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Winning in the knowledge economy

Winning in the knowledge economy

Professor Paul Callaghan of Victoria University in Wellington argues New Zealand needs a cultural change to push a much greater investment in science and technology.

New Zealand ranks well on capability in science and technology, says physicist Paul Callaghan, with the tradition of Ernest Rutherford still very much alive.

Generally though, we have a mistaken idea that science and technology is "not what we're good at" with sports and physical endurance rather than scientific success held up to our young people as models of success.

"We need to acknowledge the heroes of New Zealand's high technology sectors: Neville Jordan, Peter Maire, Gary Paykel, Rod Drury, Ken Stevens, Russell Smith and Angus Tait," he says. "Who celebrates them?"

Where we do invest in technology, he says, it displays a subjective impression of "what we're good at", with New Zealand's agricultural background leading to higher investment in biotechnology and neglect of other areas; even those, like ICT, supposedly identified by the government as high-priority sectors.

We have a mistaken idea that science and technology 'is not what we're good at' with sports and physical endurance rather than scientific success held up to our young people as models of success.

Prof Paul Callaghan

Callaghan, MacDiarmid professor of physical sciences at the Victoria University of Wellington, spoke at the recent CIO Leaders' Luncheon in Auckland and Wellington, where he shared his thoughts on strategies to create more wealth without creating further impact on the land and the environment.

The recipient of the 2007 Sir Peter Blake Leadership Awards says a path New Zealand should consider carving out is "high technology". He says "star performers" such as Rakon, Navman, Fisher & Paykel and Tait Electronics have built on a platform of physical sciences and engineering capability. They have shown that knowledge-rich physical technology platforms can be based in New Zealand and be as competitive in this country as from anywhere else, he says.

Callaghan also looks back on the achievements of the human race and the accompanying ebb and flow of prosperity. These ranged widely from Galileo's discovery of Jupiter's moons to the average temperature of student flats in Dunedin, all of which was supported with thought-provoking statistical graphs and charts.

Science provides the basis of our prosperity and our culture, says Callaghan, from the survival of individuals in the face of disease to the change in relationships and the ways of thinking produced by such inventions as the telescope and the contraceptive pill. But the reverse also applies, the way science develops is crucially dependent on the culture surrounding it.

Referring to David Landes' book The Wealth and Poverty of Nations, he points out that trust between parties to a transaction, engendered by good clear law and an absence of corruption is only the start of a culture conducive to prosperity.

"If that were all that were needed, New Zealand would be the most prosperous country in the world," he says. "We did the right, decent thing. In 1984 we went cold turkey, got rid of tariffs, and got rid of subsidies. We've always had good property rights and legal frameworks. There are countries out there that are not virtuous like us. Some even have higher taxation rates and they're richer. It's infuriating, incomprehensible and unfair."

In fact New Zealand has become less prosperous since commodity prices began falling precipitously around the 1940s, he notes. The country's fortunes have declined to the point where he claims our per-capita gross domestic product lags badly behind Australia and is below the OECD average.

"There are plenty of countries on the planet less prosperous than ours. But when our grandchildren are growing up on the other side of the world, when we have to Skype to read a bedtime story and when we would rather hold the grandchild and read the book in person, we feel a pang of grief.

"Our prosperity gap, and especially our prosperity gap with the English-speaking world, causes us a loss of children and grandchildren. Prosperity matters to families. And while we are dealing with OECD rankings, in quality of life measures such as imprisonment rates and life expectancy, we have a rather spotty story. As for infant mortality, it is nothing short of shameful. Are these social factors related to prosperity? I don't know for certain, but I can't see how a declining per capita GDP ranking can help."

One of the most striking of Callaghan's charts shows that although New Zealanders put in the second-longest average hours of work per capita of all OECD countries, they have the lowest output per hour worked.

Callaghan considered simply raising the volume of traditional high earners such as dairy and tourism, but he says both are too heavy on resource consumption or degrade the value of what is sold. For instance, five times the number of tourists tramping a track means 25 times as many likely meetings between travellers, most of whom value the solitude of the experience.

A more appropriate answer, he says, lies in industries based on science and technology: "They don't don't give out greenhouse gases, they don't even require much land. They don't pollute the streams, don't stress the environment at all; they don't even need much capital infrastructure or investment. They just need brains and enterprise."

Though we are not short of successful technology-based companies, he says they are generally small in relation to their counterparts overseas.

Government financing of research and development is heavily concentrated on biotechnology he claims, an area where it is relatively hard to push a successful innovation through to production and continued profit. More usually, he states, the product will be picked up at a late trial stage by an overseas company and manufacture taken out of New Zealand.

Government research funds are allocated in advance into a number of preferred areas, he says. "There are these people who work on the Terrace [public servants in Wellington] and they draw up these spreadsheets and they're so clever they know exactly what to buy , I hope. But I kind of wonder about it, because we are 0.2 per cent of the world's science, as well as 0.2 per cent of the world's economy. When you're that small, there may be some surprises about how things work out.

We don't need to spend less on biotech, he emphasises, just more on science as a whole. Private industry funding of R&D is in an even more woeful state than government funding. Our 0.44 per cent of GDP compares with Israel's 3.16 per cent and is 31 per cent of the OECD average.

He cites Sweden, where private investment in science from one philanthropic family is worth five times the New Zealand government's Marsden fund. "The country is not much bigger; the talent is no different, but their kids don't grow up thinking the way ours do."

We go into a national state of mourning when we lose a major sports competition, says Callaghan. "The America's Cup was rated a disaster. But we came second. What if we were second behind Nokia in cellphone manufacture and innovation? Wouldn't that be something to be proud of?"

One positive sign, he says, is that the government is inducing New Zealanders to save, producing a pool of money available for productive investment, some of it hopefully, in science and technology. He also cites the Maori renaissance as producing some promising signs of go-ahead young people and iwi-based organisations.

"To be successful we need to be viewed internationally as more than a 'Farm and Theme Park'," he says, referring to former Prime Minister David Lange's quotation about how New Zealand's destiny was to be a theme park, and Australia's, a quarry.

A cultural revolution

Callaghan cites the need for a major cultural shift towards greater emphasis on science and technology, thereby generating new high technology enterprises through such a multiplier effect.

There has, however, been a renewed effort at forging science-industry links in the past five years or so and an upturn in some of the economic indicators.

He stresses part of the cultural change should be to encourage what he calls "a marriage of physical sciences and engineering".

"Ultimately, when we come to make products to sell to the world, we will need the skills of the engineers and designers. And New Zealand performs badly in this regard. We have a severe disjoint between engineering and physical science that borders on hostility in places. This is ridiculous. We have far too few students enrolling in engineering course in our universities, with far too few taking the necessary maths and physics at high school. But the solution, I believe, lies in the hands of the present science and engineering generation. When we create the exciting, high-paying jobs in the New Zealand high technology sector, smart kids will cotton on fast."

Callaghan, however, says for all the aforementioned trends, he remains optimistic about the country's fortunes.

And he explains why, with a quote from Landes: "In this world, the optimists have it, not because they are always right, but because they are positive. Even when wrong, they are positive, and that is the way of achievement, correction, improvement, success. Educated, eyes-open optimism pays; pessimism can only offer the consolation of being right." With additional reporting from Divina Paredes

Sun Microsystems sponsored the CIO Leaders' Luncheon featuring Dr Paul Callaghan of Victoria University of Wellington.

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

Follow CIO New Zealand on Twitter:@cio_nz

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