Section 2. Economic and Social Impacts
This section covers trade issues (especially in terms of work being done in APEC, OECD and the WTO), the provision of official statistics, electronic money, business capability, infrastructure, competition policy, and social impacts in areas such as education and employment together with issues to do with access to ICT in lower socio-economic groups or in isolated areas
1. Trade Issues
New Zealand has been a world leader in liberalising trade and opening markets. Electronic commerce however is changing the face of these markets. It brings into question our basic assumptions of who trades, what is traded, and where trade occurs. As well the implementation of electronic commerce processes is reducing costs and eliminating intermediaries. All these issues are set to influence our ability to compete in traditional markets and move into new markets.
These wide reaching implications of Electronic Commerce have been the focus of scrutiny in the major international fora, including the WTO, UN, OECD and APEC. All have ecommerce work programmes and between them the complete range of issues are being addressed, including tax, security and trust, building infrastructure, legal frameworks, standards, statistics and measurement and social implications.
New Zealand has participated to good effect in work in APEC, in consumer protection work in the OECD and latterly in the United Nations Commission on International Trade Law (UNCITRAL).
2. International Reputation
In the increasingly intangible world of a knowledge economy, perception is everything. We need to convey a strong positive message about New Zealand's ecommerce readiness to business and to the global community, building on our strengths, and highlighting our forward looking strategy to address the weaknesses. New Zealand should be promoted as a net-smart economy, and this should be used in any campaign to attract foreign direct investment. For example, the building of the Southern Cross Cable will help ensure that New Zealand has ample international bandwidth, making it feasible to locate a range of ecommerce activities here. Because of the environmentally friendly nature of ecommerce, being "net-smart" fits well with our already established clean green brand.
The Electronic Commerce web site is an attempt to present information about New Zealand's ecommerce readiness. While good as far as it goes, this initiative is very much constrained by limited resources in terms of both time and money.
Way Forward
While having regard to the desirability of establishing a system for priority setting in terms of New Zealand's involvement in international legal work (which has both domestic and trade implications - see Gaps) the following specific issues are identified:
Issue: Participation in APEC Ecommerce Work Programme.
- Action: New Zealand to take a strategic role in APEC consumer protection and ecommerce work in 2000. Continue to promote UNCITRAL model law on ecommerce among APEC economies. Support other elements of the Work Programme according to priorities and available resources.
- Key Agencies: MFAT, Commerce, Consumer Affairs.
Issue: Participation in WTO Electronic Commerce Work Programme.
- Action: Monitor progress of WTO Electronic Commerce Work Programme and ensure our Geneva permanent delegation have appropriate support on ecommerce issues from relevant agencies.
- Key Agencies: MFAT, Commerce.
Issue: Participation in OECD Ecommerce Work Programmecovering taxation, privacy, consumer protection, authentication, access to infrastructure and the socio-economic impact.
- Action: Relevant agencies to continue to monitor progress, participate where appropriate, and give appropriate support to our permanent delegation in Paris.
- Key Agencies: MFAT, Commerce, Consumer Affairs, IRD, Statistics, Office of the Privacy Commissioner, Department of Labour, Ministry of Social Policy.
Gaps
- Assess whether Government has a role - perhaps through Trade New Zealand - in actively promoting New Zealand as a "net-smart" economy, particularly by highlighting our strengths such as our high Internet penetration, net-savvy consumer and privacy law, and our reputation as early adopters.
- Assess the value of pursuing bilateral agreements on ecommerce, particularly with leading nations such as the US, Singapore, Australia, Canada and the EU.
Key Agencies: Trade New Zealand, MFAT, Commerce.
3. Business Capability
A key element that will deliver a future of high skills, high employment and a high value added economy, while reducing inequality, is the rapid creation of as many new businesses as possible, exploiting as many opportunities as possible - remembering that opportunities as such are virtually limitless. The bottleneck to exploiting the many opportunities available is insufficient numbers of people with business skills and experience. While a general issue, this is of particular concern in regard to Maori and to Pacific Island peoples economic development.
To foster new business creation Government has a dual role. The first is to ensure that there are as few barriers to the creation of new businesses as possible. The second is to assist in lifting business capability. To some extent these roles overlap.
Success in the new economy is dependent on New Zealand firms continuing to strive for best practice. Managers need to be more outwardly focused and aware that their firm is operating in a global environment. This is as true for small and medium businesses as it is for large firms.
In looking for new opportunities businesses need to understand that many valuable niche products or services may not have a viable market in New Zealand alone, but a profitable enterprise can still be built through exploiting the "global niche". This is an area where ecommerce delivers a distinct advantage through giving SMEs much greater market reach at a more affordable cost, and enabling them to be part of a global supply chain for business-to-business ecommerce.
In lifting business capability Government has particular roles in:
Management upskilling: Ecommerce is not just about putting up a web site, but has the potential to completely transform business models (the "how" of the business), and indeed the nuts and bolts of what the business does. Managers need the skills and knowledge to be able to think about ecommerce strategically, and the threats and opportunities its development creates.
In the bigger picture, managers need to increase their understanding of the dynamics of the New Economy, and channel resources to identifying new opportunities. How human resources are handled will be particularly important. Human resource policies will need to be developed that encourage workers to be innovative and entrepreneurial.
Larger firms are a source of management expertise for start-up and spinout companies. Such firms should be encouraged to implement comprehensive management training programmes if none already exist.
The BIZ programme is the current mechanism for delivering assistance to SMEs.
Innovation, Fostering future discovery is a key role of Government. At the most basic level Government has role to play in educating citizens to the fact that innovation is not the preserve of a few talented individuals. Indeed we now know that incremental improvements in any number of daily activities can be contributed by anyone, given encouragement and the right conditions. The economy benefits from a diverse range of people being encouraged to value their innovative ideas. Moreover, we also know that by putting our minds to it the big ideas will also come, and the opportunities will be identified.
Edward de Bono has shown that creative thinking can be taught, and any long-term innovation strategy should include teaching creative thinking through the compulsory education system - as is done in Tahatai Coast School, one of New Zealand's most successful primary schools.
The government may also fill a useful role in creating channels that facilitate the formation of collaborative partnerships. This might include providing investment readiness training, funding ideas brokers to identify valuable ideas and matching these with the expertise and skills to turn them into businesses, and providing seed capital funding to take new businesses to the point where they will be attractive to venture capitalists.
Technology development: As a part of fostering new discovery, Government usefully serves a role in delivering assistance to businesses for the technology development through the Foundation for Science and Technology and Technology New Zealand.
Maori Economic development: As many Maori are discovering, ecommerce enables them to trade with a far wider market, both nationally and internationally. Whatever the basis of Maori business, be it in the old (land, sea) economies or new economies (technologies, tourism), their viability and profitability will be enhanced by understanding how to use ICT to best effect. They can do this by harnessing the amplifying effect of the Internet to attract new markets, researching and developing new products and services, and reducing business costs. Government can assist Maori to make the successful transition to New Economy industries and improve the success of their SMEs by increasing their awareness of, access to and skills in ICT, commercial and managerial expertise, business mentoring, and venture capital.
Way Forward
Gaps
- Increase the understanding of the dynamics of networked economies among business, local government, Maori, Pacific Island peoples, and educational players.
- Deliver appropriate ecommerce training programmes and advice through the BIZ programme, and Maori-focused training programmes, and encourage industry and Maori business organisations to deliver training and information to their members.
- Develop a SME Guide to Ecommerce in New Zealand publication
- Upgrade the Government Ecommerce Web Site with more "how to" information, particularly case studies.
- Encourage and support local government, local industry and Maori and Pacific Island peoples initiatives.
- Organise several high profile events to raise awareness, provide an opportunity for networking and showcase success stories that can be emulated.
- Investigate the specific needs of rural communities, and whether and how these might be met.
- Investigate the most effective ways to enhance Maori and Pacific Island peoples understanding and actioning of electronic commerce opportunities to facilitate long term economic independence.
Key Agencies: Commerce/BIZ and BIZinfo, MORST/TechNZ, Trade New Zealand, Ministry for Maori Economic and Social Development, Ministry of Pacific Island Affairs, Ministry of Agriculture and Forestry.
4. Social Inclusion
At the recent Paris OECD Forum on Electronic Commerce it was emphasised that the maximum benefits from electronic commerce will only be derived through the widest possible citizen participation as consumers, workers and entrepreneurs. This view is reflected in the information society/economy strategies of major developed countries where the existence of a digital divide (the gap between information haves and have-nots) is seen as an economic as well as a social issue.
A knowledge economy is built upon a learning economy that is, by nature, inclusive in order to nurture and exploit the widest variety of talents and skills.
The Internet is a fundamental tool for the economic and social development necessary in a knowledge economy. Ensuring affordable access, combined with education and support to optimise the use of ICT, has been shown overseas to be a powerful method of lifting the well being of impoverished individuals, communities and locations - ultimately the capacity of the nation.2
The Internet in itself is neither good nor bad - it simply acts as an amplifier. On the one hand it amplifies existing social and economic divides. On the other hand it amplifies the opportunities to reduce those divides. Those who are e-literate and connected have access to greater opportunities by an order of magnitude. Those who are not e-literate, who cannot become connected, or who do not recognise the value in being connected, are hence left that much further behind.
Continued barriers to accessing, understanding and making use of information and ICTs will compound existing disadvantages associated with low income, low educational qualifications, sole parent families, unemployment or disabilities. Conversely, ICT provides Maori with an opportunity to redress the economic and social disadvantage which arose from the decline in employment opportunities in traditional industries in the late 1980s; a disadvantage which traditional policy responses have had little impact in remedying.
Way Forward
Gaps
To optimise use of ICT amongst as many people and communities as possible there needs to be research into the nature of the digital divide in New Zealand and how to reduce it, including:
- Identifying the extent of current individual and community access and use of ICT;
- Possible partnership models between central and local government, Maori, community sector, and the ICT industries to identify ways of increasing ICT literacy, improving access to ICT, and using ICT most effectively for community and regional economic and social development;
- Investigating bandwidth and connectivity issues surrounding rural communities' access to online services;
- Ensuring existing statistical surveys gather optimal information on the use of ICT by targeted groups and communities to allow regular monitoring of the digital divide;
- Exploring how government agencies involved in delivering services such as health, education, employment and justice can take steps to increase the ICT literacy of customers and their access to ICT.
Key Agencies: Commerce, Department of Internal Affairs, Department of Labour, Ministry of Social Policy, Ministry of Education, Treasury, WINZ, Ministry of Maori Economic and Social Development , Ministry of Pacific Island Affairs, Ministry of Agriculture and Forestry.
5. Labour Market Capability
To create as many new businesses as possible, and expand existing businesses, requires a smart labour force. In a knowledge economy the greatest asset for employers and entrepreneurs is people; the ideas and knowledge that they generate, and the skills and attitudes they develop. New Zealand has to develop, retain and attract a labour force with the ICT and other skills to support a modern information driven knowledge based economy. Individuals and organisations need to understand how to use ICT to support lifelong learning and entrepreneurialism.
While many young people entering the workforce provide a valuable source of ICT-literate human capital, 80 percent of the workforce available to New Zealand companies in the next ten years is actually in the workforce already - existing (employed or job seeking) or returning workers. We need to ensure that these workers have the skills to create knowledge-based tradable goods and services, and make New Zealand an attractive place for global investment. Arising from this is the additional issue of ensuring groups and locations with disproportionately high rates of unemployment increase their human capital to secure employment opportunities.
An increasing proportion of young people coming into the labour force will be Maori and Pacific Islands peoples. Compared to children from other communities, children from these communities are less likely to have had access to ICT either at school or in their families. They are also less likely to have developed adequate electronic literacy and ICT skills. Unless addressed this will impact negatively on individual, community and national well being.
We need to ensure that the workforce is ICT literate, for the increasing number of core and peripheral ICT jobs, the impact of electronic commerce on many jobs, and to enable the maximum participation in the Internet economy both as producers and consumers. Because technology speeds up the "creative destruction" of employment opportunities and increases the level of skills needed, we also need to instil the ethic and the means for continuous learning and development, in order to maintain employability in a volatile labour market.
Way Forward
Gaps
There needs to be a mixture of research, refocusing of existing policies and investment, and potentially additional investment including:
- Researching the nature of our current ICT skill base and the optimal ways to both retain it and increase it rapidly;
- Investigating the likely impact of e-commerce on the demand and supply of labour market skills overall;
- Refining immigration policy to enable New Zealand to attract maximum numbers of people with the skills and attitudes to advance New Zealand as a knowledge economy;
- Ensuring that policy advice around education, training, life long learning and careers information is well informed by an understanding of the key drivers of e-commerce and the knowledge economy;
- Identifying how ICT can provide businesses and workers with the means of progressing on- and off-the-job training;
- Ensuring that government investment in second chance education and training, and support for unemployed job seekers is optimal for increasing the ICT literacy and access of target groups;
- Ensuring that Maori and Pacific Island peoples are assisted to develop the skills to participate in e-commerce.
Key Agencies: Commerce, Department of Labour, Ministry of Education, Ministry of Maori Economic and Social Development, Ministry of Pacific Island Affairs, WINZ, MORST, Treasury.
6. Infrastructure
Building infrastructure is about ensuring that New Zealanders have access to the latest information and communications technologies at cost effective prices. This means ensuring that the communications infrastructure is competitive, provides reasonable access, and facilitates the entry of new technologies and carriers.
A key element in the development of electronic commerce is the availability of broadband high-speed access to the Internet at a reasonable price for both businesses and individuals. The roll out of RADSL by Telecom and innovative products from companies like Saturn and IHUG puts New Zealand at a relatively competitive position compared with other countries. However, it is questionable whether all of these kinds of services will be made available in smaller towns and rural areas.3
A Ministerial Inquiry is to be held on the telecommunications sector to assess whether the regulatory environment could be improved and better meet the Government's objective of ensuring ongoing delivery of cost effective, timely and innovative telecommunications services.
As well the next stage of Internet developments will be the implementation of affordable "always on" broadband access into the home. This is being rolled out in main centres at the moment.
A number of other issues have come to light which impact on the ability of New Zealanders to exploit ecommerce. The first is that New Zealand based banks do not at present support multi-currency credit card billing, which is a constraint on New Zealand e-tailers selling into overseas markets where the value of the New Zealand dollar is unfamiliar. A second issue is to consider whether physical delivery services such as postal operators support rather than hinder New Zealand's growing number of e-tailers.
Way Forward
Issue: Telecommunications infrastructure.
- Action: A review of the telecommunications regulatory environment has been initiated.
- Key Agency: Commerce.
Gaps
- Research into the development of broadband access in the regional towns and rural areas, the level of demand for such access and impediments to its delivery.
- Monitoring of telecommunications infrastructure developments to ensure that the market is delivering the desired outcomes.
Key Agencies: Commerce, Ministry of Agriculture and Forestry, Ministry of Maori Economic and Social Development.
7. Technology Policy Advice
Technological innovation is driving changes being brought about by ecommerce. The speed of this innovation is accelerating. There is a range of opinion about how these changes will impact our society. One body of opinion suggests that the world in ten years time will be "business-as-usual". On the other hand there is a strong body of opinion lead by thinkers such as Charles Handy, Peter Drucker and Nicholas Negroponte, among others, suggesting that we are at a watershed in history, and that technological change is fundamentally reshaping social, economic and political institutions with as yet unknown consequences. Certainly much of the work of our major trading partners in the area of ecommerce is predicated on the notion that its effects will be far-reaching and unavoidable.
With this is mind, technology policy advice needs to be proactive and predicated on the idea that there should be as few surprises as possible. It is crucial that there is an understanding of the implications of the direction and speed of technological change for government policy and service delivery, for example, the potential for 95% of New Zealanders to have access to the Internet via their televisions/telephones within the next five years.
Way Forward
Gaps
- As well as the day to day issues there needs to be a commitment to look at the big picture - how is society changing? What will it look like in ten or twenty years? What implications does this have for public policy?
Key Agencies: Commerce, Treasury, Ministry of Education.
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