It’s fair to say that The New Zealand Institute’s chief executive David Skilling has the ear of the press and the Parliamentarians. This week, when he issued the Institute’s controversial position on climate change it made the front page lead of the New Zealand Herald. Of course, the other issue that the Institute is running hot on is its suggestion that a fast fibre broadband network be rolled out strategically, rather than inclusively.
We’re fortunate to have Skilling as a speaker at the upcoming TUANZ conference on the Skills Crisis in Auckland on November 6. The title of his presentation is ‘Long Hours and Low Productivity: the Kiwi Dilemma’*. I spoke to him yesterday about this topic, with the focus of our discussion being on how the weightless economy can make the New Zealand workforce more productive.
Skilling says that if the New Zealand is to improve its position in the global economy, local firms require a first-class communication network.
“We are going to struggle to compete with the US and London on wage rates. They can just offer in general, higher rates than can New Zealand. We’ve got lifestyle on our side I suppose, but lifestyle is nice to have but it’s not always the clincher.
So I think being able to position ourselves as a country where we provide a fantastic platform to conduct business from... it strikes me that communications infrastructure has got to be part of that value proposition.”
No argument from TUANZ! However, what about the Institute’s idea that the government abandon its goal of better speeds for most New Zealanders, in favour of making super high speeds for the few its top priority. While the weightless economy is a fine idea in principle, the reality is the rural sector generates much of the country’s wealth. Here’s Skilling’s reply:
“What we’re talking about here is a question around sequencing. Do you go for reasonable, lower speeds to a larger share of the population as your opening move and then gradually up the speeds? Or do you get genuinely higher speeds to a smaller share of the population first and then build out from that basis?”
The Institute favours the latter option because it believes that the most economic value can be captured by focusing on the “biggest bang for your buck areas.”
“To use an extreme example, if you think about the digital media sector where we think there’s a lot of economic value from a super high-speed connection, but most of the sector is geographically concentrated – Miramar in Wellington and Freemans Bay in Auckland…. the cost profile is lower and we think there is quite a lot of economic upside and so that could be one of the first cabs off the rank in terms of priority and then you kind of work your way down the list.”
“It’s not a case that the rural sector is unimportant or that they should be excluded from an aspiration but it’s a hard headed judgment about bang for buck or where we think the most economic value lies.”
*OECD rankings put New Zealand at fourth highest for hours worked per person (in some ways a positive ranking as it indicates high rates of labour participation) and 22nd for productivity. Skilling says Australian workers are 30% more productive than New Zealand workers and this is why their incomes are 30% higher than ours.