John Hood: Catching the Knowledge Wave

Speech by Dr John Hood, Vice-Chancellor, the University of Auckland, at the launch of the Catching the Knowledge Wave project.

The Ministry of Research, Science and Technology stated in 1999: "Knowledge, as much as, if not more than land, labour and capital is the key to creating wealth and improving the quality of life." Robert Reich and many others have for a decade repeatedly emphasised that the most decisive competitive advantage for organisations and nations in the information age is the capacity to develop, retain and continuously educate and train knowledge workers. Some attribute the single most significant factor in the extra-ordinary performance of the US economy over the past decade to the increased levels of investment in research through research-led universities started twenty years ago. US studies show investment in basic research has high economic and social rates of return. Curiosity driven research leads to new intellectual property and other clever ideas which, when successfully capitalised, creates new enterprises and greater productivity in existing ones. This in turn leads on to economic growth. Lack of growth, lack of increasing levels of wealth, almost inevitably frustrate social progress as well.

Our economy has expanded by around 40 per cent of the developed world average over the last four decades. Our GDP grew by around 1.2 per cent per annum during the decade of the 90's. Stated simply, for every one per cent annual growth we need to add around $1 billion in new investment, net exports and consumption, every year. The fact that we have not locked in nearly enough of these necessary, annual $1 billion increases, and that we do not have confidence that we have them "in sight" ahead, must give us cause seriously to reflect about the gap between New Zealand and other developed economies. If we accept the views of MORST, Reich and others, our reflections are bound then to move to questions around the theme of "knowledge": education, innovation, research and development, enterprise, productivity, investment, training and expertise, migration and immigration, and others.

Doubtless, we all see these differently. There are though some stark statistics and international comparisons that suggest we need to think deeply about our current condition. For example, we continue to fall down the global competitiveness rankings. Our private sector investment in R&D as a proportion of GDP is about a quarter the level of higher growth OECD countries. Our public investment lags behind the OECD average and is strongly biased to applied research rather than curiosity-driven research along with areas of genuine market failure as is the case elsewhere. New Zealand's relative standing in the patent rankings (one proxy for intellectual property development) is dismal. In some areas our research productivity is high – there is just not enough of it!

Our savings rates are very poor and investment levels commensurately disappointing. Too many highly skilled and trained people are unable to satisfy their aspirations here; the technology intensity of our businesses is very low in relation to other smaller developed nations. We are not connecting nearly as constructively with our successful diaspora as have other nations that have been confronted by similar challenges (Ireland and Israel for example). Our University, with its mission to be an internationally reputable research-led university has a critical, national role to play in the knowledge universe: training and educating our people, producing valuable research, connecting New Zealand with the international knowledge system, and so on. Yet we are hanging on by our fingertips. In spite of our superb, productive and loyal staff, the university's international standing remains at grave risk.

I am sure you will agree none of this is uplifting. It does though challenge us to think seriously about our society and its incentives, its policies and its priorities.

Have we become too consumed by the immediate, less alert to the trends, to the impatient, unsympathetic international arena? The Prime Minister observed in her statement to Parliament earlier this week: globalisation is here to stay. Therefore many of these matters are now finding their way onto the national agenda. As a matter of national priority they need to be carefully digested, honestly confronted, constructively contested, and positive, effective policies, strategies and incentives developed that will lead to an environment that will allow and encourage greater innovation, productivity growth, economic growth and social cohesion. This last is very important. Transformations need careful guidance, as this country knows well. Any view of a different future path must be accompanied by carefully crafted social policies. Because my colleagues here at the University, the business leaders with whom we regularly interact, and government leaders and their colleagues agree with the need for a heightened national conversation, we are combining to hold the Catching The Knowledge Wave Conference as part of the continuing project that the Prime Minister has this evening announced.

At the conference itself we aim to bring together around 300 broadly representative New Zealanders with 30 or so international leaders: political leaders, business leaders, academic leaders and thinkers; leaders whose experiences are apposite to the challenges we have identified. We intend to run a parallel public programme, to involve young people and leading members of our diaspora and to make extensive use of the media including the web leading up to and during the conference. As far as is practically possible we want this to be bi-partisan – both Mr Hodgson as the PM's representative and Mr Williamson are on the organising committee. The conference itself will contemplate six key themes: fostering innovation, learning and creativity, macroeconomic policy and growth, entrepreneurship in the knowledge economy, people and capability, environmental sustainability, and social cohesion and cultural transformation.

Our desire is that the conference and the events leading up to it and following it will provide that rare opportunity to step back from the day to day, to build a deeper national understanding and possible consensus about what a knowledge society could mean for New Zealand, and to provide a broad portfolio of possible ideas and strategies that might be considered by our political parties, business, academic and research institutions, social agencies and the like. There is no monopoly on these. Many are currently being developed and implemented by all these groups. The government in particular will continue carrying forward its agenda as it must. It has many groups and Commissions assisting with the themes we will be exploring. Our collective desire at one level is to provide a broad perspective and at another to facilitate sharp insights to assist in fashioning a route to a faster growing, equitable, confident society, comfortably positioned in the first world.

We are deeply grateful to you, Prime Minister, and many of you here tonight who have already played major roles in developing and planning this project. We are pleased that the Government has indicated its intention to commit significant resources to the conference. We are also indebted to a number of businesses that have already committed to major sponsorship of the event: Carter Holt Harvey, Deutsche Bank and McKinsey are early subscribers to gold sponsorship. May I encourage all of you, members, alumni and friends of this university to find the way to contribute or participate in helping this nation find a better way forward. There is no-one "out there" who is going to do it for us.

May I wish you a very enjoyable balance of the evening.

href="http://www.nzherald.co.nz/storydisplay.cfm?reportID=57032">Herald
Online feature: The knowledge society

Catching the Knowledge Wave project