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Is our future in tech?

7 November 2017

Australia calls itself "the lucky country" but I think they're only the second luckiest country. New Zealand must surely outrank the West Isle when it comes to luckiness.

Australia is blighted by drought, an overwhelming number of poisonous creatures (over and above that represented by politicians) as well as incredibly hostile climatic conditions in some regions. Tropical cyclones, permanent droughts and other extremes make huge tracts of "the lucky country", anything but.

So what about NZ?

Hell, by comparison, we have a benign climate, an abundance of fresh water and arable land, virtually no lethal insects or mammals and fewer politicians -- so what's not to like?

Unfortunately, things are changing here.

Poor management is fouling our formerly pristine waterways with nitrogen and farm run-off, to the extent that many are not fit for swimming, let alone drinking from.

The invasion of pests such as veroa mite, myrtle rust and a growing number of other plant, insect and animal pathogens is taking the shine off our previously untarnished reputation for clean, green, safe and untouched flora and fauna.

So what should we do about it -- and how can we address the need for ever-greater productivity, export earnings and wealth, without further damage to our environment?

Perhaps we should look to Oslo for one option.

For those who failed geography at school, Oslo is the capital of Norway and the Prince and Princess of Norway want to turn it into a city of hi-tech startups.

This CNN story provides a somewhat bland view of the proposal but, if you ask me, the video is obviously more fixated on the touchy-feely issues of gender and minority equality than on the more important issues surrounding the initiative -- but you get the idea.

Norway is in the unenviable position of having to work hard to replace its oil revenues with something else, as we stand on the edge of a massive transition to renewable energy.

In a very short time, oil will no longer be the lifeblood of the Western world and Norway's lack of other natural resources could see it tumbling down the OECD list of nations from a wealth and standard of living perspective.

Obviously this is a country that isn't sitting around and just waiting for the inevitable, they're working hard to explore and promote these alternative income streams and it seems as if tech is working for them.

They have leveraged their reputation as "the happiest country on Earth" to attract ambitious, hard-working, skilled and educated entrepreneurs and tech workers who, when mated up with a good supply of venture capital, have already boosted the number of new ventures by 160% in the past 12 months.

So why aren't we here in GodZone doing something similar?

Technology has already become our third largest export earner (after dairy and tourism) and clearly we are good at this, so why aren't we pouring more resources into scaling up this aspect of our economy even further?

Unlike dairy and tourism, tech ventures usually create high-income jobs that are worth having. Reports indicate that most tourism workers are on or barely above minimum wage and dairy is an industry that has become increasingly automated, offering few extra jobs for our growing population.

We have the perfect environment for attracting and fostering hi-tech startups. Our broadband is now amongst the best in the world (making Australia's NBN look like crap, which it is). We have some excellent tertiary institutions to provide a steady stream of tech-workers and can offer a fantastic range of lifestyle options for those few hours of leisure time that can be snatched between "sessions" at the keyboard or in the lab.

So how are we going to do this?

Well first of all, government has to get behind such an initiative but they have to learn that their role is not to pick winners. Politicians and their bureaucrat sidekicks have zero ability to pick winners so the whole "government funding" thing is a non-starter. Just look at how the Martin Jetpack worked out after we threw $1m of taxpayers' money at it (sigh!).

No, the role of government is to create an environment that attracts private funding and investment and which makes entrepreneurs want to choose this country as the base for their operations.

The bottom line is that this will probably mean tax concessions.

As I've said on many occasions... we need to provide an over-unity, non-transferable tax credit for startups engaged in R&D. This is far, far better than trying to pick winners because only those startups which succeed will actually end up claiming those credits. The (usually large) percentage who fail to achieve profit will not get one cent of help from taxpayers. We want to help winners, not losers!

We also need to keep these companies right here in NZ once they become profitable. That means offering a reduced rate of tax for income earned by way of exports. When an exporter gets paid by an overseas customer, the whole of New Zealand becomes richer. When a product is sold to a domestic customer, the net worth of the nation remains unchanged -- therefore, exports must be incentivised and paying a lower rate of tax on export earnings seems to me to be the best way to do that.

What do readers think?

Instead of ramping up the scale and intensity of our dairy farming (at huge cost to the environment and possibly ankle-tapping our tourism industry in the process -- should we instead pour more resources into attracting and facilitating tech industries to this country?

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