The Labour / NZFirst coalition government (supported by the Green party) have stated a vision for digital technology sector growth through their policies and coalition agreement statements (described as ICT), to quote:
Labour believes that New Zealand must aim for ICT to be our second-largest contributor to GDP by 2025
Reform government procurement rules to give New Zealand companies greater access.
NZRise members, as owners of New Zealand owned digital technology sector businesses, are encouraged by this level of support and have the following recommendation on how the government could realise their goals.
Recommendation – Double the allocation of government spending with NZ owned Digital Technology companies.
Government patronage is one of the most effective ways of stimulating the NZ owned digital technology (ICT) sector in allowing business to grow capability and product. Time and time again it has made NZ companies such as Orion Health, Datacom and Catalyst “export ready”.
Action – The NZ government needs to set ambitious targets for increasing the use of local capability and it needs to measure and publicly report on the direction of change over time.
Unlike in other advanced digital nations, there is no coherent policy here on how to effectively use local capability and improve the access it has to government work. Indeed, there has been a long- standing assumption that government is somehow removed from the market and has no influence on market outcomes. In an economy the size of NZ, this is wrong and represents a missed opportunity.
Small and medium businesses need improved access to government ICT contracts. As other nations have demonstrated it is possible to both support the locally owned sector while meeting obligations to trade agreements – a reason NZ officials have often stated as a barrier to improving this access.
Further reading on the economic benefits of localised procurement can be found here.
Action – NZ government should also continue to improve the success of ICT projects.
It is widely understood large, multi-year, multi-million dollar projects are fraught with issues and hold a high propensity for failure with many high profile failures written off by NZ government in recent years. New Zealand is not alone here, for example, a Dutch government open investigation into failed ICT projects revealed that just 7% of ICT projects with a budget starting at 7.5 million Euros could be said to be successful.
The NZ Auditor General has pointed out that successful IT projects are smaller, transparent, agile and open source. The Auditor General’s findings have not been formally adopted by the NZ government. Smaller, transparent projects will lead to continued improvement in project success and provide increased opportunities for New Zealand owned companies to participate – as are usually locked out of the current larger model.
Action – Abandon the “panel” and AoG “shared services” approach to procurement
Panels are anti-competitive and mediate against innovation and change. They reward hegemony, and the AoG (all-of-government) panels and shared framework agreements are confusing, unpopular and costly. Their claimed benefits are never actually reported and it is unclear whether they are ever measured.
The forthcoming “ICT Marketplace” initiative holds great potential while needing to be reviewed to ensure that it doesn’t further remove NZ companies from government business. This initiative was greeted with concern by the NZ business community when DIA carried out its consultation “road shows” last year yet these concerns remain unanswered and changes to the approach (based on feedback and concerns raised) are not currently evident.
Abandoning the “panel” and “shared services” approach would create opportunities for New Zealand owned companies to actively participate in the supply of ICT products and services for NZ Government and in turn result in business and export growth.
This post is the first in a series of recommendations NZRise members encourage and support. We have stated these openly to Government officials and agencies via our agreed communication pathways.
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