“Large multinationals arrive in the country, contribute nothing in the way of paying local taxes, and exfiltrate value and data (“the new oil” as it was unironically christened by The Economist). It is essentially digital colonialism.”
The ugly face of what Christie calls ‘digital colonialism’ was on show at a recent industry event. A handful of companies had speaking slots.
Local firms spoke about serving small business, building skills and capability. Their focus was longer-term.
Meanwhile two of the multinationals that got to speak made short term sales pitches. One even used the occasion to push its latest promotion.
“…there are other approaches. Ones that involve paying taxes that provide for schools and hospitals, keeping data onshore and respecting te ao Māori, acknowledging the value of New Zealanders’ privacy, and building a resilient digital sector that will provide fulfilling, high-value jobs for Kiwis for decades to come.”
Paying local taxes for digital products is a sore point. Yet it is not unusual for countries to tax foreign resources firms like miners and oil explorers.
On that basis, it makes sense to treat the ‘new oil’ the same way.
Tax on digital profits is being addressed at the international level. The process will be slow and could be unsatisfactory. Yet a small country like New Zealand would do better to fall into line with other like-minded nations and not go it alone.
Jobs are critical. We have low unemployment today. Indeed, a halt to immigration means we are desperately short of skilled workers.
Yet we may be a lockdown away from widespread company failure and layoffs.
While multinationals use locals, and in cases pay well, much of the work is in sales or administration. The high value-add work tends to take place close to corporate headquarters.
More high value jobs means building more capability. It would give young New Zealanders better career paths. And that would seed interest in tech related subjects in schools and tertiary institutions.
If we get this right, there will be more corporate headquarters in Auckland, Wellington and Christchurch. This would be better for the wider economy.
“…Rebuilding New Zealand’s economy in the aftermath of the Covid-19 pandemic, and under the shadow of climate change, is a challenge that we have not seen since the end of World War II. The decisions we collectively make now have the potential to impact, positively or negatively, generations of Kiwis to come.”
There are ministers and opposition politicians who get this. Building digital capability is low down the priority list at the moment. If more prominent industry personalities speak out, we can push it higher up the agenda.
“We should be planning for our own data management, cyber security, and artificial intelligence applications, and how these can be implemented across all of our sectors: agriculture, education, finance and others.
“Building and delivering value for the current and future generations, now that technology is interwoven into every aspect of our communities and our economy.”
It’s hard to disagree with any of this. A good place to start would be with government. Even now, government buyers appear to have a built-in reluctance to choose local technology. Fixing that would be the best place to start.