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How to remain a first world country

01 May 2010

The current government has a goal of New Zealand catching up with Australia. This is a good goal, because as a nation we are hanging on to first world status by our fingertips. If we want our children to choose to live in New Zealand, and to have a good standard of living, then we need to get on with the job. Four ideas that could help us make progress are:

1. Smart Water: The Romans, Egyptians and Greeks built civilisations through smart water management. It is not that New Zealand is running out of water, it’s that water is running out of New Zealand. And if it is supposed to get a bit warmer it will be those countries that have water storage infrastructure which will navigate though potential practical challenges the best. MAF estimated that the last drought cost over $2.8 billion. We need to fix it, and broadband is a critical part of the answer.

2. Smart Minerals: New Zealand is big. Our land mass is 67% the size of Germany’s, 72% of Japan’s and bigger than the United Kingdom. Our coast is longer than mainland USA and our economic zone of around 4.1 million square kilometres is the eighth largest on the planet. It just makes sense to look under the mat to see what is there. That’s all Australia has done. Our top two exports to Australia were crude oil ($1.949 billion) and gold ($556 million) last year. Again broadband is critical to sustain this industry.

3. We need more big intellectual companies based here in New Zealand. While Fonterra is basically New Zealand’s sole multi-national, we’ve also had great starts based on agricultural intellectual capital in the form of the Glaxo in GlaxoSmithKline and Nufarm. Both started in Palmerston North and turn over $NZ62 billion and $4 billion respectively. But both are no longer based in New Zealand, suggesting our capital markets may lack some depth and breadth as well as, perhaps, an outdated view that they needed to be closer to their larger markets. The world is getting a more crowded. With ultra-fast rural broadband we could offer a lifestyle unrivalled on the planet and break the tyranny of distance.

4. Broadband: Another hundred-year solution we have pushed hard for is investment in rural broadband. We are doubling public debt over four years and we need to ensure we future-proof New Zealand in terms of our ability of shift data. In our view the Government didn’t quite get it right the first time with its rural broadband policy. $48 million out of $1.5 billion for the most productive sector of the economy that produces 65% of all we export didn’t quite make sense to us, especially when the most sparsely populated 25% of the population is where the market fails. Broadband is the next big enabler, so our rural communities need it, not only to increase productivity and production, but to ensure we do not have a digital divide socially.

However we now have a decision from government that recognises technology changes. It sees changes to the TSO and a new levy which will see a further $250 million to be invested in the rural fund. I won’t go into our views on all the technical issues around this, as we are where we are. The key now is to make sure that the available resources go as far as possible to as many people as possible at as high a speed as possible.

There are some critical issues that we need to make sure we get right. These include targeting at least 100Mbps for farmers (not 3-5Mbps), the price of interconnection between different parts of the broadband infrastructure, ensuring that costs of rollout are realistic, getting demand going, and getting to as many farms as we can. It’s not just about schools – little Sally needs to be able to learn stuff online from home as well as at school

We recently held a ‘Farming in the Cloud’ day in conjunction with Xero where we had 15 presentations from providers of technology that need broadband to work best. Like the iPhone, once we build the infrastructure, the applications will follow. These are a new wave of tools that will help New Zealand, and its agriculture industry, remain at the international forefront.

Let’s get it right to stay in the first world.