HiGrowth gets real on targets

Garth Biggs is a realistic man. Since taking over as executive director of the Government's HiGrowth Project, he has chosen to scale back its overly ambitious goals - namely, the creation by 2012 of 100 information and communications technology companies worth $100 million.

"It actually distracted a lot of people. There were [many companies] doing $5 million a year and they said, 'I can't see $100 million in the next 10 years, so I'm going to switch off to that'," Biggs says.

"What we're trying to do is de-emphasise that. If all the $5 million people [grow to] $20 million, it does take the pressure off."

Biggs, former chief executive of IT services firm Gen-i, was chosen to head up HiGrowth in June, thus inheriting one of the roles created by the Government's ICT Growth and Innovation Framework (GIF) taskforce to spur New Zealand's march toward becoming a "knowledge-based" economy.

The GIF was formed in 2002 when Prime Minister Helen Clark spelled out the Government's plan to transform the economy. It identified four sectors - ICT, biotechnology, screen production and design - for their high growth potential and their "enabling" ability to spur other industries.

In September 2003, the Cabinet established four taskforces and approved $110 million over four years to implement growth initiatives.

The taskforces yesterday released their progress reports online (see link below) and are scheduled for a full review by the Ministry of Economic Development next June.

According to the ICT taskforce's progress report, the sector would have to post annual growth of about 13 per cent to achieve its main goal.

ICT contributed 5.1 per cent of GDP in 2003, up from 4.3 per cent the previous year, the report says.

The number of $100 million companies rose from 16 in 2003 to 18 last year and the total number of ICT firms increased 5 per cent between 2001 and 2003, says the report.

But while those numbers are all positive, they are a long way from the GIF's projected goals.

Biggs says there are 7500 ICT companies below the $5 million mark, and his new goal is trying to help those companies grow.

"I'd love a whole bunch of $100 million companies, but I don't want to turn people off by saying, 'We're not really interested in you if you're not going to get to that number'."

The taskforce figured it needed to expand the industry by $10 billion, and the 100-by-100 idea was "a nice round figure", Biggs says.

"The indications were that if we didn't fiddle with anything, we'd get to about $6 billion. So we're looking for that uplift, and if you don't try, I think you know what the answer is going to be."

The report states 218 companies have registered with HiGrowth as "aspiring" to the $100 million goal.

"There was an approach which probably more assumed than stated that we could identify 200 companies that were going to produce the 100 companies of $100 million," says Biggs. "Frankly, if I could do that, I'd be a venture capitalist."

So the redefined target may be wise as the report shows that the largest growth came from smaller companies. Those with profit between $15 million and $20 million saw growth of 140 per cent, while companies with profit between $1 million and $2 million grew 75 per cent.

A major problem unearthed by all four taskforces was the lack of accurate and meaningful statistics.

"Quite often you guess at these things because the statistics are pretty spartan," says Jim Anderton, who, as the Minister of Economic Development, is ultimately responsible for overseeing the taskforces.

"If you ask a question like 'what is the contribution of the film industry to New Zealand?' it's very hard to get the answer."

Biggs says the problem is even more prevalent in the ICT sector.

"Even finding an appropriate definition for ICT has been quite interesting. I can't give you the definition off the top of my head - I have to read it and look at the wall and contemplate every couple of sentences."

The taskforce has responded to the problem, allocating more than $6 million over four years to redesign, develop and implement new ICT surveys, with the first batch of new stats expected for release this year.

The improvements will hopefully shed light on some key cross-sector issues, such as immigration. ICT professionals are on the Immigration Service's Long-Term Skills Shortage List (LTSSL), but Biggs says it is difficult to gauge exactly how many people are being brought in from abroad to fill the gaps.

The GIF report says only 29 people with ICT jobs were approved for visas under the LTSSL policy in the last half of 2004, with 66 approved under the Talent Visa policy.

"That's not going to solve the problem, is it?" says Biggs.

Statistics New Zealand, meanwhile, reports that 1295 temporary work visas or permits in an ICT-related occupation were granted in 2004/05, up from 989 in 2003/04 and 238 in 2002/03.

The agency could not say how many applications were declined as job type is generally not recorded in such cases.

The taskforce report also cites feedback from the Information Technology Association of New Zealand, which says it is still finding it hard to recruit immigrants with ICT skills. The association does acknowledge that this may be because of a tight labour market rather than recent changes to immigration rules.

Indeed, Theresa Gattung, chief executive of Telecom, the country's largest technology employer, has said that one of the reasons her company bought Gen-i last year was because "skill shortages are a real problem for us".

To that end, the GIF also put forward education and training initiatives, including the 321 Go Global executive development programme in Auckland, Wellington and Christchurch in 2003 and last year.

Industry observers agree that if the GIF is serious about expanding the ICT sector, it is going to have to loosen immigration further, significantly improve training and convince expatriates to return.

Taskforce reports

* Industry body HiGrowth says the Growth and Innovation Framework's goal of a ton of $100 million ICT companies is unrealistic.

* The body is refocusing to concentrate on helping smaller companies.

* Statistics and immigration are seen as key barriers holding the ICT sector back.