Category Archives: Opinion

Movie Subsidies Need More Analysis

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With the Australian government now offering movie producers a whopping 40% rebate on any local expenditure, New Zealand movie-makers, concerned about an exodus to the west, are looking for parity.But can anyone name another industry that receives such exorbitant handouts?

Peter Jackson and his peers certainly deserve the many accolades they have received for bringing a world class industry to our doorstep, but does that mean we have to heavily subsidise it with public money? The industry already receives a 15% rebate for local spend under the large budget screen production scheme. Post-production work performed in NZ also qualifies.  In addition, the film industry has been the beneficiary of government largesse in the form of large grants towards sound studio facilities in both Waitakere and Wellington. The government funded NZ Film Commission also provides co-funding for selected feature films.

The Film Commission claims that 2 million New Zealanders went to see a locally made production of some sort in the last year, so there is no question that the industry is in good heart. Of course part of the reasoning behind providing this support is that it showcases New Zealand scenery and exports our culture to the rest of the world. But I can’t think of any “large budget” local production that has done this since Lord of the Rings (although there has been several smaller budget projects). Animated productions like Halo or Tintin certainly do not showcase New Zealand, although they do help to maintain the resident skill pool.

The bottom line is that there needs to be a full economic analysis before any increase of public investment in the film industry. I’d love to know how many permanent full-time jobs have actually been created for actors, animators and technical support crews over the last five years. My understanding is that many of the crew positions are sub-contracted to itinerant workers on a part-time basis, some of whom depart the country between gigs. What has been the net increase in the tax base as a result of the growth of this industry? Given the complex nature of foreign controlled licensing and distribution, what is the actual export return from a NZ-made feature film?

Film receives most favoured status because of the perceptions of glitz and glamour and because film producers are very good lobbyists. And what politician could resist an offer of front row seats on opening night?

Research Funding Equity Sought by CRIs

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Outspoken AgResearch CEO Andy West has this week raised the volume level over the ongoing debate on the issue of funding uncertainty for Crown Research Institutes (CRIs).

University based research organisations receive public funding based on periodic review of their output performance and through the Marsden Fund. The current arrangements mean that a university PhD project on “Bogan Westies” can theoretically get funding whilst a three year CRI study on bee mites or biofuel feedstock crops might not. The CRIs argue that this is unjust.

The sometimes humourous and occasionally “ACRI-monious” shouting match between Universities and CRIs spills into the public domain periodically. But the debate has a more serious side. It’s bad enough that universities are competing with each other for funding and students but it beggars belief that our national innovation system pits talented researchers against each other in Darwinian fashion. Inevitably some worthy research projects will miss out on resources.

For several reasons I’m entirely in favour of blue skies research that explores social issues or esoteric science which may have no immediate obvious commercial return. Firstly we need to cultivate a pool of intellectual talent across the entire research spectrum and not just in the physical and biological sciences. Secondly, non-commercial research sometimes has unexpected commercial applications and frequently involves building international linkages with agencies and researchers abroad, which can lead to profitable collaborations downstream. Finally supporting a diversity of research is the responsibility of any open and inclusive society.

But as AgResearch point out in their 2020 blueprint for agricultural sciences research in New Zealand, over half of our national income is derived from exporting agricultural produce. Is it fair then that agricultural research organisations feel so hard pressed obtaining secure and long term funding for research that underpins the growth and especially the sustainability of this enterprise?

Digital Strategy Not Just About Laying Fibre

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A while back I waxed on about how we needed some clear thinking around the Digital Strategy Summit. Now the economic development ministry has appointed a high flying former Telecom executive to manage the Digital Strategy policy revamp and talk up the strategy event to be held in November.

My concern about the summit event is that at $795+GST for registration (plus airfares and accomodation), the consultation process is aimed squarely at large corporate concerns. These firms are likely to be primarily interested in promoting their agendas in terms of either preserving the existing network hegemony or else positioning themselves for any government funded broadband rollout in the future.

The Digital Strategy was supposed to be about building capability around connection, community and content. But it is not clear if ordinary webizens will get access to the online forums and wikis being proposed. So I’d like to know who at the summit will be representing the wider community and the developers of digital content. If the summit fails to engage at grassroots level then surely it is over-looking the fundamental intent of Web 2.0?

There is some relief in sight however. TUANZ members are being offered a pre-summit event early November in order to collate their viewpoints. There is also now a report suggesting that a limited number of discounted places at the summit will be offered to “community organisations and young people”. The summit itself will be webcast, so interested parties and those of us without corporate charge cards can at least adopt fly-on-the-wall status.

Are We Overinvested in All Blacks Brand Culture?

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I’m not qualified at all to comment on the detail of the All Blacks embarrassing departure from the World Cup. In fact I don’t even follow the game very closely. What I do know is that as a nation we are far too psychologically invested in the fortunes of fifteen sportsmen.

The NZRFU marketing machine has to accept full responsibility for putting the team on such a high pedestal, in order to feather its nest with huge sums in sponsorship. In fact I’m surprised the team members have time to attend regular practice sessions given the demands to appear in a wide variety of TV commercials promoting airlines, credit cards, sportswear, food and beverages and even underpants. As an “iconic” brand the All Blacks have over-promised and under-delivered. It all looks rather like marketing hype gone mad.

But what concerns me most is that so much of our national self-esteem hangs on the All Blacks performance. New Zealand has so much more to offer than rugby, hakas and bubbling hot mud pools, but we cannot seem to move beyond these cliches. It’s cringeful at times. 

If our emerging technology companies could secure even a tenth of the media coverage and financial backing that the ABs get, imagine how beneficial this would be to the economy. What if our brightest science researchers could get proper long term funding sponsorship and didn’t have to head overseas to make a living.Then we really would have something to celebrate. We need some new heroes.

Will NZ Miss the Pacific Cable Boat?

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Apparently Google are engaged in talks over investing in the Unity cable project aimed at spanning the Pacific Ocean with terabits of new bandwidth. It could turn out to be a wise investment on two fronts. Firstly there is obviously a return on the revenue generated by digital traffic. But secondly it ensures that the burgeoning middle classes of Asia-Pacific have ongoing high speed access to applications hosted in America, amongst which Google is aiming to become the provider of choice.

A lot of commentators are talking like Google is setting itself up as a telecoms operator but this is not true. Google may have the cash, but it does not have the expertise to contemplate such a project. The word is that Google are in fact talking to an Australian telco about the new venture.

 Unity is not the only initiative aiming to add capacity across the Pacific. Verizon are working on a project linking to China and North Asia and Southern Cross have just commenced a major upgrade of the cable that links Australasia to North America. All of which is good for consumers because as domestic networks improve, so the demand for international bandwidth increases.

The slow rollout of domestic high speed bandwidth is often upheld as the reason why we will never see a Google or a Bebo spring out of New Zealand. But it looks more and more like a U.S. centric hub and spoke kind of network, everywhere you look now. Naturally providers of innovative global digital content and services then look to the United States as the preferred site to host their offerings. I think that is why we do not yet see anything special built and hosted here in NZ, despite the fact that digital creativity abounds.

In fact there was a visionary project about five years ago called “First Light” that aimed to set up a direct NZ-Singapore cable. The project failed because of difficulty in negotiating “last mile” access at the Singapore terminal. In retrospect it is now clear that New Zealand missed a major opportunity.

Crunch Time for Buy NZ Made

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For the last few months I have been wondering why my favourite crunchy peanut butter just doesn’t taste quite as good as it used to. Then recently I heard a radio interview that mentioned how Sanitarium had shifted much of their operation to Australia and then subsequently outsourced peanut butter production to China. Sure enough – upon inspection I noticed three words in tiny print on the bottom corner of the label – “Made in China”. I recoiled in horror.

Now apparently because of sensitivities around trade barriers, there is some cautiousness about enforcing the labelling of some products with country of origin. So we now have (another) paradoxical situation. On the one hand the government has committed to pursue the “Buy NZ Made” policy, whilst on the other it feels obligated not to offend trading partners who are currently flooding the nation with cheap (but inferior) imported goods.

It sometimes feels like we are giving away our sovereignty when we look at how much of our consumer goods are now sourced from offshore. I actually don’t mind paying a few cents more for a New Zealand made food product that tastes better, because I know that it won’t end up in the waste bin half finished!

But is the “Buy NZ Made” campaign going to make a difference? I’m not sure that you can legislate to control consumer preference. Yes I would like to see more “NZ Made” labels on local products, so I can make an informed choice. But retailers have already got the message loud and clear from their customers and are voluntarily labelling goods anyway. And isn’t there already an existing organisation with a recognised logo? Why spend a bunch of my tax dollars reinventing the wheel?

The good news is that Sanitarium have just announced that they intend to recommence producing a line of traditional “more local” brand of peanut butter. I wonder if they appreciate the irony in the fact that it will still be manufactured in the Australian plant?

A Mighty Kauri Has Fallen

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The news of Sir Angus Tait’s passing will no doubt be greeted with much sadness throughout the New Zealand business community, but especially that of the Canterbury region. Tait was appropriately regarded as the founding father of the local electronics industry with his firm Tait Electronics rising to become an export pioneer and role model for many across the ICT sector. That Canterbury has a thriving technology sector is in large part due to the family of firms that arose from and clustered around Tait.

Even at the age of 88, Sir Angus was still actively involved in the business and was often called upon to speak at industry events, meet with business delegations and sit on various boards. Tait was also passionate about reinvesting into research and development and helped to broker linkages between academia and industry. Few individuals have played such a pivotal stewardship role in the technology industry and he will be sadly missed indeed.

ICT-NZ Repels Aardvark Attack

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Bruce Simpson’s withering attack on ICT-NZ was a bit like a small furry mammal dismembering a termite nest, but it has brought supporters of the proposed ICT industry supra-organisation scurrying to its defence.

Kudos to Garth Biggs for fronting on Simpson’s blog to respond to some fairly searching questions (and some rather ill-informed criticism). There has been so much rumour and innuendo circulating in the industry about what ICT-NZ is up to that this impromptu blog debate has been quite a tonic. Given the amount of public funds already spent on websites by both ICT-NZ and HiGrowth it is somewhat surprising that there is such a paucity of public information available on both initiatives. The intentions are good, but communicating the vision out to the communities of interest has perhaps not been such a roaring success.

It will be a positive if Biggs gets the cash he needs, but he may have a hard time loosening the purse strings. Despite some nice successes in the past, governmental agencies are generally bailing out of supporting super networks, expecting them to be self-sustaining these days. Instead the focus is now on smart niches in the ICT community where they can generate measurable outcomes more quickly. Examples of this approach include Land New Zealand, UCi3 and NextSpace.

Forget termite mounds, ICT-NZ and Hi Growth have still got some mountains to climb. Just how do you amalgamate a highly competitive $15 billion industry under a single flag anyway? Given that ICT has become somewhat of a political football lately, it seems like a tough job.

Broadband Treading Water

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The news that even third world nations are getting on with the job of rolling out broadband comes as no big surprise. If 300 million global users are now accessing the Internet through high speed networks, then that is a market segment New Zealand simply cannot ignore.

Whilst we continue the academic debate over telco restructuring and the benefits of fibre versus wireless, other countries are getting on with connecting their businesses and emancipating their burgeoning middle classes through fast access to digital content.

New Zealand is brimming over with digital creativity, whilst emerging economies are crying out for it. It’s bad enough that our domestic network speeds are intermittently slow and patchy, but there is clearly now a tangible opportunity cost because our connectivity to the rest of the world is not that flash either.

We have a very fast research network with very little traffic, I’m told there is spare capacity on the Southern Cross cable and there are a number of high speed urban networks in operation or being planned. Surely digital content and applications providers would pay a small premium to be hosted within a high speed network environment with global reach?

What I cannot fathom is with all the smart people involved in the ICT industry in New Zealand, why nobody seems capable of making a good business case. If we don’t do this soon, then the most exciting digital offering to come out of NZ will likely be websites flogging insurance or similar.

Govt. Gets Wise to Web 2.0

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David Cunliffe outlined his government’s ICT agenda in a speech to public service CIOs last week. As minister of all things to do with ICT as well as economic development, he is in a unique position to influence outcomes. Achieving better productivity and enhanced connectivity has never been more important to our economic well being. So it bodes well that we have a Minister who is fronting up and paying attention to the very industry that can enable those things.

At the same event, visiting experts implored the government to get on board with Web 2.0 and start using web technologies to engage with its constituency. The State Services Commission have (finally) heard this message and are now involved in developing a state services framework for online participation.

To their credit the commission have invited a small community of interest to contribute to the policy formation process. Encouragingly, the consultation process makes use of the very technologies being proposed as part of a new toolset to bring government agencies closer to the people.

The only variable missing from the equation is that the government heads of departments have not yet been widely consulted on the policy proposal. Government agencies are brimming over with staff and there is an election looming on the horizon. Implementing an e-participation plan that actually empowers the public, increases transparency and contributes to productivity may yet prove unpalatable within certain quarters. A few government agencies are already well advanced in their use of Web 2.0 technologies and having a cross government standard, sooner rather than later, would be a good thing for service providers and the public who will be the end users.