The Day After

On Sunday we woke up to – well pretty much the same flavour of government we had the day before, thanks to voter apathy and one or two quirks of fate. Although Prime Minister Key has predictably adopted the position of “business as usual”, the next three years look anything but usual.

Saturday’s election outcome was fairly consistent with what the polls had been predicting in the week prior. But the returning National government will need to tread warily and not drift too far right. With 48% backing from two thirds of the enrolled electorate meaning only 32% of the adult population has their support. If parties on the Left can better galvanise voters in 2014, the outcome may be very different.

There was some good news in that potentially disruptive, extremist political parties ACT and Mana had their support base obliterated. The one exception was Epsom where greed and stupidity seems to have prevailed. Even the Labour voters in that electorate wasted the opportunity to excise their controversial and divisive former mayor. It may be a moot point, with the ACT party imploding on election night and Banks set to become a National minister in all but name.

The other piece of good news was that the Greens achieved their goal of topping 10% in party votes. An astounding effort after intelligently repositioning themselves over the previous 18 months since the departure of some of their looney fringe elements. The Greens deserved these gains and I hope Key will continue the relationship which has already seen the adoption of some of their more sensible policies. The Greens were also the party that proposed a clean technology fund for New Zealand companies in their manifesto and who have made a commitment to clean up our cow shit infected waterways.

It’s clear that Europe isn’t out of the economic woods yet and China may be on the verge of deflating. A steady hand will be needed on the tiller in the medium term. National would do well to form an inclusive government that sets a cooperative tone for the challenges that lie ahead.

Where Are We Going?

I’ve been trying to make sense lately of an avalanche of economic news and social data that has overtaken us and in particular has implications for the young and disenfranchised worldwide.

On the one hand bankers, politicians and media magnates in suits have got away with crimes that seem only to empower the apparatus of what is looking like an increasingly discredited and ailing economic system. On the other hand looters are venting their anger by targeting the very consumer goods produced by that system. It’s hard to separate the looming economic collapse from the steady erosion of morality across society in general, yet the traditional media at first seem reluctant to make that connection. Perhaps because they are entirely complicit.

Phone tapping and gross invasion of personal privacy were the hallmark of Murdoch’s now discredited tabloids. Perhaps the tattle tale gossip was a tonic aimed squarely at deflecting attention by the masses from the really big issues facing the world? At first glance there may seem to be no connection between double-dipping politicians, eavesdropping media and riots. But England is clearly a nation in crisis on many levels at present and where England goes others in the Eurozone are sure to follow. That has implications for global sentiment, which impacts on small trading nations such as ours.

Now Prime Minister John Key is promoting a poor card for young beneficiaries in an effort to curb welfare dependency and the misappropriation of state funds. Isn’t this precisely the kind of misdirected, pandering politics that brought England to its knees? More importantly, where is the leadership vision that will drive meaningful economic growth, promote education and create jobs for young people instead? There was one good news story however. According to a recent report on the economic cost of failing to invest in early childhood, it turns out we beat Turkey and Mexico in an OECD ranking of social spending in this area. That is simply embarrassing.

Where are we going?

Parting Of The Waters

Matt McCarten’s piece in the Herald last weekend once again laments the passing of waterfront unionism and 1950s style welfare. But it teaches us nothing at all about the real reasons why the exodus to Australia continues unabated, nor about the real challenge that lies ahead.

Our kids aren’t leaving because welfare got dismantled, nor even because silly old men say dumb things in public sometimes. They are leaving because successive governments of all hues have consistently failed to create and pursue an overriding grand vision that diversifies the NZ economy away from relatively low value agricultural commodities and tourism towards applied science, technology and value added services. They are also leaving because we live in a much more open and global society than the one he longs for.

I agree with McCarten that concerted attempts to lower wages for youth are misguided. We actually need to increase per capita income – across the board. That means creating more opportunities to generate wealth and it means cultivating a highly educated workforce that thrives on such opportunity and has a sense of purpose. We can’t compete on size, so we must compete with our brains and our wit instead.

I believe New Zealand is already at a cross roads. Whilst on the one hand we have recently suffered the worst recession and most devastating natural disaster of our lifetimes, we also exist at a time in history when two huge global economic powerhouses are emerging on our doorstep. Instead of lamenting the loss of skills to Australia, we should be working in close partnership with our western cousins to build global companies that are capable of taking our talent into these developing markets. Parting the waters of the Tasman Sea need not be a negative.

Our children have become the first generation of global citizens that have been digitally connected since birth. It may not matter that they reside in Sydney but commute to an office in Auckland or Shanghai. What matters is that we instill a deep desire to build something that creates value for New Zealand. Kiwis should not be discouraged from going global, they should be emboldened. Next week I’m heading to the Ice Ideas conference. I’m looking forward to being inspired by fellow entrepreneurs who have done exactly that.


Wrong Thinking From Right

This week it was reported that our Deputy Prime Minister and Finance Minister gave a speech to a select group of Australian and New Zealand business and governmental leaders. The tone of his presentation made me realise he’s finally thrown in the towel. The government’s astounding vision for New Zealand now apparently involves us becoming the Mexico of the South Pacific, by which our undervalued labour force and weak currency are to be re-branded as “competitive advantages”.

Mind you, I have to credit John English for using the current round of budget cuts as an excuse to quietly terminate Don Brash’s ridiculous 2025 Taskforce on “closing the gap” with Australia. The gap is already wide enough to comfortably sail a small fleet of supertankers through it, so the only sensible thing to do now is work closely with Australia to jointly develop high added value products and services for burgeoning Asian markets. Attempting to compete with or catch up to Australia is so completely the opposite of the approach we should be taking that I barely know where to begin.

Grappling with what is quite possibly the worst economic crisis of our lifetimes; standing amidst the quicksand of quake wreckage and floundering financial institutions, one could perhaps be forgiven for acts of desperation. But within the same spirit of collegiality shown by our cousins from the West Island, who mucked in and helped in Christchurch, now is precisely the time to talk more about regional associations and tighter cooperation and not how we can under-value ourselves in order to steal a few crumbs off our neighbours’ table.

Shaken and Stirred

Politicians and dignitaries emerged in a sombre mood from the meeting house at Waitangi earlier this month, after a local kaumatua stood up and pronounced that a major city would soon be destroyed by an earthquake. This week New Zealand experienced its worst natural disaster of modern times when Christchurch, our second largest city, was badly damaged by a devastating quake. After a tough year in 2010, this event is likely to have severe repercussions for the entire nation both in economic terms and for morale in general.

It was bad enough that Christchurch took a hit in September, but this event is much worse. Officials are already talking about the possibility of a final death toll in the hundreds and over $6 billion in repairs being needed for the stricken city. Residents must be shocked at how their lives have been turned upside down. For the rest of us, the situation seems surreal and we feel powerless to assist. But this is the scenario we’ve been taught to prepare for all our lives. We just never expected it to happen in the garden city.

Seismic and volcanic upheavals are a fact of life in a country like ours; we sit astride two very active tectonic plates. The forces that built this land can also destroy it. In the short term, the remainder of the nation will need to step up to support our southern cousins. That could mean some form of additional taxation. It will almost certainly mean a dent in our fragile economic recovery. Apart from the pure financial cost, it is hard to focus on productive work when friends and family are suffering and horrifying images of destruction are being broadcast into our homes. If we are to help Christchurch rebuild, we must ensure economic growth continues throughout New Zealand.

* We’ve compiled a list of web-based resources on the iWantMyName NZ blog, for anyone who is worried about missing persons or is keen to help in some way.

Bank You Very Much!

Over the last year or two I’ve learnt a lot about banks and especially the ways in which they don’t serve their customers. When are we going to build a technology that solves this pain?

Managing an online e-commerce platform means you simply cannot avoid the bureaucracy that is the global banking system. You have to fill out endless forms, pay extortionate fees and generally play their silly game or get cut off. After two years of trading we took the step of opening a foreign currency account for iWantMyName. Six weeks down the track we are finally in a position to accept our first U.S. dollar transfer from our payment gateway. That’s not all. It turns out that I have to actually go into a branch each week to physically transfer money. There is no online banking facility (at least not for small businesses or individuals). It shouldn’t be that hard!

Economists and business commentators have been urging us to participate in the “weightless economy” and go global. Banks on the other hand have no interest in uploading risk by dealing with more small companies. Banks and financial institutions have a vested interest in the status quo and are reluctant to allow a frictionless flow of capital across international borders. Of course if you are a large enterprise, the banks will bend over backwards for you. I’m sure the financial controller at Fonterra doesn’t have to pop down to his local branch to sign a form to transfer a few million Euros in proceeds from the latest global milk auction.

Amazon, PayPal and even TradeMe gave us a taste of what a universal payment system might look like; but these services remain heavily dependent upon the existing banking system because your credit card or bank account is involved at some point. But it’s a starting point at least. Notably, there are increasingly vocal calls for a completely new value system involving the Internet that enables easier payments and that excludes banks altogether. For example, with some services you can perform virtual tasks to earn bartering credits. But that won’t pay my rent or buy me dinner – at least not yet.

Money is a deeply ingrained social institution around which economic commerce has conveniently been constructed. It has no inherent value in itself yet leads to huge inequity in society. Creating a safe, universal online payment system that not only circumvents the banks, but also engenders trust is possibly the greatest challenge facing developers and entrepreneurs today. Let’s do it!

100% Puree

The recent media clamour criticising Tourism New Zealand’s new campaign threw up some intriguing responses from a seemingly random selection of  “marketing experts” who had been canvassed for their views, but who completely missed the real problem with the new approach.

With New Zealand already ranking as third strongest “country brand” for tourism last year, you would think that Tourism New Zealand might think twice about giving up on their successful twelve year old promotional style that focuses on New Zealand’s natural attributes such as landscapes, flora and fauna. 100% Pure New Zealand has evolved into 100% Pure You. I’m not sure if that is a reflection on our increasingly tenuous environmental credentials or the fact that the next generation of global travellers are more self-absorbed. Perhaps both.

The new campaign is obviously a response to the Aussie battle cry “where the bloody hell are you?”. All of the actors in the video clips are youthful, white, middle class, which not only belies the multicultural nature of Australian society to which it is targeted, but also politely ignores the fact that the fastest growing inbound tourist sources are in fact other places like China and India. The new campaign strengthens the message that New Zealand is all about hedonism and short term gratification – a message that resonates with young backpackers.

Unfortunately backpackers have the lowest per diem spend of any segment in the market. Shouldn’t we be focussing on attracting more of the upper end of the market? Don’t get me wrong. I’ve backpacked all over the world myself and it was character building and great fun at the time. I’m not for one minute suggesting we limit access on the basis of disposable income. I’m simply suggesting we revisit where our tax dollars might best be spent for greatest return.

Tourism is a huge part of the New Zealand economy, but it has a considerable environmental footprint and creates little ongoing value. It’s all about extracting short term gains from renting as many seats as possible. Jobs in the tourism service sector are generally amongst the least well paid. Perhaps we need fewer “freedom campers” pooping on our roadsides and more doctors and their families from Bangalore enjoying our sparsely populated geographic beauty. Dare I suggest it, but maybe we could also get them thinking about investing in New Zealand, whilst we have their undivided attention.

2010 Rocked Us, Roll On 2011

To say that 2010 was a year full challenges and opportunities is somewhat of an understatement. For many people in business it was a case of  hanging in there as a recessionary economy misfired and struggled to get up off its knees. But much worse than this, New Zealand (and in particular the south) was stricken by the triple tragedies of a huge investment business failure, a destructive earthquake and a terrible mine disaster. Whilst these events provided a much-needed distraction for the government, they were devastating for the people directly affected and shocked all of us.

When national morale takes a hit, I’ve noticed the economy tends to suffer as well. Good spirits lead to more spending which in turn leads to more optimism. It’s a virtuous circle. On the plus side, we have been sheltered a little from the storm by high global dairy prices and the fact that our banks are stable and government debt not completely out of control like elsewhere. But there’s still lots more work to be done on diversifying the economy and I don’t think we should rely entirely on the Thugby World Cup to reignite our passions in 2011. We can’t afford to sleepwalk through another year.

The government needs to be looking at providing a more aspirational science and innovation framework that goes well beyond moving the deck chairs around with yet another departmental restructuring. In the lead up to the election, we also need to start thinking about reforming our entire legal system. When a senior judge thinks it’s ok to preside over a court case involving a business partner and peeping toms get longer prison sentences than drunk drivers who kill and maim, we know we’ve got a serious problem.

On a personal level I had the immense satisfaction of working with two great teams. The first was the crew at ideegeo from whom I learn something new every day. We headed into our third year of domain renewals this month at iWantMyName and grew revenue at over 200% during the year. We also addressed some growing pains by improving our platform technology as well as our management systems as we position for the next chapter. The most exciting aspect of going global with the technology was that we secured a core following of early adopters amongst the developer community worldwide that may open some interesting doors for us in 2011. Watch this space.

My other team are the good folks at the Unlimited Potential committee who help bring the coolest events to the ICT community here in Wellington. We had a very busy year with a strong focus on promoting technology entrepreneurship through a number of well supported events. We also completed our wonderful new website. All of this was achieved in a very tough funding environment. Because of UP activities, teams got built, tech businesses were started and people found jobs. Real life social networking is important. Thanks to the supporters who made it happen and let us know if you’d like to get involved as an event partner or committee member in 2011.

Best wishes for a safe and happy holiday season and a prosperous 2011.

Paul Henry Comments Out Of Step

Paul Henry’s ill advised on air comments suggesting that New Zealand’s Governor General was not fit for office because he neither looked nor sounded like a New Zealander demonstrated how disconnected the “state broadcaster” and its talking heads are from the real world. Worse than that, I found highly offensive the implication that an idiot like Henry speaks for all of us.

Television New Zealand spokesperson Andi Brotherston leapt to Henry’s defence suggesting that he merely reflects what society is “quietly” thinking. Perhaps that is true on some issues, but it certainly was not in this case. The record number of complaints from the public on this matter suggest that Henry grossly misjudged the public appetite for such commentary. The public backlash was as much about disapproving of Henry’s racist tone as it was about defending the good name and dignity of the office of Governor General. Republicanism aside, the GG performs a valuable role as a representative of New Zealand and as an apolitical interlocutor essential to the functioning of a civil society. Henry’s gaffe threatens our nationhood and questions our self perception.

Even more embarrassing was that Prime Minister, John Key was engaged in a conversation with Henry at the time of the incident. However, I’m prepared to give Key the benefit of the doubt. His guard was down during (what he thought was) a moment of light-hearted banter. But one has to question the wisdom of even appearing next to Henry, given his track record. Popular technology commentator Ben Gracewood obviously asked himself that very question, because he resigned from the Breakfast show immediately the comments came to light.

TVNZ mouth-piece Andi Brotherston might be looking back fondly to less controversial days when she shared a provincial radio turntable with DJ turned Cabinet Minister Steven Joyce. Perhaps he could find a parliamentary spokesperson role for her; she might be needing it. Way back then, Joyce established a private radio station to challenge the entrenched state monopoly. Perhaps the accepted moral authority of another state broadcaster needs to be challenged once again.

If you want to lodge a complaint with Television New Zealand about Paul Henry’s racist and denigrating comments, you can do so using the online form at the Broadcasting Standards Authority website.

Does Shakedown Have Silver Lining?

Christchurch based politician Jim Anderton will no doubt be regretting his comment last week that it would take a “seismic shift” for incumbent Christchurch mayor Bob Parker not to lose the local body election fight that they are both engaged in. At 4.35am last Saturday morning, New Zealand’s second largest city was struck by an earthquake of similar strength to that which destroyed Haiti. In fact Parker, ever the gentleman showman, has risen to the occasion and must be privately elated that he has a new public platform on which to perform. The timing is also perfect for other politicians who are ever mindful of the lessons from 9/11 and New Orleans.

When old Mr Hubbard went to the cupboard and found it bare recently, the subsequent receivership of poorly managed South Canterbury Finance (SCF) and its labyrinthine and multitudinous related entities also hit the Canterbury region like a shock wave. It was a painful reminder of why we cannot continue to prime our economic machine purely on the basis of milk exports and highly leveraged property assets. Investors in the failed firm received an immediate payment under a government guarantee scheme totalling $1.7 billion. Whilst some of this cash will no doubt be recovered, it’s appalling that SCF went unchecked for so long. Ordinary taxpayers and legitimate businesses have had to shoulder this burden.

Most of the SCF payout will likely disappear into holiday trips to Surfer’s Paradise and safe but low interest earning bank accounts of the grey brigade.Very little will actually be reinvested into the productive part of the New Zealand economy. Consequently, the earthquake is a “god-send” for central government too. Apart from the immediate distraction from existing economic problems, it will validate investing hundreds of millions of dollars on infrastructure repairs. Road builders, plasterers and brick layers from all over the country will be fully engaged for months, possibly years. That may be quite a good thing.

I don’t wish to minimise the effects on Christchurch residents as they were thrown from their beds on Saturday morning. It must have been a terrifying ordeal and the ongoing psychological trauma of aftershocks will continue to play on minds. But I partially agree with some commentators who suggest that New Zealand has a high level of preparedness and that we will come through this. Now that the dust has settled, we might even see some benefits arise from this event. If nothing else, there will be a lot of learnings that can be passed on to those of us that live in other parts of the country with a history of high seismicity.