Speech to the Information Technology Association of New Zealand

Thank you Peter,

Ladies and Gentlemen

Last week I launched the Government's Bright Future action plan for the knowledge age - a $223 million investment in our future.

The Package highlighted the Government's recognition that having highly skilled people is the basis of your and our future success in the knowledge age.

We also recognise the need to step into new and uncharted areas of research in order to get to the cutting edge.

This is why we are investing heavily in scholarships to promote our brightest and best and give you the skilled people you need.

It's why we're moving our research expenditure into areas that will generate New Zealand's future wealth.

It's why we're setting up a new capital market and incubator project to help good ideas get the funding they need to get to market.

The mechanics of the launch was an excellent example of what information and communications technology can do.

We had PowerPoint presentations, video graphics, and video conferencing between 5 sites around New Zealand.

Plus the whole thing was simulcast over the Internet.

So you can see that IT has inveigled its way into the conservative world of politics, just like it is continuing to fundamentally change other areas of our work and lives.

Bright Future is about building a knowledge-based economy in New Zealand and a better future for all our people.

And the IT sector is a shining beacon of what we are hoping to achieve.

Growth in IT exports over the past five years have been substantial.

On the hardware side $134 Million in 1994 became $258 Million in 1998.

Software and IT Services exports showed even greater growth from $77 Million in 1994 to $198 Million in 1998.

The New Zealand IT sector is thriving with growth rates of around 25% per annum, and in terms of private sector R and D, it is the most active sector in the economy.

All I can say is, more please, and faster.

It is significant that New Zealand, for five of the past six years, has been the world leader in per capita expenditure on information and communications technology.

In terms of Internet penetration, we continue to be among the top ten countries in the world.

All this is a great platform on which to build a knowledge economy.

The Bright Future Package builds on this strong platform by helping to grow and integrate the powerhouse of ideas - the interface between business, education and research - that will be the source of greater wealth in the next century.

It invests in people, creativity and excellence.

The contest of ideas in building a knowledge economy has just started.

One thing is clear, it must be built on some key components.

- Low interest and inflation rates

-Flexible labour markets.

Union control was a huge barrier to change and modernisation in the 1970s and 1980s, yet the Labour-Alliance bloc want to take us back.

-Lower tax rates

People as well as capital are the key drivers of a knowledge economy. They can disappear across national borders and do if the going is greener elsewhere.

Tax rates are a key part of determining whether people stay or go.

The notion of a $200 million development fund that the Labour-Alliance bloc propose is a 1970s ideas that is little more than a taxpayer funded lottery.

Taxpayer money would be spent on projects that no-one knows will be successful.

For every winner there will be many losers.

More importantly, it does not address the key drivers of growth.

What this Government wants to do is to ensure that we equip people with the right skills and knowledge, and that we have the mechanisms to get good ideas out into the marketplace.

This Government is helping to create a capital market that generates risk capital and an incubator project that will ensure good ideas are turned into products.

The mindset typified by the Labour-Alliance bloc is the single biggest barrier to our rapid conversion to a knowledge-based economy.

Despite the wonders of communication, and the rhetoric about the death of distance, there is still a disturbing lack of appreciation among New Zealand business of how much the rules of business and trade are changing.

Take electronic commerce for instance.

All predictions for the growth of electronic commerce have so far been proved short of the mark.

Research is now saying that business to business e-commerce will be worth 1.3 trillion in 2003.

And yet the majority of New Zealand businesses have not yet got a web site, let alone an e-commerce enabled web site.

Others are hampered because they cannot charge customer's credit cards in US dollars.

This must change if we are to profit from the opportunities in the global market place.

In the future, a few Motorolas setting up in New Zealand would be a good boost for the economy - a New Zealand Nokia would be even better.

But, New Zealand's knowledge economy will likely have its own flavour.

We need to build the brand of "kiwi ingenuity" to mean excellence in ideas and their execution, complementing our clean green image.

Already successes in film, music, fashion, computer graphics, software, electronics, engineering and biotechnology illustrate the payoff of such approaches, but more is needed.

With a change in mindset, the creativity of New Zealanders can be unleashed so that we can capitalise on these opportunities, and that is what Bright Future and the knowledge economy is all about.