ICT Sector: tick, Digital Economy: fail

The ICT Sector in NZ is increasingly getting the recognition it deserves. However, the linkages between the ICT Sector and other high-priority economic areas needs more work. Worse, there is no appreciation or drive for a digital economy.

ICT Sector

A double barrel Ministerial launch of the ICT Report underlined its importance as the first of six Sectors Reports that make up the New Zealand economy. The purpose of the Reports is to “pull together the most recent official economic data (as at December 2012) and discuss the challenges and opportunities that face New Zealand’s industry sectors… The report does not intend to draw policy conclusions.”

The ICT Report does a fairly good job in meeting that purpose. Describing the sector as “fast-growing, high-achieving”, the report focuses on the IT services sub-sector and, within that, “computer system design”. The report notes that, “Many of the initiatives the Government is implementing through its Business Growth Agenda are targeted towards the future growth of this sector”.

Linkages with other Sectors

A report that aims to “discuss the challenges and opportunities that face” the ICT Sector should not lightly detail the linkages with other sectors of the New Zealand economy. It’s not an easy task but it is vital to truly value the ICT Sector. Possibly, it is a limitation of a sector by sector approach based on ANZSIC codes but could have been explored in the Main Report.

Tucked away under the Digital Economy section is, “Firms which may be formally classified as being in the IT sector often see themselves as being part of the sector they serve. For instance, Konnect Net sees itself as part of the insurance industry, although the service it provides is entirely ICT enabled.” This illustrates the confusion in the report between cross-sector linkages and the digital economy.

There is some recognition of how the ICT Sector enables and propels other sectors in the Report but limited to crudely aggregating data across sectors.

The ICT Sector’s contribution to the New Zealand economy has therefore been undervalued by the Report. In turn, this raises the danger of under-emphasising the sector in priority, resources and policy initiatives in the future. At the very least, the Report could have taken a ‘systems approach’ and perhaps used a couple of examples to demonstrate how other sectors benefit from the ICT Sector.

The Digital Economy

Where the Report fails absolutely is in understanding and detailing the Digital Economy. Squashed into the end almost as an afterthought, perhaps it is a small consolation that it recognises the digital economy at all, something that has not been evident in previous Government reports.

While there have been several comments, mostly good, as well as decent media coverage of the ICT Report since its publication, the lack of discussion on the Digital Economy section of the report is disappointing. Why aren’t more people pointing this out? Where are the digital economy leaders? Are people who read and comment on the report actually satisfied with the way it was covered?

I found one, solitary gem in the report about the digital economy. Quoting a Forbes article by David Kirkpatrick, the report says “ICT is driving change in every sector, as these examples show; arguably ‘every company is now a software company’.” Note how again cross-linkages between ICT and other sectors is confused with the digital economy. That makes the assertion, “Exports attributed to the digital economy are between $1 and $2b, depending on the definition” highly suspect.

It’s easier to describe the hole in the Report by pointing out the good work other countries are doing. Across the Tasman, Australia defines the digital economy as “the global network of economic and social activities that are enabled by information and communications technologies, such as the internet, mobile and sensor networks.”

The Australian Government has been at it for a while. Starting with the Digital Economy: Future Directions paper in 2009, it adopted a National Digital Economy Strategy in 2011 and recently published the update Advancing Australia as a Digital Economy. Collectively, this is an impressive march towards the stated goal to “position Australia as a leading digital economy by 2020”.

I expect that every country, developed and developing, other than New Zealand has a similar vision of how it plans to maximise the opportunities from the Internet. The wide impact across social and economic dimensions in particular means that step-change is coming. Not having a written, agreed goal or plan is extremely short-sighted.

The ICT Report does a good job of looking at the ICT Sector as a silo. In the spirit of school reporting, it gets an “Achieved”. To get a “Merit”, the Government needs to detail the linkages between the ICT Sector and the rest of the New Zealand economy. But to really get an “Excellence”, the Government has to demonstrate that it ‘gets’ the Internet and the digital economy.

All in all, the ICT Report is another missed opportunity for New Zealand to get its act together.

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3 thoughts on “ICT Sector: tick, Digital Economy: fail

  1. I haven’t read the ICT Report in any detail, but I have skimmed the updated Australian report. And yea, they appear to ‘get it’. Viewing the future through the rear vision mirror of history, helps some folks, and not others. So it is with those who ‘get’ what a digital economy looks like and those who don’t. In the online identity space where I spend much of my day, the majority of the smart folks there understand what a digital economy enabler it has the potential to be. Take the current thinking around GST on online purchases for example. It’s OK that a few folks think about how to apply an old world economic model to a rapidly changing new one, *provided* you have some other folks thinking about how to get NZ at the forefront of the new economy..one without borders and the associated barriers that old world economics relies on. I’d love to see those folks crowd source what that future state looks like and engage in the subsequent dialogue that puts the hard stuff on the table to be wrestled with – even if there is no answer right now. What is more important at this point is awareness. Without awareness, it’s a case on continuing on day by day ‘not knowing what you don’t know’..

    • The purpose of the ICT Sector Report was to highlight opportunities. That’s something that can’t be a rearview mirror view. So you’re right in terms of getting a dialogue going rather than keep missing the chance to do so.

  2. Pingback: Brasil Economia Digital » Blog Archive » ICT Sector: tick, Digital Economy: fail | Internet Ganesha

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