Policy Issues Arising from the Kenex Case Study
The Kenex case study illustrates a real need for the Government to address its role as a holder of the property rights to considerable quantities of information, the value of this information in the processes for which the Government collects the information and the potential value that this information may have in stimulating the creation of greater stocks of knowledge and information products that will add value to the New Zealand economy. Whilst it is acknowledged that information relating to individuals may need to be treated differently to other information, there is potential for the Government to both directly contribute to growth of these industries and act as a role model to other holders of property rights to information stores. This requires the government to address the question of whether the profit objective of CRIs is at odds with the role of government as a promoter of research for the public good. If making a profit from the information is still an imperative, then the use of joint ventures with the private sector must be more seriously considered. The current model appears to inefficiently bias the quantity of research undertaken downward and the cost upward.
Secondly, the Kenex case illustrates the role of Government as a seeding ground and joint venture partner for sustainable businesses based around information products. The genesis of Kenex came from within a government department and a CRI. The individuals concerned were aware of both the availability of the relevant information and the opportunities that it offered, and the initial pilot project resulted from a joint venture between two crown-owned entities. In this sense, the relevant crown-owned entities have "accidentally" acted as an incubator for the creation of viable information-based business that emerged, in a manner similar to a classic innovation incubator. If the information that stimulates the creation of such ventures is in government ownership, then partnership with government in the initial research and development stages of these businesses may well be apposite. However, Government must also be aware of the role it can play as a partner in research with the private sector in addition to controlling the agenda either overtly through direct funding or covertly by discriminating against private research using public data.
Both of these policy implications, however, require government to recognise the information it owns as an asset, and the research and development of processes utilising the information as a way of generating a return on that asset. This is in direct contrast to treating information and its collation, maintenance and storage as a cost to be minimised, and publicly owned data a commodity from which profits can be extracted using discriminatory pricing. It also challenges government to make decisions about whether it wishes to be in any of the businesses of managing the databases (that is, "owning the data"), managing the research processes (that is, controlling the research agenda either directly by commission or indirectly as a research partner), or operating the new businesses (that is, "owning the processes" following creation) in the long term. The Kenex business could have been continued within the government joint venture ownership, but it is debatable whether the incentives or opportunities would have existed to develop the horticultural applications if the focus had remained solely on minerals prospectivity. Only by understanding the underlying contributions of each component to the value chain can such decisions be made in each individual case.
Furthermore, if Government is to provide advice and financial support to businesses operating in the knowledge creation business under the aegis of its "knowledge economy" strategy from entities such as BizInfo and Trade and Enterprise New Zealand, then those setting the policies and criteria and those dispensing advice must be fully cognisant of the distinctly different economic characteristics of information products to ensure that the advice given is sound, and that the potentially most valuable businesses are prioritised for receiving support from limited budgets. From the Kenex case, it must be questioned whether, at the current point in time, there may be some doubt about the ability of the current processes and individuals to achieve this effectively.
Government has a responsibility to address these questions in relation to all of its roles as owner of information, regulator and policy-maker.
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