further investments are expected to be made by fund managers in the next few weeks.

- Knowledge Wave 2001 called on the government to work with industry sectors and regions to foster collaboration.

The Wood Processing Industry Taskforce was the first major collaborative effort between government and an industry sector, and its work has been successful.

Its strategy aims to transform a $5 billion export industry into a $20 billion industry through the application of knowledge and skill in New Zealand and an improved infrastructure.

Government and industry also worked together to produce a national tourism strategy looking ten years ahead.

Last year the government established a further four taskforces, prioritising sectors with the potential to have significant positive effects for growth in other sectors.

The Information and Communications Technology Taskforce has already produced a draft report with ambitious targets; and the biotechnology, design, and screen production reports are due shortly.

The blueprints that emerge will help guide the government's investment in education and infrastructure, and the sectors' ability to exploit market opportunities.

The highly successful Regional Partnership Programme has

helped twenty-six regional groupings to develop economic strategies and regional specialisation.

From that work, new regional centres of excellence have emerged.

Hawke's Bay has the Centre of Innovation for Food Processing; Marlborough has the Research Centre for Viticulture; Rotorua has the Centre for Excellence in Wood Processing, and Training; and Hamilton has the Waikato Technology Park to promote commericalisation of intellectual property.

Meanwhile Nelson has plans to become a centre for seafood research, skill development, and sustainable management.

Sanford, Sealord, the Cawthron Institute, Nelson Marlborough Institute of Technology (NMIT), and the New Zealand Seafood Industry Council have already dedicated time and money to the proposal.

They see it as an opportunity to move forward in an industry which is fiercely competitive.

Other benefits include the opportunity for people already in the industry to increase their skills, and to attract quality people to the seafood industry.

- Another priority area for Knowledge Wave 2001 was the development of clusters and the pursuit of industries of appropriate scale in areas of sustainable competitive advantage.

Industry New Zealand has backed twenty two clusters ranging across Health IT in Auckland, to Waikato Biotech, Wellington's Creative Manufacturing, Nelson Seafood, and Dunedin Engineering.

The Health IT cluster brings together nearly forty companies, with current annual revenue of $100 million.

Software developers, academics, business groups and government departments work together to brand New Zealand's health software as world leaders.

The cluster is planning to grow revenue at about $2.1 billion in ten years.

- Knowledge Wave 2001 recognised the importance of developing and celebrating talent and the value of reconnecting with New Zealanders who live overseas.

Industry New Zealand's World Class New Zealanders' programme aims to help businesses to get access to international expertise and innovative technology.

Through the programme, businesses can set up networks and strategic partnerships with successful overseas businesses through international missions and exchanges.

It also encourages links to successful expatriate New Zealanders and their networks.

Whangarei timber company TDC Sawmills is the largest sawmill in Northland, employing well over one hundred people and growing rapidly.

It sent two of its people on an Industry New Zealand World Class New Zealanders' business exchange to the United States to improve its production capabilities.

In particular, the company's drying and export quality controller learnt about US best practice, quality, and grading requirements and the improvements needed in the company's production and management capabilities to meet international best practice.

An immediate reward from the exchange was the signing of a sole distributor contract with a major supplier of wood products to the USA market which will see the company's radiata products sold throughout the USA.

I acknowledge also the work of Stephen Tindall and other private sector leaders in establishing KEA to link expatriate New Zealanders and their networks with developments at home in New Zealand, and believe this will be a long term benefit.

- Knowledge Wave correctly identified the importance to innovation of ensuring that the government keeps its own house in order.

We do that through our commitment to transparent, stable, macro-economic policies, maintaining sustainable spending, and pursuing a value for money approach with spending.

The path to growth staked out in the Growth and Innovation Framework and Knowledge Wave 2001 is ambitious. Many steps need to be and are being taken, and many more will need to be taken.

Every reasonable person knows that the path ahead is a long one. Half a century's decline isn't reversed over night, but reversed it can be and is being. Current growth and employment rates are encouraging - and the challenge is to make them sustainable.

The common themes underpinning the government's initiatives have been our absolute commitment to transforming the economy, to facilitating innovation, to partnering with industry and taking an inclusive, participatory approach.

We will need to do more to reduce unnecessary compliance costs, to match skills development to the current and future needs of the workplaces, and to reduce barriers to learning and education. This term the government is focusing on addressing the infrastructure needed to drive a fast growing economy and first world society. Transport, energy, water, and the spread of broadband are firmly in our sights.

Increasing investment into New Zealand, and an active trade policy aimed at opening up opportunity for our exporters, will assist our economy's growth potential.

Over time, we believe what we are doing will deliver real gains, and it meets that critical objective of taking the public with us.

A guest at this conference, economist Paul Romer, argues that poor countries don't lack resources - they lack ideas.

We are not a poor country and we don't lack ideas. In fact we have an abundance of them.

It is often said that our geographical isolation and small size have been disadvantages - a tyranny of distance - but they have also been advantageous in an interesting way.

They have bred a culture of resourcefulness and innovation.

We had to develop a culture of coming up with our own creative solutions, because those of others were not easily accessible.

We developed a culture which was prepared to try things out and which created an ability to think laterally, but in the past we haven't realised the full potential of our innovations.

Our challenge is to harness our ideas and improve our success in commercialising them.

Much of that work isn't glamorous; it's painstaking, practical work at the interface of ideas, business, and markets.

Turning our innovative ideas into wealth and export dollars requires improving our nation's human capital, and investing more in our physical capital and in the technology transfer which will drive New Zealand's productivity gains.

In the years to come we will see many more small entrepreneurs with bright ideas contributing to the growth in our exports.

They will compete not on low price because of a weak local currency and low wages, but on offering high value advanced services and products which the world wants.

You will see these entrepreneurs and their companies developing all over New Zealand today, across the regions and in every sector.

These companies are getting the right signals from offshore markets about where to invest and the co-operation of local and central government agencies to help them realise their ambitions.

Our government will continue to work actively in partnerships at all levels to assist our innovators, investors, and entrepreneurs to reap the most from the opportunities which are there for the taking.

Our future depends on our ability to produce world-class innovation.

The Knowledge Wave Trust has helped promote awareness of that goal, and has been a source of ideas for achieving the vision I believe we share.

For the Trust's contribution, I congratulate John Hood and Auckland University, and the sponsors who have made it possible.

It is up to all of us now to take the practical steps, unlock the ideas, show the leadership required, and realise the vision.


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