Budget short on boldness and urgency, says Knowledge Wave director

By MARK FRYER

The Government's commitment to economic transformation in the Budget is encouraging, but lacks any strong sense of boldness and urgency, says Knowledge Wave Trust director Bridget Wickham.

Wickham said it was good to see the Budget building on the incremental initiatives the Government had already taken to foster a faster-growing, knowledge-based and innovative economy.

There had also been significant new investments in areas such as supporting research, commercialisation of new discoveries and access to venture capital.

But, while this was encouraging, "we seem to be inching cautiously towards the goal of faster economic growth rather than taking the big, bold strides needed to make up for lost ground".

While the economy had benefited last year from low commodity prices and a low dollar, with near-term growth prospects averaging 2.6 per cent, New Zealand was still a long way short of the annual growth needed to narrow the income gap with the rest of the world's developed economies.

"The Government has started creating the right framework, as we can see in the tertiary education strategy, in its decision to focus on key sectors like ICT, biotechnology and the creative industries and its recognition that better funding mechanisms are needed to foster research and development," Wickham said.

"The danger is that the effectiveness of these policies in unlocking New Zealand's huge potential could be undermined by setting our sights too low in important areas like encouraging foreign direct investment."

Wickham said the proposed new investment agency to be created out of Investment New Zealand and Industry New Zealand was a good example of an excellent initiative at risk from inadequate resources.

"The Boston Consulting Group report that formed part of the Innovation Framework announcements suggested an initial budget of $28 million would be necessary for a new agency to do a thorough job of encouraging foreign direct investment. The $6.5 million allocated in the Budget for the first year suggests the Government has not made this initiative a high priority."

Wickham said The Knowledge Wave Trust was encouraged to see how far political, business and community thinking had shifted in terms of the need for New Zealand to be transformed into a knowledge society.

"What we would like to see now is that thinking turned into the decisive actions we need to turn around our economic performance.

"Higher growth is essential for better economic and social outcomes and we recognise that it will require skilful political leadership to maintain consensus behind the importance of this goal."

The trust would like to see all the political parties producing a policy mix that would ensure New Zealand's economic and social potential was realised.

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