Brett O’Riley has been a leader in the digital transformation and innovation eco-system of the New Zealand economy, since his return to the country in 2009. As the Chief Executive of Auckland’s economic growth agency “ATEED”, and before that as Deputy Chief Executive of the Ministry of Science and Innovation, Brett has spearheaded the goal to establish Auckland as an innovation hub of Asia-Pacific, through the development of advanced industries including screen and digital, health technologies, ICT, advanced manufacturing, food and beverage, education and aviation/space.
We sat down with Brett to discuss New Zealand’s economy is evolving, the talent challenge and how we can build resilience into our cities.
PwC: So what do you think is the biggest change you’ve been seeing in the last 20 years?
Brett: I think it’s definitely been the focus on the rest of the world and on globalisation. When I think back to the New Zealand business world 20 years ago, it was about a primary sector and related industries focused on exporting, and a tourism sector that also had an external focus, but everything else was largely internally focussed. Off the back of that initial shock in the 70s of the UK entering the EU’s common market, and then the deregulation of the 1980s, businesses have become much more competitive and global in their outlook.
PwC: So 20 years ago it was all about free trade, but with Brexit and similar events you have a real change in the way we talk about trade. How do you see that playing out
Brett: I think one of the advantages the New Zealand economy has is that we have been through in the 1980’s and 90’s what the US and Europe are now going through. So we moved past traditional manufacturing and protectionism, and into the knowledge economy a lot sooner than a lot of other countries overseas.
That puts us in a good position because it means we have things that people want to buy – which is essentially what trade is all about, particularly IP driven products and services. So I think we are in a good space there and our future is going to be trading in Asia, in addition to our traditional markets of Australia and the USA.
I think we will certainly continue to see strong growth from China, and the One Belt, One Road trade strategy is driving a lot of Chinese companies to start looking offshore for investment opportunities. So I think we’ll see plenty of inbound activity from China which will stimulate trade to China and other markets.
PwC: Thinking about risks, are there any businesses are facing that they weren’t facing three years ago?
Brett: I think talent is the main risk for New Zealand businesses. We’re in a position where most developed countries in the world will say they are short on talent. The housing situation in Auckland is certainly exacerbating that, because workers are very aware of housing costs and quality of life determines where globally mobile talent will work. So talent is a persistent issue. We know housing and transport are two of the major factors that are holding back economic growth in Auckland, but the net effect of that is the effect it has on attracting and retaining talent.
At ATEED, we’re doing a lot of work around how we can get young New Zealanders into skilled work, and how we can either discourage them from going overseas or provide them with opportunities to come back. If the technology sector is going to keep growing we have to get that talent pipeline working now, and other sectors like tourism and construction are also under severe pressure for workers.
The elephant in the room here is our education system and our curriculum. The pipeline simply isn’t there to encourage people into technology roles. We are still developing a 20th century workforce, rather than a 21st century workforce, which is where we need to be.
PwC: So thinking about automation, and how that relates to talent. Surely, that’s a possible answer to the talent shortages we are facing?
Brett: I think some jobs certainly will be automated, but those jobs overseas that are being automated are roles we simply don’t have here in New Zealand because we don’t have the manufacturing base that the USA or the UK have.
We should still be looking for automation opportunities though. We have some sectors like health that are still hugely reliant on human labour and this can be inefficient. I think one of the problems we have at a national level is that we have too many low-paid jobs and not enough high-paid jobs. So we have to be focussed on growing those advanced industries that can provide higher salaries and creating a talent pipeline to support them. We can then look at automating more manual jobs so we aren’t creating a two-tier economy.
Another piece that’s missing from the conversation about talent is that we only really talk about young people, but this question of advanced industries and future ways of working really cuts across all age groups. I’m 54 and, if I listen to the experts, I should be aiming to live until I’m at least 100. So what other careers could I have between now and then? There’s no reason to believe I couldn’t be an active workforce participant for the next 30 or 40 years – maybe not in the conventional 8-5 sense but I could still be a salaried or contracted employee. So how do we retool the workforce to accommodate older workers with different requirements?
PwC: It’s certainly something we are seeing with more flexibility around their work, how do you see that playing out?
Brett: It’s something I’ve seen quite a lot recently with friends of mine moving back from London to New Zealand and they are able to keep their old jobs but work while their colleagues are asleep. It works for the company and it works for them because they get to have a better family life.
We have a unique benefit in that our time zone is halfway between North America and Asia. We’ve talked about that historically but it’s been largely about call centres and other lower value services. So now we have to think how we can apply that advantage to higher-value roles.
PwC: And how well are businesses managing to capture the value that globally connected students can bring to the New Zealand economy?
Brett: So far, not well. It’s a gap for corporate New Zealand. I still think there are stereotypes of migrants that are holding organisations back. There’s a bit of a mind-set, one that we are trying to change at ATEED through our Study Auckland arm, that international education is a transaction rather than a lifecycle. What we should be saying isn’t ‘how many students can we get in?’ it’s ‘how many students can we retain?’
PwC: So let’s talk about privacy and trust. We’ve all become very good at sharing information, and people are more and more aware of that. Has privacy had any impact on your organisation?
Brett: It certainly has. I think one of my observations on the New Zealand public sector in general is that we don’t use data very well. So it’s interesting that we’ve been through this conversation about privacy but we still aren’t using the data that we have collected to any great extent.
There’s also a conversation we need to have about how you function as a modern society with data – and that’s an area where New Zealand could be a real leader internationally. At the moment we have a few 20th century norms, a few 21st century norms and quite a lot of confusion around it as well. But if we had that conversation, we might be better positioned to deal with cyber security threats.
PwC: With any organisation there’s a conflict between managing costs and delivering value, and meeting the expectations of society. So how do you balance those?
Brett: The world isn’t linear anymore, it’s changing in non-linear ways. So how do you plan for that and develop services that can maximise that? It’s a challenge for the public sector because everyone is conditioned to think in linear growth cycles and plans.
It’s something we’ve seen in housing – so far we’ve taken a very linear approach to solving the housing crisis. It’s also something that is happening with transport. There are some very fundamental questions around driverless cars and changing work patterns that aren’t linear, but we are still coming up with linear solutions based on what we’ve done in the past.
PwC: You mentioned infrastructure. Having seen the damage that the Kaikoura earthquake has caused in Wellington and the South Island, how do you think that will affect our infrastructure?
Brett: I do think there is a real danger – and this might sound strange coming from me – a real danger in seeing Auckland as our only international city. In Auckland we have a similar risk profile to any other part of New Zealand, just for different reasons. The threat of a volcanic activity here is just as great as the risk of earthquakes in other parts of the country. So I think there is a national conversation we have to have about how to build a contingency plan and build resilience into the New Zealand economy.
Now that contingency and that resilience doesn’t have to be just in case of natural disasters, it could equally be around the housing crisis. But we need a plan to build that resilience into the New Zealand economy so that when these shocks come, whether that’s an economic shock or a shock from overseas or a natural disaster, we have a plan to respond. At the moment most of our responses are tactical, but there’s not a lot of strategy behind it. We need an economy where we can move production around the country to respond to these shocks.
There has been a real missed opportunity around the Christchurch earthquake to talk about building a new city and a new economic driver for the country. We had a lot of conversations in the early days of the rebuild about building something special economically, but what we’ve come to is rebuilding the old Christchurch in a new way, rather than taking a new direction.
So the challenge is to build New Zealand like a platform where you can move the pieces around depending on different factors. That means seeing Auckland, Wellington and Christchurch as three data centres, rather than three cities, and then structuring the economy so that if one data centre went offline, the other two could pick up the load. Now obviously cities are more complex than data centres, but if you start thinking of the economy as an ecosystem there are real parallels. It’s that kind of thinking that has to start happening but we just aren’t seeing it yet.
PwC: We’ve talked a lot about the 20th and early 21st century, but thinking to the future, what do you think will change in the next 12 months? And what won’t change?
Brett: So I think New Zealand will be a more attractive place to live in a year’s time. Now that won’t be because we’ve done anything spectacular here but it’s because other parts of the world are becoming less attractive. Globally we’re going through one of the biggest periods of disruption that we’ve ever seen and there are a lot of uncertainties.
I think business is also starting to get its head around diversity. I don’t know how much will change in the next 12 months, but many companies are now looking at how they will actually become more diverse at the board level, within the C-Suite and all the way down through the organisation.
I think Simon Moutter’s delegation to Israel will make a big difference around innovation. The numbers have been saying for a long time that the lack of innovation has been a handbrake on the New Zealand economy but what we are seeing now is a recognition that corporate New Zealand has to step up. We’ve often confused innovation with ‘start-ups’ but if you want to change the economy to be more innovative, the best place to start is with those companies that already have capital and skills in place.