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The pandemic has certainly highlighted the importance of digital technologies. Companies with digital business models have been able to operate during various alert levels without significant revenue loss and many have grown. Companies relying on digital infrastructures and processes have also been able to keep operating smoothly. In a nutshell, the ongoing digital revolution has been significantly accelerated by the pandemic.
The way governments manage and navigate the digital transition will continue to significantly determine their country’s prosperity for many decades. Not only are digital technologies critical, so are the skills required to develop and manage them. According to the European Centre for Digital Competitiveness and the World Economic Forum, the way governments respond to this situation will define the progress of their nation for years to come.
Unfortunately, in the just released Digital Riser Report 2021, New Zealand is not progressing well, compared to many nations. The report considers how governments managed the transition, driven by digital technologies between 2018 and 2020. Digital competitiveness is studied across two main dimensions; ecosystem and mindset. The digital ecosystem includes venture capital availability, cost to start a business, time to start a business, ease of hiring foreign labour, skillset of graduates. The digital mindset covers digital skills among the active population, attitudes towards entrepreneurial risk, diversity of workforce, mobile-broadband subscriptions, companies embracing disruptive ideas.
Since 2018, according to the study, New Zealand’s digital competitiveness has reduced 70 points. This is primarily due to issues with the ability to hire foreign labour and the lack of graduates with digital tech skills. New Zealand is not adapting fast enough.
A great example is the Digital Tech Industry Transformation Plan (ITP). Work began in 2019 and today, almost two years later, I will be reading through the latest version of the draft ITP in preparation for its presentation to Cabinet. Fortunately, the great collaboration on its development, between industry and Government means work has already begun on some of the critical areas identified. For example, the work Callaghan Innovation and New Zealand Trade and Enterprise (NZTE) are doing to support and grow a community of New Zealand cloud software companies (SaaS and Gaming). The ITP research has identified that the growth of companies developing their own intellectual property into software in New Zealand and exporting it using a cloud based subscription model has the potential to be transformational. But only if we can accelerate the success of these firms. Each small increase in the number of software firms successfully exporting via a cloud subscription model produces large increases in jobs and tax income for the Government.
However, underpinning this is digital skills. I know I may sound like the proverbial ‘broken record’, but until the Government acknowledges the importance of being able to get critical international digital skills into New Zealand, we will continue to slide backward. Productivity will get worse, not better, income taxes will decrease as high paid roles continue to be shifted out of New Zealand. The algorithms that govern many aspects of our lives will lack cultural relevance and ultimately life will be challenging for many more people.
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