Paul Winton: Joyce to be commended for stance

Dr Paul Winton

Communications and IT minister Steven Joyce represents the type of leader New Zealand needs in spades, if we are to build a future for which our kids will thank us.

The broadband investment debate will continue to be contentious: has the market failed or not? Does the country need more capacity or not? Should it be across the rose garden or across the Tasman that we invest? These are complex investment questions that should rightly be considered before taxpayer funds are committed.

However, as with any investment in a changing market, if we want to know for certain whether it's a good idea, we'd need to sit on the deck at sunset with a glass of Pinot in one hand and a copy of The History of New Zealand: 1990 to 2015 in the other.

In the absence of this crystal ball, the path Joyce has suggested risks further alienating one of New Zealand's largest businesses and its shareholders; incurring the wrath of the farming community; and possibly introducing big delays in the investment of broadband, without even considering the opportunity cost around that $1.5 billion and any political capital he might burn if this doesn't work.

But on balance (and considering the risk of inaction) he thinks it's worth pushing through, and has stuck to the promise made by John Key over a year ago, both in spirit and substance.

In doing this Joyce has demonstrated himself to be a decisive leader, not because of the solution he has chosen but by the way he has done it.

He has taken ownership of a difficult topic, listened to the views of those who know, and has then made a decision at the right scale to drive change. He has not died a death of committees, watered down the solution to the point of banality, or backed down on the original intent or specific pathway.

To top it all off, he has done this in spite of very strong opposition in government and in industry.

The implications of this leadership for New Zealand are twofold.

First, Joyce has provided a sense of certainty for the investment community. Because the proposal released last week is almost exactly as was promised over a year ago, we can be confident that the major telecommunications companies and other industry stakeholders have considered the implications, developed the scenarios and syndicated them with management teams and boards.

There were no surprises in the announcement last week – Telecom's share price barely moved. In fact, probably the biggest surprise is that he's done what he promised. This is important for political leaders if we are to grow offshore investment to New Zealand, and in doing so grow the businesses New Zealand sorely needs.

Second, he has illustrated the value of the therapeutic investment dose – a concept of which New Zealand business and government are often ignorant.

We see too many investment initiatives launched at a sub-therapeutic level – the right stuff is being done, just not enough to make a real change. The small dose may seem appealing – there is the belief that if a small investment proves effective, then a larger one will work as well.

Sadly, that's not always the case. Some investments require an adequate initial dose of cash to prove or disprove an outcome. (Just as in medicine, a child's dose of Panadol won't have any impact on an adult's headache.) The problem with the big investment dose is it that it comes with big, calculated risk, and it is this balance of belief, analysis, risk and decision that makes the leader. As a famous Kennedy once said, "Only those who dare to fail greatly can achieve greatly."

This characteristic will be increasingly necessary over the coming decade – one need only look at the growth in health costs (double GDP from 1996 to 2006) to see that decisive leadership is required.

While we won't know for some time (until the investments flow) whether the direction is right for the broadband investment community, we can be sure that any failing will not be the result of lack of scale from the proposal Joyce and friends have developed.

These are early days for the Steven Joyce political brand, but the path he has taken to date is a model that others in politics and industry could learn from, as we shift New Zealand from GDP lightweight to GDP leader.

* Dr Paul Winton heads up Temple - a Capital Investment Specialist firm