Wool to Weta This page intentionally left blank Wool to Weta Transforming New Zealand’s Culture and Economy Paul CallaghaN AucklAnd university Press First published 2009 Auckland University Press University of Auckland Private Bag 92019 Auckland 1142 New Zealand www.auckland.ac.nz/aup © Paul Callaghan, 2009 isBN 978 1 86940 438 3 Publication is kindly assisted by the David and Genevieve Becroft Foundation and National Library of New Zealand Cataloguing-in-Publication Data Callaghan, Paul T. Wool to Weta : transforming New Zealand’s culture and economy. includes index. isBN 978-186940-438-3 1. Economic development—New Zealand. 2. social change—New Zealand. 3. interviews—New Zealand. 4. science and industry—New Zealand. 5. Technological innovations—Economic aspects—New Zealand. 6. New Zealand—Economic conditions—21st century. i. Title. 338.993—dc 22 This book is copyright. Apart from fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without prior permission of the publisher. Cover design: spencer Levine Printed by Astra Print Ltd contents Preface vii 1 Beyond the Farm and the Theme Park 1 2 Our World-class success stories Michael Chick, Mike Daniell, Peri Drysdale and Richard Taylor 24 3 The Aspirants Murray Broom, Hans van der Voorn, Bill Denny and Andrew Coy 58 4 The Challenge for science Andrew Wilson and Di McCarthy 80 5 M ori Perspectives ā Craig Rofe, Ocean Mercier and Wayne Mulligan 93 6 New Zealand’s Prosperity David Skilling, Rod Oram and Stephen Tindall 119 7 Our Capacity to succeed Sally Davenport, Neville Jordan and Stephen Tindall 142 Epilogue: From Wool to Weta 168 index 172 This page intentionally left blank Preface Through the nineteenth and twentieth centuries, New Zealand’s prosperity was built on commodity sales. Wool was one of the earliest products and, thanks to refrigerated shipping, was followed by meat and dairy. But in the twenty-first century an additional basis for prosperity is needed, in which we generate New Zealand products of great value to the world, offering opportunities for talented and creative Kiwis to work in their homeland. The title of the book, Wool to Weta, reflects the transition we have to make. Weta Workshop Ltd embodies an ideal. its products have extraordinarily high value and are transportable anywhere in the world. it manages a complete value chain, from intellectual property (iP) generation to production, yet it works in close alliance with international players. it is confident and bold. To quote from chief executive officer (CEO) Richard Taylor, ‘One of the things i say to our crew is, “Why shouldn’t it be us?” if it can be a company in the heart of Burbank in California, why couldn’t it be a company in the heart of Wellington, New Zealand?’ That is the story the book seeks to tell. if we are sufficiently bold and determined we can make New Zealand a place where our young people see their best future. The book is optimistic, but it also examines our present predicament, a declining prosperity in which we are comforted, yet imprisoned, by our myths. Every time i return to New Zealand from a trip abroad, i savour the air as i walk out of Auckland international Airport towards the domestic vii viii paul callaghan terminal. Whether a bright day is dawning or storm clouds looming, there is a clarity of light, a freshness to the place that even a week or so away causes me to notice, yet again. Living here, day in day out, it takes more to remind me of the delight of this place, perhaps a moment of astonishing stillness, gazing out over Wellington Harbour, perhaps during a pause for breath, looking back to the Nelson Lakes valley from the top of the scree near Mount Angelus. We New Zealanders are defined by our natural environment. We know why this place is home to us. Yet we are worried that our children see better opportunities abroad and that our infrastructure each year appears a little more decrepit by comparison with the countries where our children are headed. We worry about our health services, about our access to the best possible medical treatments and about our social cohesiveness. in short, we sense that we are somehow not as prosperous as we would like. We work hard, we have a good-quality education system, but something is amiss. Political lobby groups provide ready answers: ‘We are overtaxed’, ‘The Resource Management Act is stopping us using our natural assets effectively’, ‘The New Zealand dollar is too high’. And yet, when we look at countries more prosperous than us, we often see higher taxation rates, more bureaucracy and higher value currencies. i choose two examples to make the point. Australia and sweden are richer than us, per capita, by 30 per cent and 31 per cent respectively. The origin of our economic predicament does not lie in our politics, nor in our commitment to hard work, nor in our lack of mineral resources, nor in our lack of skills. sustainable prosperity is a product of culture. New Zealanders choose to be poorer than other nations because we choose to work in low-wage activities. Our land-based industries are the bedrock of our economy. Dairying is to us what minerals are to Australia. And yet, as this book will show, we cannot build a successful modern economy based on pastoral farming and horticulture alone. And as much as we love our landscape, and extol our Kiwi values, we need to break free from myths of our own making. The fundamentals for our economic transformation are in place, and the examples of small economies moving rapidly from decline to prosperity should encourage us. Finland and ireland made their upwards shift in less than one generation, and so can we. David Lange once said, cheekily, that New Zealand’s destiny was to be a theme park, while Australia’s destiny was to be a quarry. This book tells the story of how we must move beyond the farm and the theme preface ix park if we are to build sustainable prosperity in New Zealand, protecting our natural environment in the process. The story grew out of a series of public lectures throughout New Zealand in late 2007, sponsored by the Royal society of New Zealand (RsNZ) and the David and Genevieve Becroft Foundation. A camera and sound team accompanied the lectures and, as we travelled around the country, i interviewed a number of New Zealand entrepreneurs, technologists and economic commentators. The project extended into 2008 as the scope of the interviews broadened, resulting in a ten-part documentary series first broadcast on stratos Television in May 2008 and a later fifty-minute documentary broadcast on TVNZ7 in October 2008. The book is an edited compendium of those interviews and the first chapter is based on my public lecture. it is partly a vehicle for the insights of those interviewed and, in the first chapter, a vehicle for my own opinions. i interviewed a remarkable collection of New Zealand achievers, including Warehouse entrepreneur and philanthropist stephen Tindall, technologist and venture capitalist Neville Jordan, business professor sally Davenport, the CEO of New Zealand’s premier ‘high- tech’ company, Mike Daniell, Untouched World exporter Peri Drysdale and iwi business leader Wayne Mulligan. A multiplicity of voices emerge. Through Peri Drysdale we learn how our land-based industries can find entirely new markets based on fashion and design. Richard Taylor of Weta Workshop makes clear the potential for creative industries based on the humanities. Rod Oram and David skilling present somewhat different economic analyses of New Zealand’s potential for growing global knowledge-based businesses. And Di McCarthy and Craig Rofe stress the importance of motivating the young. This, at heart, is a book about economics, and i am not an economist. But economics is a subject that fascinates me. Far from being ‘the dismal science’, it is a subject about humanity, about human behaviour and about how we can live socially to the greatest mutual advantage. i respect the discipline of economics, especially because of its own inherent scepticism. i’m a scientist, so being a sceptic comes naturally to me. i invite and welcome the reader’s scepticism as well. i would like to acknowledge some of the people who have made this project possible, most importantly all those i interviewed. Di McCarthy and Glenda Lewis of the Royal society of New Zealand encouraged me to undertake the lecture series and organised it, while David and Genevieve Becroft assisted through their generous sponsorship. Mark Everton and