ICT Taskforce gets millions for ICT industry growth

The government’s response to the report of the ICT Taskforce has been positive and encouraging, says taskforce head Murray McNae.

“We started out with some scepticism that this would be another talk-fest, but [IT Minister Paul] Swain shows that there is a commitment by government to do something practical.”

The ICT Sector Taskforce is one of four industry taskforces established by the government last year. It has advanced a target of bringing 100 New Zealand ICT companies through sales levels of $100 million by 2012.

The government has offered a multi-faceted response, ranging from the starting up of the HiGrowth project, which is aimed at helping ICT companies raise their income and approach export markets, to grants for research and education and promises of relaxation in the burden of complying with business law.

The last is something McNae is particularly pleased to see, though he notes it is still “a work in progress”.

Easing the task of offering stock options to staff is a key factor to keeping local skills with growing New Zealand companies, he says. An indication of possible relaxation in requirements to publish a full prospectus when inviting investment is particularly welcome, McNae says. It will help draw in the investment New Zealand’s ICT companies sorely need.

At present if someone invests in a startup and claims early losses against tax, and the company is susequently restructured, those losses cannot be carried over under the same terms. This, McNae says, is another factor discouraging investment in new, growing, changing companies. There are indications from government that this requirement will be relaxed.

On the much-visited question of research and development tax incentives, Swain says he expects a report back from a joint working party on the subject from Treasury and IRD by the end of the year.

“But we shouldn’t underestimate the importance of the regulatory issues,” McNae says. “We want New Zealand to be regarded as a great place to invest.” The signalled regulatory fixes should greatly help that objective.

Expected skills improvement funding has emerged at various education and training levels, as signalled by associate IT minister David Cunliffe, including funding for a schools “IT awareness programme” to be called Futureintech.

The funding announced by Swain comprises:

- $1.5m over four years for HiGrowth. The project has been running for two months and 88 companies have signed to try to grow that fast. Of these 88, a number have previously not been “on the radar” of industry organisations like Itanz, said a member of the HiGrowth working party

- $1m for 2003-4 to the ICT sector project fund within the Growth and Innovation Framework (GIF) defined by the Prime Minister in February

- $0.5m over five years for the business accelerator The Icehouse’s 321 GoGlobal programme, aimed at assisting companies to move on to the international market

- $8m over five years for development of the technology curriculum in secondary schools

- $5.6m over four years for Futureintech, to be delivered by Ipenz, the Institution of Professional Engineers NZ

- $11.55m over four year for encouragement of “emerging industries”

- $6.04m to gather statistics that will show more clearly where the ICT industry is in New Zealand, where it is going and “where the holes are”.

There are also “negotiations” around the establishment of research consortia in ICT.

Some who attended the announcement event, including one staffer in a prominent research and development funding organisation, are disappointed at the low scale of the funding. Swain, however, insists that “partnership” is the watchword; that the funding is intended only as a seed and that industry will be expected to contribute funding for these exercises and gradually take it over.