Our man from the institute
By Vincent Heeringa,
Rick Boven, executive director of the New Zealand Institute, took over from founding director David Skilling, who was not only very tall but had some large shoes to fill. So 18 months on, is Boven making his own mark? And what’s his big issue for 2011?
questions by Vincent Heeringa
The New Zealand Institute started with a hiss and a roar in 2004. I get the feeling it lost a bit of momentum.
I’m not sure it lost momentum so much as had a bit of a gap between David and when I got really rolling. And I think we’ve sort of regained that momentum, at least I hope so.
How did you regain it?
Two things: one is the programme of work on innovation. We started out with innovation and the innovation ecosystem and then the wider New Zealand economy. And Our man from The institute second, we’ve broadened the scope of the institute to give greater coverage to social and environmental issues. For example, the work we do on NZ Ahead, a website with 16 measures of social performance, and the top ten issues for New Zealand, which I think is an interesting piece of work. It’s quite small for us but actually very helpful in getting an understanding of what it is that we need to address in the long term in this country.
Many of your reports feel more like a wish list than a prescription for action. Often you recommend things that nobody would disagree with—like lifting productivity or increasing exports. In some ways they’re self-evident. What’s the point of that?
To what extent do you try to define the agenda versus specifying how that should be done? This government is more open to dialogue than the previous one. And so defining the agenda is more important than being prescriptive about what the policy should be. There are a whole lot of issues that are not being addressed, and the opportunity to point to those issues and try and mobilise the government apparatus to convert that into real policies seems particularly attractive.
One of your more prescriptive proposals is to provide tax breaks to stimulate venture capital investment. That seems, dare I say it, like picking winners.
I think tax breaks are useful—but we need to be clear. We’re not proposing tax breaks for companies, but for investors in order to increase the flow of investment. There are two issues: the first is that we don’t have institutions putting sufficient money into expansion capital. In larger economies you’ve got a richer institutional structure. Consequently, despite our public investments in R&D and science, companies are going offshore because we can’t fund the next stage of expansion here.
As for influencing the market with tax arrangements —well, we have tax arrangements that encourage a flow of money into residential housing investment. The problem with that particular tax break is that it takes money away from productive investments that will lead to prosperity for us in the future.
You surprised me by saying in one report that New Zealand’s science and R&D investment is okay by international standards. But don’t we have a very low spend as a proportion of GDP?
We’re a bit low but not by that much. Where we really have a huge shortfall is in business R&D. New Zealand science is fantastic, but increasing the flow of inventions out of the science system into commerce is only going to work if the rest of the innovation ecosystem is functioning. In addition to the funding problems above you’ve also got companies trying to jump over this huge fence, which is internationalisation. What we need to do is help those companies jump higher rather than get more companies to try to jump and smash into the wall.
The government tends to have its hands on the levers of science production and has only an indirect involvement in internationalisation.
Speaking of the government, how do you rate it—you know, points out of ten?
Difficult question. Haven’t thought about it and don’t think about it in that way.
Give us a different rating system, then. I think of it as a government that’s strong in terms of doing a lot of short-term incremental things that are improvements. I think of it as useful trying to encourage greater emphasis on the economy. I think it’s probably insufficiently focused on non-economic opportunities.
Social issues, environmental issues—and really making a difference there, because I think on the environmental side we’ve got some huge challenges, globally as well as locally.
Aren’t you a business think tank?
Well most of our funding comes from businesses and our members tend to be, not all of them but most of them, leaders of businesses. But we’re a charitable trust and our purpose is to improve long-term outcomes for New Zealand, not to improve conditions for business. Not only that, I’m often referred to as an economist—which I’m not.
But the scope of the New Zealand Institute is economic prosperity, social wellbeing, environmental quality and environmental productivity. So this year, for example, our research effort has switched to youth disadvantage. New Zealand’s youth are at a disadvantage relative to the youth in other developed countries and that’s a big issue for us in terms of the human harm that’s being caused as well as the productivity losses and expenses. We’ve launched a programme to understand the causes of that disadvantage and what New Zealand can do to reduce it.
You’ve been a consultant with Boston Consulting Group and involved in advising many offshore businesses and governments. These skills are in demand. What keeps you in New Zealand and why take on this role?
Well, the original motivator for coming back to New Zealand was that I was working in Australia on issues very much like the economic issues we’ve been working on here. And I realised that actually I was working for a competitor of New Zealand so I should probably go home. Now I’ve got the opportunity to contribute in the way that I had originally wanted to back then. In the late 80s, early 90s, there was no interest in New Zealand in helping our businesses to be successful. They were left alone.
The other thing is that I believe our world is becoming a more uncertain and difficult place to be, whether you’re a country or you’re an individual. I think there are emerging threats on the horizon, the environment being a principle threat. And I think New Zealand is a country that is a long way away, has relatively benign climate response, at least according to the models compared to other countries, and has low population density. You know, this is a country that I think has good long-term prospects. As you say, I’m a New Zealander so I like to help my country.
So it’s worth the investment.
It’s worth the investment, yeah. And it’s an opportunity to give something back. New Zealand’s been good to me.