Editorial: E-commerce train needs right signals

In the world of e-commerce, where potential is often jollied along with hyperbole, it is perhaps ironic that a Government should be in the consciousness-raising business. But that will be one of the main grounds for judging whether the strategy released yesterday by the Minister of Information Technology is successful. As the e-commerce revolution starts to take flight, it is imperative that New Zealand business climbs aboard. The Government's job is to encourage as full a participation as possible by pointing to the benefits and providing an environment that removes rather than creates impediments. If it fails, the potential to be among the world leaders in a development soon to be measured in trillion-dollar terms, will have been lost.

The e-commerce strategy released by Paul Swain might be late in the formulating and tending to rhetoric. It has no place for committees or advisory panels. Instead, it has an e-commerce action team. But the strategy at least indicates an understanding of the potential of doing business on the internet and, most significantly, the opportunity for us to take a place in the vanguard and gain competitive advantages.

This country's small size, sound infrastructure and high literacy provide the fleetness of foot to place such benefit within its grasp. Other countries making e-commerce waves, notably India, have far less in their favour. If the internet is used correctly and in innovative ways, it will inevitably promote an efficient business engine. Indeed, the United States' strong run of non-inflationary growth in recent years has been widely attributed to productivity gains from the integration of telecommunications and computers.

Tantalisingly, our business environment, a landscape dominated by small and medium-sized companies, appears tailor-made to exploit an information technology infrastructure. One of the main promises of e-commerce is a levelling of the playing field between big and small businesses. This is a result of small businesses being able to gain access to services previously available only to their bigger, more horizontally integrated competitors. Likewise, customers can connect to the tiniest of companies from anywhere in the world. And small businesses, just like the biggest of multinationals, are able to make big cost savings in areas such as transactions. When British Telecom claims a 90 per cent reduction in the cost of processing transactions and direct savings in goods and services of 11 per cent, that potential is obvious.

Strategies such as that announced by Mr Swain can play a part in accentuating those positives and allaying the fears of those who would prefer business procurement to remain a face-to-face affair. Setting an example is one worthwhile role. Thus, the strategy aims to provide a lead in the delivery of higher-quality, cheaper and faster services through an interagency pilot involving the Treasury, the State Services Commission and the Department of the Prime Minister. This system will be running by the end of the month.

The Government has sought to emphasise the urgent need for action by laying down a timetable for other of its initiatives. By December 11, ministers will be advised of a national infrastructure protection strategy to be developed in partnership with the private sector.

The Government strategy lays down no precise timetable for legislation which will be essential for the smooth functioning of business-to-business e-commerce. That is a pity, because New Zealand has huge potential to gain a competitive edge in business costs and efficiency. But it has indicated that an Electronic Transactions Bill will be passed to give electronic transactions the same legal standing as paper transactions. A Crimes Amendment Bill will try to deal with cyber crime. And the Government says it will review other laws to ensure there are no significant impediments to e-commerce. This task is urgent.

Recognising the need to accelerate such legislation, as well as removing other potential hurdles in areas such as tax, would confirm that the Government understands its role in the e-commerce revolution. Its initial dipping of the toe indicates an awareness that its job is to promote and facilitate. If the Government provides the right e-commerce environment, business will do the rest.

Herald Online feature: e-commerce summit

Official e-commerce summit website