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Speech to Copyright Summit, Michael Fowler Centre,

Hon Bill English
Treasurer
MP for Clutha-Southland

Speech to Copyright Summit, Michael Fowler Centre,
Wellington, 2pm 18 August 1999


Embargoed until delivery

The knowledge economy is rapidly becoming the catch-phrase of the moment.

It is widely accepted that we must become part of the knowledge economy if we are to achieve a higher standard of living for all New Zealanders.

One of the key elements in creating a culture that supports creative and innovative New Zealanders is the part that this conference is interested in - how we protect our intellectual capital.

Firstly today I want to run through the Government's Bright Future package, launched just a couple of hours ago, which is one of the ways the Government will contribute to building a stronger, more diversified economy in the future.

Then I will look at how we protect the intellectual property we have created.

Finally I will look briefly at how meeting the demands of the knowledge economy fits in with the Government's wider policy framework.

In the 60's and 70's we built dams and sheep numbers, in the 80's and 90's we built markets and good government. The next chapter of New Zealand's economic story is about creating jobs and better incomes from the raw material of ideas. In future what's in our heads will be as important as what's in our paddocks.

We are well positioned for this. New Zealand is the nation of the brilliant back-yarder. We like the idea that laid back kiwis can come up with a brilliant idea that beats the world. We seem able to fuse together practical skills with the latest technology.

The job now for the Government is to build on where we've been while at the same time taking advantage of new ideas and new ways of doing business.

The Five Steps Ahead package totals $223 million over four years. This includes $47 million of new spending, up to $137 million reallocated from the public good science fund, and $39 million from contingencies and savings.

First, we will make sure all New Zealanders have the skills to excel in a knowledge era.

We will provide $30 million for new scholarships each year. There will be 1,500 new enterprise scholarships to be funded jointly with industry. The scholarships will encourage able students to keep learning particularly in science and technology.

In addition there will be 80 new doctoral scholarships averaging $40,000 each. There will also be, over three years, $10.2 million worth of study assistance for our best teachers and increased bursaries for top secondary students.

Secondly, we want to generate good ideas

Next month we are launching a $36 million New Economy Research Fund. This will be used to generate ideas for the businesses and industries of tomorrow. We will also be offering post-doctoral scholarships worth $7.25 million a year. We will review the taxation of R & D and do more to harness the benefits of research carried out by Crown Research Institutes.

Our next priority is to fund bright ideas. We will support the establishment of a small business stock exchange that can help turn people's innovative ideas into commercial reality. This will be operational by next April.

We are setting up a national 'ideas' incubator. The incubator will help turn good ideas into new businesses by developing them to the point where others will invest.

We'll be making changes to the Securities Act to reduce the costs to firms of raising venture capital.

Fourthly, entrepreneurs and enterprises must have the freedom to innovate.

We are going to make life simpler for businesses. We are going to set up test panels of small businesses to make sure that our laws don't impose unnecessary burdens. Wherever possible, we are going to cut the cost of compliance and get rid of obsolete regulations. We estimate that up to a quarter of our regulations may be redundant.

We also need a less 'taxing' tax system. We are going to look in detail at whether the tax system fits the realities of small business.

The last part of the package is about creating a spirit of success that will inspire us, and the generations to come.

There will be Prime Minister's Awards for Excellence to motivate New Zealanders to aim high and be the best.

This package will spearhead our efforts to make New Zealand the best country to live and do business in.

I would like to turn now to the question of how we protect our intellectual property.

In 1998 the Government commissioned a review of pirating and counterfeiting in New Zealand. The review also looked at our laws that deal with these problems.

That review showed that we don't have a significant problem in world terms. For example a study by the Business Software Alliance and the Software Publishers Association placed New Zealand in the bottom 10% of countries for software piracy rates, and also showed that the rate of piracy had fallen in each of the three years to 1997.

There was also no evidence that theft of intellectual property had increased significantly, or at all, since the parallel importing amendments were passed last year.

However, while the situation in New Zealand is not serious by international standards, we must not be complacent.

While the report noted that New Zealand laws were consistent with most of our international trading partners, they lagged somewhat in providing protection against pirating and counterfeiting.

In response, the Government last week announced that it would be introducing tougher measures to protect intellectual property rights.

The maximum term of imprisonment for trademark and copyright offences will be increased from three months to five years. This is in addition to the significant increases in 1998 to the level of Copyright Act fines.

Copyright and trade mark crimes will be made indictable offences, with a new criminal offence created of counterfeiting of trade marked goods.

The time for laying of informations for trademark and copyright infringing offences will be extended to three years. This is considerably longer than the normal six months for indictable offences, reflecting the time it can take to detect the offence and track the source of counterfeit material.

These new measures are designed to send a strong message to those involved in piracy and counterfeiting that the Government regards such activity as serious and criminal. It also ensures penalty levels are consistent with those in other comparable jurisdictions, such as Singapore and Australia.

The powers of the customs service will be extended to pirate and counterfeit goods that are 'in transit' where these goods are the subject of copyright or trade mark notices.

Further legislative changes or ratification of international treaties are also a possibility should this be prudent.

All these moves form part of the Government's drive towards increased innovation and creativity through the effective protection of intellectual property rights.

However, while the Government sets the laws and takes prosecutions, making those laws work is not solely the Government's job. Businesses have to help look after the exclusive rights they have been given.

The most important, and one of the simplest things right-holders can do, is to lodge notices with Customs regarding their goods. That means Customs can detain goods for 10 working days, giving the right-holder time to verify if the goods are pirated or counterfeit.

Right-holders also need to take the initiative in gathering sufficient evidence to show the police that there is a case to answer. If goods are found to be counterfeit the courts have a wide range of remedies available that can be pursued by owners of intellectual property.

I gather there is someone from Customs here today who you can speak to about the practicalities of lodging notices.

Copyright serves a wider purpose than just economic. It is a legal mechanism for establishing uniqueness and ownership.

So it is a means of establishing and protecting our identity as a nation. That is why the law matters.

I've had the opportunity to work with the local music industry. It has real potential to be a bigger, more successful industry, and it is a contemporary vehicle for expressing and exporting our unique New Zealand identity and environment. The industry has taken the chance to look hard at where it really wants to go, and to sort out what it can do for itself with some moral support from Government.

People who are creative tend to be individualistic - that's the nature of art. But the passion for that unique New Zealand identity is just as strong. Our work with the music industry has taught me how culture and economic growth are linked. It's also been a learning exercise in how Government can be a catalyst for small industries which can grow. It is a model we may look to copy elsewhere.

Finally today I would like to put the knowledge economy, and intellectual property, into the broader picture about New Zealand's economic performance.

We need to respond to the knowledge economy if we are to improve our performance and have a higher standard of living. The Bright Future programme is a first step in that direction.

We need to develop and utilise new technologies for new services and new jobs. But much of New Zealand's capital and many of our people are tied up in traditional commodity industries. We cannot walk away from our people, and it is vital that this capital is mobilised.

Bright Future offers opportunities to our traditional industries. They can benefit from our efforts to turn the accumulated intellectual property of Government's extensive research into better performance. This is particularly the case for agriculture with the coming biotechnology revolution.

But it is also crucial that the Government press ahead with its programme to make our traditional industries as competitive as possible. In addition to this package there are five other areas for Government action to build a stronger economy.

But any investment in this area must fit alongside other economic measures to encourage innovation and enterprise and ensure our economy is as competitive as possible.

In particular, we will maintain the sound economic framework that has served New Zealand well over the last decade - a flexible labour market, low inflation, prudent fiscal policy, low broad based taxes and debt repayment.

We can't take these for granted. Opposition parties are proposing to undermine these foundations with a less flexible labour market, higher taxes, and no debt repayment.

Secondly, lower taxes are crucial to a culture of innovation and enterprise.

What sort of signal is it we send skilled young people if we tell them higher taxes on their efforts are better?

I am determined we maintain our tax advantages over Australia and that lower taxes are available to all New Zealanders. Where is the logic in increasing taxes on workers to fund grants and incentives for business ?

Thirdly, we will keep driving to make our economy more competitive. This year we have moved on producer boards and ACC. There are still big infrastructure issues ahead of us - roading management, business compliance costs and the Resource Management Act.

Do not underestimate the determination it takes to see these harder issues to their conclusion. Bureaucratic cash handouts for a few businesses are no replacement for the nitty gritty of good policy aimed at results for every business, not just a selected few.

The long term gains are crucial to our traditional industries. We will be producing meat and milk and wood for some time yet, and the prices for them will tend to drop over time. We need to push for every cost and efficiency advantage we can get for our producers, so jobs and incomes can grow.

Along with these areas, we must consider how Government activity, which accounts for 35% of the economy, is contributing to productivity growth and the knowledge economy. I want to ensure public investment focuses on the cutting edge of the economy.

We will also be looking at how the forces of e-commerce, which are changing business so dramatically, apply to Government's activities. Government supplies a wide range of services to the whole population and we run most of the regulatory activities. Any other large organisation running similar services or functions is thinking hard right now about how the internet fundamentally changes the way they do business. There are risks in investing in new technology, and Government faces the same risks as the private sector. But we cannot ignore it.

And, finally, health, education, welfare, justice and police represent 78% of Government spending. We have committed ourselves to spending more. But taxpayers also expect all the spending will make a difference. We have put in place principles of devolution, local decision making, and integration on a small scale. The next phase is to mainstream these concepts, so we can break the cycles of disadvantage and so we can offer more choice and flexibility to everyone who uses public services. Compulsory education in particular is ready for further improvement on Tomorrow's Schools.

This policy framework is in step with the wider New Zealand economy as we enter the new millennium.

It is consistent with the way wealth creation in New Zealand is changing.

It drives a vision for an economy where our children will stay and build their future.


ends

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