Paul Swain: Speech to EDS breakfast

I am delighted to be here to talk to you today. This is a very exciting time for New Zealand and in particular for the ICT sector. We are moving into a new phase of ICT development in New Zealand.

In the Government's first term I wanted to push through a number of initiatives. My focus was on e-commerce, improving competition in the telecommunications sector, and rolling out broadband.

E-COMMERCE STRATEGY

To help realise the potential of e-commerce the Government developed the E-Commerce Strategy, which was released in late 2000 at the E-Commerce Summit in Auckland. It set out the Government's vision for New Zealand to be world class in embracing e-commerce for competitive advantage. The Strategy contained approximately sixty actions for Government, almost all of which have been implemented.

The e-commerce drive continued in 2001 and 2002 with regional e-commerce roadshows and the work of the E-Commerce Action Team. I hosted a function earlier this week where members of ECAT released their final report, as they phase out their activities after more than two years spreading the e-commerce message and facilitating the implementation of the Strategy.

ECAT is a successful example of government and business working together to improve conditions for the economy as a whole, and it can take much of the credit for lifting the profile and understanding of e-commerce.

In order to make it easier to do business electronically, in October we passed the Electronic Transactions Act. It is based on similar laws overseas and is comparable to Australian law. It will come into force once regulations are made to provide safeguards in certain circumstances.

E-GOVERNMENT

A decision has been made that GoProcure, the proposed whole of Government online requisitioning system, will focus on creating a "core transaction hub".

This means suppliers will need to maintain only one catalogue, and establish only one interface to sell electronically to many government agencies, reducing costs for many businesses wanting to get involved in e-commerce. The Police and the University of Auckland are to be the first users of the GoProcure hub.

The New Zealand Government Portal, www.govt.nz, has been operational since last year. It is designed to be fast to load and easy to use, and is based on the use of a single metadata standard by central and local government.

The Government's business portal will also be launched soon, providing information to businesses and a further reason for businesses to get online.

TELECOMMUNICATIONS

To improve competition in the Telecommunications sector the Government passed the Telecommunications Act in 2001, and a Telecommunications Commissioner was then appointed. Disputes are referred to the Commissioner for a ruling. I am happy with the progress so far and I am confident he will have a positive influence in the future.

A key recommendation in the E-Commerce Strategy was for the Government to "explore innovative ways to facilitate private-sector provision of better access to electronic communication services for rural communities."

We have launched pilot projects in five regions to test the potential for bringing together demand for broadband in a commercially attractive way. This led to the development of Project PROBE.

PROJECT PROBE

Under this project the Government has a goal of providing all communities with access to broadband by the end of 2004. Tens of millions of dollars have been set aside.

A secondary objective of PROBE is to increase competition in the telecommunications sector outside metropolitan areas. The PROBE budget allows for some underwriting of the costs of new infrastructure, in order to minimise the commercial risk and provide an opportunity for new operators to enter the market.

Despite no money having been spent at this stage, PROBE has already had a considerable impact on the telecommunications market and competition has increased markedly. There is a high level of interest from suppliers, many of whom are new to this sector. New entrants include wireless and satellite operators but also power line companies looking to develop new business. In some regions new start-up operators are being formed, backed by local authorities, community trusts and private sector groups.

Under PROBE, the country has been split into 14 regions with separate tender processes. A 15th region was also created to cover the most remote areas in New Zealand that are only suitable for satellite services. Three regions: Southland, Wairarapa and the Far North, which worked parallel to but separate from PROBE, have already accepted tenders. They opted for a consortium of Vodafone and Walker Wireless. Following a comprehensive RFP process the Government is about to make decisions on tenders for the remaining 12 regions.

THE GROWTH AND INNOVATION FRAMEWORK

While Project PROBE concerns improving infrastructure in the regions, the Growth and Innovation Framework seeks to develop the economy as a whole. It was released in February 2002 by the Prime Minister and its objective is to return New Zealand's per capita income to the top half of the OECD over time. The Framework has a number of key themes: Enhancing the Innovation System Improving Infrastructure Developing Skills and Talent Increasing New Zealand's Global Connectedness, and Focussing Government's Resources

In the drive to speed up growth and innovation, the Government is focussing resources initially on three key areas, which have considerable growth potential, and also strong potential to influence growth in other sectors. These are biotechnology, the creative sector and ICT. THE ICT TASKFORCE

Currently the ICT industry accounts for 4.3% of New Zealand's GDP. If we are to achieve our goal of getting back into the top half of the OECD, the industry's contribution will need to be more like 10% of GDP.

I convened the ICT Taskforce in May 2002 to bring together private sector people with direct experience of growing ICT companies, to report on the growth potential of the ICT sector. It produced a draft report in November titled 'Breaking Through the Barriers'. I am very excited by the report as it contains challenging goals and concrete recommendations, which flesh out the Government's Framework.

The Taskforce has since undertaken further discussions with the industry and will release its final report soon. The Government will provide a full response to the Taskforce's recommendations and this should be seen as the beginning of engagement with the ICT industry, rather than the end.

The Taskforce's report sets the goal of 100 more ICT companies each doing over $100 million in sales per year by 2012. Currently there are 16 ICT companies annual sales of more than $100 million, so this is a big jump. The Taskforce has given us a wake up call. We need to focus on this target and get serious about making it happen.

The Taskforce's primary concern was growing the ICT industry through exports. The Government agrees with this but is also very interested in the potential of ICT to improve the productivity of the whole economy. With the rollout of PROBE, New Zealand will have a broadband network as good as anywhere in the world. We need to focus on developing future applications for broadband that will improve our productivity. We need to look at economic activities that are information rich, like health, education, and agriculture, and think about how ICT can allow us to move, access or process that information in new ways and more efficiently.

Growth in this sector is essential if we are to realise our objective of returning to the top half of the OECD.

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