ICT key to service sector productivity

New Zealand's Productivity Commission sees increased use of ICT as key to improving the performance of the country's services sector.

The Commission released its second interim report and draft recommendations for consultation today, including recommendations on how to increase competition and the use of ICT in New Zealand’s service industries.

Services make up nearly three-quarters of New Zealand’s GDP. The price of services, therefore, affects the cost of goods throughout the economy, including exports. However, the service sector does not perform as well as in Australia or the United Kingdom, the Commission said.

“Sharpening competition and increasing the use of ICT could provide a much-needed boost to New Zealand’s services sector, from tourism to software design, and by extension the whole economy”, said Commission chair Murray Sherwin.

Sherwin said ICT is revolutionising the way services operate.

"However, New Zealand has yet to experience the full productivity benefits of ICT, in part due to the lack of skilled ICT professionals and ICT-savvy managers, and the high initial cost of ICT services."

Streamlining the process for filling ICT jobs from overseas and helping ICT graduates to adapt to the workplace would increase the number of employees and managers with ICT skills, he said.

Cloud computing also has great potential to level the playing field for New Zealand services firms by reducing the costs of setting up ICT services, he said. However, New Zealand firms need encouragement to adopt cloud-based services.