Agency aims to hone competitive edge

Industry NZ is the new business group the Government hopes will kickstart economic development. We analyse how it will operate.

After 15 years of consciously withdrawing from the market, the Government is now seeking a "partnership" with business.

Craig Boyce, the Christchurch businessman who is interim head of the Government's new business agency, Industry NZ, says ideology needs to give way to a practical approach.

"There are many people in business who believe a partnership between business and central and local government can work," he says.

"Certainly [that is] the evidence from overseas is that the involvement of central and local government in the process of attracting business is very important."

Industry NZ came into legal existence yesterday, 10 months after the Labour/Alliance Government was elected.

It still does not have a permanent chairman, as the preferred appointee - rumoured to be either TVNZ chair Ross Armstrong or former Fletcher Challenge chief executive Hugh Fletcher - will not be available until early next year.

The other eight board members will meet for the first time on Thursday and Mr Boyce says they "hopefully" will appoint a chief executive to start before Christmas.

But some of its programmes are already operating, and the first of 70-80 staff are being recruited.

Public affairs manager Suzanne Cookson says staff and consultants have already worked with more than 250 businesses.

According to its website (www.industrynz.govt.nz), Industry NZ aims "to boost economic development by increasing the competitiveness of business and industry. This means creating high-quality, sustainable jobs and increasing regional growth."

Its budget is $33.75 million this year, $73.125 million next year and $112.5 million a year from 2002-03.

Of this, only $13 million was already being spent by the previous Government on Biz business seminars and the Industrial Supplies Office, which lists state purchasing needs for business and NZ business capabilities for the Government.

The National-led Government also budgeted about $2 million to develop business "incubators" - a concept now popular in countries such as the United States and Israel, where they provide new entrepreneurs with shared premises, finance, tools, professional advice and administrative help.

The new Government called for tenders from potential incubators in March, but in July decided there was not enough money for all the applicants. Instead, it put $1.3 million into an Investment Ready Scheme, which is running seminars on how to raise capital, assessing business ideas, and putting people with good ideas in touch with potential investors.

So far, 318 people have attended seminars, 65 have requested business assessments, 49 of these have been assessed and six have been approved for "deal-broking" with investors.

Suzanne Cookson says officials are still considering how they can support incubators.

"The Government has not and does not intend to provide technical advice to incubators," she says.

"However, it does see a role in coordinating the dissemination of relevant information that could assist incubators in making decisions."

It has allocated another $250,000 to develop a network of "angel" investors: people who are interested in putting both their money and business skills into new enterprises. Proposals are being sought from two consortiums to develop this network.

Better-established businesses, with up to 20 staff or annual revenue as high as $10 million, can apply for "enterprise awards" to a limit of $10,000 to cover up to half the costs of developing new products, researching markets, training or advice.

The Government budgeted on making 250 awards by Christmas, with a full-year cost of $5 million.

By September 22, it had received 154 applications, and it expects to recommend 70 awards by early this month. So far, applications average $5000 each, so Industry NZ's panel may make more than the planned 250 awards in the first six months.

The next step is to provide "industry specialists" to help "businesses with significant growth opportunities."

These specialists will include Industry NZ staff and consultants, spread through the country. They will advise businesses on growth strategies, management, marketing and raising capital.

Their budget of $3.375 million this year includes grants of up to $50,000 to pay for as much as half of the costs for these businesses to obtain more detailed advice on raising capital, forming joint ventures or alliances, strategic planning, market research, management structure and protecting intellectual property.

Another $1.69 million has been budgeted to facilitate "strategic investment" - major projects creating at least 200 new jobs or investing at least $50 million over five years. The criteria may be reduced to 50 jobs or $10 million in priority regions such as Northland and the East Coast.

Trade NZ already has an investment team to assist foreign investments on this scale. When Motorola was looking at building a research centre in Christchurch, Trade NZ mobilised local councils, universities and Government agencies to offer a package that Motorola said was comparable to packages offered by Australian states. (The company still went to Australia because of its business relationships there.)

Industry NZ's brief will be to bring together similar packages for domestic firms. These may include grants up to $1 million, provided:

The investment would not be likely to occur in New Zealand without the incentive; and

The investment "complements New Zealand's areas of competitive advantage."

Finally, an accompanying cabinet paper proposed a budget for regional development of $5.63 million this year, rising to $16.88 million a year from 2002-03.

Most Industry NZ staff will be at its head office in Wellington, well away from Trade NZ's Auckland headquarters.

Although in theory Trade NZ will help businesses to export, while Industry NZ assists the domestic market, they will obviously need to work closely together.

Alliance leader Jim Anderton, who is Minister for Economic Development, says the last state agency that lent money to new businesses, the Development Finance Corporation in the 1970s and '80s, "lost its way."

When he was in Japan recently, its famous Ministry of International Trade and Industry told him that many of the companies it lent to were now "walking zombies."

"There are all sorts of ways of helping," Mr Anderton says.

"For this kind of direction we are going in - a bit of self-help, assistance to get expertise, to do some market research for some major investment opportunities - we need a range of approaches. That is the method we are using now and we'll just see."

Herald Online feature: The jobs challenge

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