News

How local government can support the digital economy

This opinion piece was written by Victoria MacLennan, Co-Chair NZRise and was published in the NBR on 5th July 2016. 

We live in interesting times. Globalisation and increasing demand for digital and technology-based products have created a wonderful environment for companies to build their products or services anywhere. No longer bound by the tyranny of geography, we can easily export these products to the world. But to build this part of our economy means we need better support and aspirational leadership from both central and local government. To quote Sir Paul Callaghan, we need to kickstart the diversified economy by getting off the grass.

The recent Digital Economy Report highlighted this sector’s contribution of $16.2 billion to the GDP of New Zealand, or 8% overall, providing 100,000 jobs. High-value jobs too. And for every one of these jobs, there are another five new service industry jobs to support them.

Add it all up and digital and technology is our third-largest export sector. This growth is happening all over New Zealand. NZRise member companies are exporting software and services from Gisborne, Tauranga, Oamaru, Nelson, and Taupo to name a few, alongside Wellington, Auckland, Hamilton, and Christchurch. Local government can support this growth both directly and in a support capacity with strong digital and technology policies and strategies. Sadly, there is a serious paucity of vision in this space so far. Auckland mayoral candidate Victoria Crone has taken the strongest position in the upcoming local body elections, announcing a vision, policy, and strategy for this growing sector. We’re waiting for the same from other mayoral candidates.

At a grassroots level, councils can provide two basic building blocks. The first: policies to support investment and expedient implementation of world-class digital infrastructure, creating one of the key conditions required to work globally from anywhere in New Zealand. I was recently in Europe where I had 4G cellphone coverage that is faster than a lot of Kiwis get from their home broadband.

The second is investment in raising the digital literacy of local communities. At a business level, a lift in technology usage will generate immediate opportunities for collaborative and adjacent industry initiatives to emerge – such as health tech and agritech. Taking that to fruition, those businesses that digitise their processes will increase productivity, create higher-paid jobs and move us further up the value chain from a raw commodity based economy.

Fostering a thriving digital and technology economy also requires access to capital investment, a diversified workforce, and a growth-oriented focus. Most cities in New Zealand are already home to growing businesses in this sector. A strategy to facilitate access to investors, talent, and develop conditions for growth should be at the top of any incoming mayor’s agenda. Wellington City Council has announced further investment in bringing a new call centre to town creating 300 new jobs. To be blunt, with the sort money being bandied around by the council, I could create 300 new jobs here in Wellington as a local, yet the rate relief and other benefits offered to offshore companies are not extended to those of us already here and growing locally.

Where councils do seem to have their act together is in startups.  Startups are important, the conversion from an idea into a thriving Xero-sized company takes bravery and investment that many companies are unable to convert on. But with this startup support, councils need to also support those of us who are already employing staff, paying rates and taxes, and bringing in dearly needed export dollars. Many of the most successful New Zealand companies in this area have been incubated from and started by growth companies, so an aspirational vision to recognise and support differing paths is crucial to the creation and retention of local jobs. In 2014 and 2015 many of my friends and fellow business owners moved their businesses to Sydney and Melbourne, taking their growth and jobs with them. Now their revenue is generated in Australia where it is kept and reinvested. We need a strategy to support and retain the growing businesses in our regions, in parallel with the support we give startups for the optimal result.

NZRise will be hosting Wellingtons potential mayoral candidates at the upcoming ITx conference. We’re going to ask them directly how they will support our growing businesses and growing sector, how they intend to keep us as a thriving Wellington cohort without many moving to Auckland or offshore. In the campaigns we’ve watched so far, conversations have been about core infrastructure expenditure, for example,roads, housing, and airports. All important issues but there has been no focus on growth and to date nothing from Wellington candidates offering a vision to support digital and technology companies contributing strongly to the local economy. We would wait with bated breath but we’re not confident we would ever exhale.

You can read about how the Wellington Mayoral Q&A went, their answers to our questions and more here

Leave a Reply

Your email address will not be published. Required fields are marked *