New Zealand Engineering 1999 March

Feature

Congress Report

by Peter King

The consequences of New Zealanders’ low average participation in science education over the past two or three decades are beginning to bite, and bite hard. If a theme was often repeated at Congress 99’s six forums it was that New Zealand is dumbing down in the sciences and dumbing down badly.

The importance of maintaining a high quality science education infrastructure was crystallised by Irish Tanaiste (Deputy Prime Minister) and Minister for Enterprise, Trade and Employment, Mary Harney. Ms Harney, who impressed everyone present by not referring to speech notes once during her rapid-fire 20 minute address, said that the transformation of Ireland from European basket-case to "Celtic tiger" was only possible because successive governments had continued to spend heavily on results-oriented, high-calibre education for their young. Even in the mid-1980s when national debt was 125 percent of GNP and 200,000 young Irish people, typically the best qualified, had left Ireland for jobs elsewhere and Ireland’s unemployment rate swelled to 16 percent of the workforce, the endemic cultural respect for education meant governments continued to invest. This meant that 90 percent of Irish youngsters stayed at school to age 18, 60 percent went on to tertiary training of whom 40 percent studied applied sciences and engineering. The New Zealand 1997 figure for applied sciences and engineering was 18 percent.

The result was that when the Irish government changed its strategy from heavy-handed state socialism to flagrant state mercantilism in the late 1980s, the icing it could add to a big tax-incentive cake for foreign firms establishing plant and facilities in Ireland was a workforce more than ready to accept the challenges. Ms Harney said this direct investment also provided educational opportunities in itself so that an increasing number of Irish people have now left the employ of foreign firms to start their own businesses, drawing on the confidence, skills and contacts they had gained.

Throughout her speech it was obvious that the Irish government has one simple measure of the success of its policies: the number of jobs created. No talk of "policy settings" or other abstractions; success was measured clearly in terms of firms creating jobs in Ireland for the Irish. If this meant cutting taxes for business to 10 percent and workers to 24 percent then the government cut taxes. Result: 12 percent more tax revenue! If this meant setting up $250 million investment and advisory vehicles to encourage people to start their own enterprises, then so be it. The tough talking Irishwoman who used words like "weapons"and "competitiveness" seemed to have no truck with half-measures or pussyfooting. In contrast with all the New Zealand speakers her words held a palpable sense of urgency behind every policy initiative.

The results are fairly clear. Irish unemployment now stands at 7.1 percent and the economy is the fastest growing in the OECD. Ms Harney said Ireland expects to achieve five percent unemployment (which it regards as full employment) by 2003 despite a growing skills shortage. Last year half the Pentiums made in the world were manufactured in Ireland, while the country boasts 500 indigenous software companies. Ireland is well on the way to becoming the Taiwan of Europe.

Luck of the Irish? Given that the distance equivalent of Wellington to Sydney from Dublin spans the 320 million consumers of the European Union and that the Union provided $5 billion in bail out money for Ireland, not exactly. With close ties to both Europe and the United States any effort by an independent English-speaking nation in Europe to produce the lowest cost structures would inevitably be well rewarded. As Sarah Box concluded in her Treasury-commissioned analysis of the Irish economy, specific policies could not necessarily be transplanted successfully to New Zealand. On the other hand a focus on measurable outcomes of government policy, eg. job creation, easily could. Perhaps the sense of urgency engendered by massive debt and 16 percent unemployment is the scourge it takes for governments to focus state resources on such issues.

Internet impacts

And one thing was certainly sure from IBM Asia President John Joyce’s presentation - the nature of work, employment and almost everything will be transformed by the advent of internet trading, something IBM markets as e-business. The ability for airlines to reduce the cost of producing an air ticket from $8 over the counter to $1 over the net; of banks to reduce transaction costs from $1 over the counter to one cent over the net; of a supermarket chain in Peru to pay $100,000 for a website as opposed to $1 million for a building; all of this inevitably means that the way people purchase, and therefore the way people interact and work, will change. Just how much it will change, and what will remain unchanged is uncertain, but Mr Joyce repeated the well known prophecy that 80 percent of the jobs that today’s five year olds will be in the market for when they leave education and training have not yet been invented.

Mr Joyce said the rapid evolution of the technology means that computing will become both more intelligent, in human terms, and more pervasive in that a far greater variety of devices will be able to be remotely operated over the ubiquitous internet. IBM estimates that already New Zealand traders move $43.2 million worth of goods and services over the internet and estimates that this figure could be $546 million by 2002. But he said it is not a matter of if the technology will develop, it is a matter of who would be ready for it. Now, he warned, is the time to act.

But Alex Sundakov, director of the New Zealand Institute of Economic Research, was not so easily impressed by the arguments of previous speakers. Although he said New Zealand was right to be concerned because of a significant loss of marketshare across all major markets over a ten year period, he pointed out that in general when one nation grows its neighbours also reap the benefits from spillover trade. Competitiveness between nations was not necessarily the same as competitiveness between firms. The old theory of comparative advantage whereby nations export to those which cannot produce a good as cheaply was proven to be false by trade flow data. Instead nations export to nations which have similar industries; thus New Zealand exports fish to major fish harvesting nations such as Japan and the United States not Switzerland or India. He then went on to introduce the notion of the "gravity model" of trade which essentially says that any nation will tend to trade more with the nations closest to it. According to IMF data New Zealand’s trade patterns follow the gravity model with the exceptions of the oil nations and the United Kingdom. Mr Sundakov concluded New Zealand could only expect to improve its position by improving its productivity and efficiency.

This position was not really challenged until the Democracy, Technology and Progress forum when Ministry of Research, Science and Technology chief executive, Dr James Buwalda, argued that "traditional economic models based on capital investment and economic efficiency should give way to more relevant models based on knowledge and technology". This was given further weight when agricultural economist and Foundation for Research, Science and Technology chief executive, Dr Stephen Thompson, addressed the Venture Capital forum. Climbing down from the heady heights of macroeconomics Dr Thompson presented data which showed that New Zealand has a low output of technical graduates from its tertiary institutions and that because 85 percent of our firms have revenues less than $10 million and five staff are too small to conduct any meaningful research and development on their own behalf. The $20 million Technology New Zealand fund had been developed to help firms overcome these obstacles and Dr Thompson said that the top ten investments by TechNZ had realised $100 million in sales and 600 jobs over four years for each $1 million of investment.

This, of course, raises the question that if $2 million invested through this process can produce such returns why not invest more? Manufacturers Federation president David Moloney, while pointing out that New Zealand boutique technology manufacturers have achieved significant successes in global markets, also said that New Zealand’s huge number of small businesses could do with some form of government assistance which need not be a subsidy. He also said that the fact that 70 percent of young people leave secondary school without any qualifications (with some presenting themselves for work and having to be taught decimals) was a drag on the nation’s economic potential. At the Venture Capital forum this point was also made by David Koni reading a paper prepared by Dorchester Pacific managing director, Brent King. In that paper Mr King complained that New Zealand lacked an effective trade apprenticeship system.

Secretary to the Treasury Alan Bollard, undertaking an unexpected rearguard action when the bulk of the panellists at the Global Markets session unceremoniously left twenty minutes early, disputed a remark by moderator Ian Johnstone that Government was not in favour of intervention. "New Zealand governments have always intervened, the question is how and by how much."

Mr Bollard said the Government put $12 million into the Business Development programme, $55 million into Tradenz and $55 million into tourism along with the $600 million it spent on science and technology each year. To improve competition and efficiency in the economy Government was pressing ahead with the break-up of ECNZ and the introduction of competition to ACC. Mr Bollard pointed out that while the Asian slump had hit New Zealand hard the flexibility we have achieved in our market means that New Zealand can expect to achieve a rapid rebound.

Not surprisingly Mr Bollard’s summary of current priorities contained no political surprises. New Zealand Herald business editor Rod Oram said that from a chat he had had with the Prime Minister Jenny Shipley the previous day, and following the recent Cabinet reshuffle, he was detecting a changing mood within the National Party toward a more hands-on approach to the economy. Certainly this was given credence by Yvonne Lucas of the Commerce and Enterprise secretariat of the Ministry of Commerce, who said that venture capital was one of the Secretariat’s major focuses for this year.

Women and technology/enterprise culture

But one of the issues which concerned Ms Lucas was one of culture. She related how a series of interviews of New Zealand’s most innovative seventh form students had found that when asked whether they saw themselves as employers or employees every one of them answered "employee". Stephen McPhail of Morel and Co, investment bank, also related how one client with a previous year’s revenue of $11 million, looking for $1.5 million worth of debt to expand to meet $18 million worth of forward orders from blue-chip New Zealand corporates, had been turned away by every trading bank in New Zealand for lack of collateral.

These attitudes don’t come from nowhere. Fundamentally our culture remains governed by notions of risk and reward which have not altered significantly since New Zealand was the Albania of the South Pacific during the 1960s and 70s. Rewards come from employment, capital gain from a valuer’s report and risk is someone else’s problem. This culture informs our banks, our schools and even our government. It was a matter which, despite their different backgrounds, both Mr Buwalda and Mr King commented had to be changed if New Zealand was to improve its economic and technical opportunities. "We will know we will have a culture of technology when..the Woman’s Weekly features the latest developments from New Zealand’s biotechnology labs, rather than the latest relationships of Shortland Street stars," Dr Buwalda concluded.

But to achieve that, the question has to be asked, does the culture of technology and enterprise not have to change also? The forum on Democracy, Technology and Progress revealed some interesting things about the male:female divide when it comes down to the politics of technology.

Both Paul Reynolds of the Ministry of Research, Science and Technology and Andrew McEwan of the National Radiation Laboratory made good cases for the importance of retaining scientific capability in biotechnology research and the safety of cellular telephone base stations, but it was the past misdeeds of the messenger which was the focus of Phillida Bunkle’s speech. She pointed out that science had not always had the public’s mistrust but over the years had steadily earned it. Issues such as thalidomide, DDT, and radiation, combined with a scientific culture based on authorities and pecking orders which discounted lay experience, had left the public with no option but to mistrust science’s messengers. In his address David Elms concurred and concluded with a plea that professional engineers should take up the call of their code of ethics to become the champions of the public. But the nature of the gender gap in this was highlighted by one young female engineer who told the forum she had found that it was her gender rather than anything she might have said which often convinced residents to allow her cell sites to be admitted to their neighbourhoods. "Is that rational or just a personality contest?" she asked, as it turned out, rhetorically.

Perhaps it was inevitable that the nature of this gender gap should be the subject of Gretchen Kivell’s presidential address. Ms Kivell took the example of the doors to the Marae at Te Papa Tongarewa which she described first in artistic and symbolic terms and then again in engineering and technical terms. Her point was that while the public may not understand and appreciate engineers and engineering, that "We engineers don’t know too much about the public and the society we all live in either".

Speaking from her own experience and drawing on research into the sociology of engineering in universities and the workplace, Ms Kivell pointed out that male engineers and technologists are often unaware of the subtle and not-so-subtle assumptions implicit to the way they work. She pointed to a culture which favoured tinkerers, tomfoolery in engineering school, and generally reinforced white Anglo-Saxon protestant male values and concluded:

"The gender revolution that has swept through the western world, our community, our schools and organisations and our fellow professions, has left engineering behind. Our engineering schools have suffered from their very male domination….While this may have been a very comfortable standpoint for those within the engineering establishment it has deprived the profession of a major source of intellectual challenge, growth and renewal." So who moves first? There can be little doubt that while there is concern in high places, in general, New Zealand wallows in a sea of complacency while nations like Ireland jet-ski to prosperity. But in an environment where science and technology have become as marginalised as they are in our society it seems counter-productive for engineers, scientists and technologists to wait for the cultural mountain to come to Mohammed. If anything is to actually happen Mohammed must go to the Mountain.