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Investment in Hitlab pays dividends for all NZers

Our investment in Hitlab is paying dividends for all New Zealand

Christchurch mayor, Garry Moore
Chris Pickerall from CDC
Paddy Austin
Representatives from Canterbury University, industry leaders and colleagues of HitLab

Before I begin I would like to pay tribute to the founder of HitLab in the United States, Professor Tom Furness, and to the director of HitLab New Zealand Mark Billinghurst.

I first met both around five years ago, and I’ve had the pleasure of watching their vision for a New Zealand HitLab come to be realised.

The promises they made for spin-off benefits have all been fulfilled.


New Zealand Trade & Enterprise has worked with them throughout.

Its job is to help innovation in New Zealand get underway.

NZTE provided establishment funding and project funding for Hitlab in its first two years.

Together NZTE and HitLab are working on a range of exciting technology opportunities.

For example: HitLab is working with interactive media company Story Inc. on an innovative design for the AICHI pavilion at the World Trade Expo in Japan;

At the same time NZTE is working strategically with the New Zealand Game Developers Association to help to grow the sector.

NZTE has funded attendance at major digital technology events internationally such as SIGGRAPH (where NZTE supported eleven companies to attend last year and created a BRAND NZ campaign around them).

The HITLab was one of those attending.

NZTE is also supporting the HITLab’s attendance at CEBIT – the leading edge global conference on digital technology and ICT.

Our investment in HitLab has certainly paid off.

HitLab New Zealand now has 22 corporate members, it hosts researchers from around the world and has carved a word-wide reputation for its work in remote collaboration technology.

So I think the partnership between HitLab NZ and NZTE has been a success.

In welcoming our international guests, and in particular to New Zealand technology innovation capital, Christchurch, I would like to stress the coalition government’s commitment to working in partnership with innovative and creative businesses.

I hope you will take the opportunity to see the talent we have.

I’m going to talk a little about our support for partnerships, across industry in New Zealand, and with international partners.


And I hope your experiences here confirm for you the opportunities I believe exist in New Zealand.

This government recognises the fundamental importance of business success to sustaining our living standards.

If we want the highest standards of health care, education, security and opportunity then we need high incomes.

High incomes are produced only by a high-skill, high-value, job-rich economy.

Our strategy to grow more successful businesses in New Zealand is to unleash the innovation and creativity of New Zealanders.

Innovation is about making better use of our resources; it’s about creating more value with what we have.

It was remarked at the turn of the century that the United States exported the same weight of goods in 2000 that it had exported in 1900.

But the value of those exports had increased hundreds of times over.


Innovation made the difference, and the lesson is clear for us as well.

We need to create more value from the resources we have, rather than simply trying to ship more of the same across the wharves.

So the innovation strategy makes sense.

The strategy is specific in its application to sectors.

The government made a decision a few years ago to work closely with the sectors that provided the greatest potential to help our economy develop.

Our ICT and Creative industries are vital innovation sectors.

They were selected because of the potential for rapid growth in those sectors.

They also have vital positive effects on other sectors.

So the work you are doing here is pertinent to our innovation strategy.

The government has begun collecting figures about the level of innovation in individual firms.

The figures show businesses in New Zealand are introducing innovations at about the same rate as businesses in the EU.

But they also show we haven’t been reaping similar gains in productivity and in real wages.

While we have some success in bringing innovation into individual businesses, we need to get better at harnessing world-class innovations that command a premium in international markets.

We know we have capable, innovative people.

Our focus is to do better at unlocking their potential.

Individuals like Mark Billinghurst, whom you know about, are examples of the extraordinary talent New Zealand has.


Another is the businesses Pulse Data International, which is a member of HitLab.

Based here in Christchurch it makes computer products for the blind and visually impaired.

The company was the Information and Communications Technology Exporter of the Year in last year’s New Zealand Trade and Enterprise Export Awards.

Not only are its products significantly beneficial for users, the company has created 150 jobs and substantial export earnings for New Zealand with its exports to more than thirty countries worldwide.

There are creative and talented individuals working on good ideas all over New Zealand.

The government set up NZ Trade and Enterprise to work with these creative businesses and with the regions of New Zealand.

Its role is to be a catalyst for economic growth.

The HitLab is actually a very good example of how the partnership can be successful.

Not every project NZTE works on is going to achieve what NZTE has managed.

When I set up NZTE, I said I would be disappointed if it didn’t work with a few projects that didn’t succeed.

We need to take risks.

I know the government’s critics spend enormous energy trying to find examples of businesses that haven’t succeeded.

But the ledger needs to be balanced by those that do.

As the old Frank Sinatra song about Love and Marriage goes, you can’t have one without the other.

But you don’t have to look far to find the success.

One example is the Hamilton-based business Ectus, also a member of HitLab.

It specialises in electronic education, video conferencing and streaming media.

It originated as a research and development unit at Waikato University.

It is the first company to graduate from the Waikato Innovation Park where it is based now – the Innovation Park itself was created with the assistance of the very first New Zealand Trade and Enterprise regional partnership.

Ectus launched its flagship products in December.

Its video-conferencing, video-streaming and on-line discussion software has international applications in government, education, healthcare and business.

Ectus received funding from Technology New Zealand's Technology Business Growth fund and an Enterprise Development Grant from New Zealand Trade and Enterprise to help promote its products internationally through a branding strategy.

It has also received funding from the New Zealand Venture Investment Fund’s seed funding provider Endeavour-icap.

So the government is working in partnership with high-growth-potential businesses.

Successful innovative firms drive our economic success.

Alongside innovation, partnerships are central to a well functioning modern economy.

New Zealand has a predominance of very small firms and the challenges of being a great distance from major markets.

Partnerships within the private sector and between the private sector and central and local government are important to overcome these hurdles.

The modern economy increasingly features specialisation within firms and tougher competition internationally.

Once, firms were seen as stand-alone entities that undertook most functions, if not all functions, themselves.

Designers, component manufacturers and assembly lines were all located within a single city, perhaps a single plant.

Now, they are increasingly not even in the same country.

Successful businesses are outward-looking, focused on their core activities, and drawing in information, skills and resources from outside.

Linkages between businesses are therefore increasingly important.

So too are partnerships and networks between research institutes, education providers and government agencies.

Linkages and relationships internationally may be every bit as important as our domestic linkages.

Strong networks and partnerships allow sectors, regions and individual business to focus on their strengths.

By agreeing on their priorities, they can produce efficiencies such as joint research, early stage development, collective marketing and training.

They can give firms, sectors and regions access to complementary resources.

In the regions of New Zealand, the regional partnerships we have been putting together create the widest possible buy-in.

They help regions to identify and exploit their advantages.

They encourage a more strategic focus on economic development opportunities and build the capability to deliver on these opportunities.

Let me give you one example of a partnership that works.

It’s between Palmerston North company NZ Pharmaceuticals and IRL (IRL is a member of HITLab NZ).

New Zealand Pharmaceuticals has launched a three-year research and development project to develop capability in chemical synthesis.

The company is collaborating with the Crown research institute Industrial Research Limited.

The initiative is designed to produce raw materials to meet strong global demand for special carbohydrate derivatives used in manufacturing some of the latest drugs.

The research will help to develop drugs that prevent and treat cancer, heart disease and a range of other life threatening conditions.

Technology New Zealand and New Zealand Trade and Enterprise are contributing heavily to help New Zealand Pharmaceuticals build its business and marketing capability.

Partnerships like these are necessary to drive our economic performance higher.

Just recently, a new report was released by the Ministry of Economic Development and the Treasury.

It’s called the Economic Indicators report.

It looked at how New Zealand’s economy has been performing recently compared to other developed countries.

Of course, we’re going along pretty well.

Our economic growth rate over the last five years has been one of the best in the OCED – and we repeated the success last year.

Unemployment is at a nineteen year-low.

I’m not fond of reading newspaper editorials, mostly written by people who have never been near an export-earning business in their lives.

But when I read tired, backward-looking editorials about the economy, they almost always speak of our economic success as though it happened by accident, as if good economic times make themselves.


They ignore the fact we had a hard time for thirty or more years.

We only really began to create jobs and sustain much better economic performance when we began to take economic development issues seriously.

The Economic Development Indicators Report, in contrast, deals with a few facts.

It found we have a high level of entrepreneurial behaviour, our skills are improving and business investment is improving too.

With sound economic management in general, our businesses have a good basis to grow into the future.

But there are things we need to work on.

Our productivity needs to improve further – though it has been getting better in recent years.

There are a number of factors behind our productivity performance. The most important include:

-Our levels of private sector research and development;
-Skills shortages – both at management and employee level;
- And business investment in new technologies.

The government has a choice in how we respond to these challenges.

We could listen to our critics, and do nothing – sit on the sidelines and hope they sort themselves out.

We would avoid any criticism for having tried to ‘pick winners.’

But we tried that approach for decades at the end of the last century, and it didn’t work.

So I’m taking a new approach.

We’re working in partnership with industry to solve these issues.

It’s producing increased investment in skills and research and development.

It’s also producing better access to finance for our fast-growing export-earners, and better linkages across the economy – especially with the tertiary education and Crown research sectors.

And as the results come in, they show the new strategy is working, in lifting our national income and in creating more jobs and opportunities for New Zealanders.

So it remains for me to welcome you here.

There are guests from around New Zealand and from overseas.

Although I have a background running an engineering business, I don’t pretend to have particular technical knowledge about your fields of expertise.

What I do know, and what I hope I have convinced you of today, is that the coalition government believes innovation in the ICT and creative sectors are critical to our success in future.

I’m reminded of the story of the former British PM Gladstone.

When he met the physicist Michael Faraday he asked whether his work on electricity would be any use.

Yes it will, Faraday assured him. “One day you will tax it.’


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