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Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

New Zealand’s growth agenda for prosperity

Innovate

• r bust

MA MATT PRICHARD TT PRICHARD

Last year’s message

What got us here Won’t get us there

What will get us there?

82%

OF CEOS ARE CONCERN OF CEOS ARE CONCERNED D THEI THEIR CURRENT PRODUCTS R CURRENT PRODUCTS AND SERVICES MA AND SERVICES MAY NO Y NOT T BE BE RELEV RELEVANT T TO CUST CUSTOM OMERS ERS THREE YEARS FROM THREE YEARS FROM NOW NOW

They’re probably right

If then

What will get us there?

82%

OF CEOS ARE CONCERN OF CEOS ARE CONCERNED D THEI THEIR CURRENT PRODUCTS R CURRENT PRODUCTS AND SERVICES MA AND SERVICES MAY NO Y NOT T BE BE RELEV RELEVANT T TO CUST CUSTOM OMERS ERS THREE YEARS FROM THREE YEARS FROM NOW NOW

They’re probably right

If then

What are we doing about it?

KPMG innovating

What New Zealand needs from…

Business

GODFRE GODFREY BO BOYCE

Government

SOUELL SOUELLA CUMMING A CUMMING SIMON HUNTER SIMON HUNTER BRUCE BERNA BRUCE BERNACCHI CHI

Communities

KIM J KIM JARRETT RRETT

Innovating for prosperity

The role of businesses

GODFREY BO GODFREY BOYCE

CONNECTION CONNECTION AND AND PACE CE

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

The role of businesses

DOUBLE DOUBLE

OUR EXPORTS BY 2025

The issue: value chains and innovation

SOU SOURCE: WORL WORLD ECONO D ECONOMIC FOR FORUM

(NEW ZEALAND IS 13th OUT OF 138 COUNTRIES) GL GLOB OBAL AL COMPETITIVENESS INDEX 2016 COMPETITIVENESS INDEX 2016

NEW ZEAL NEW ZEALAND EAST ASIA AND P EAST ASIA AND PACIFIC CIFIC

INSTITUTIONS INSTITUTIONS LABOU LABOUR MARKE R MARKET EFFICIEN T EFFICIENCY GOODS MARKE GOODS MARKET EFFICIE T EFFICIENCY HIGHER ED HIGHER EDUC UCATION ION AND TRAINING AND TRAINING HE HEALTH AND AND PRIMAR PRIMARY EDUC EDUCATION ION MA MACRO- CRO-EC ECONOMIC ONOMIC ENVIRONMENT ENVIRONMENT INFRA INFRASTR TRUC UCTU TURE RE INNO INNOVATION ON BUSIN BUSINESS SOP SS SOPHIST ISTICATION ON MARKE MARKET SIZE T SIZE TECHNOL TECHNOLOGIC GICAL READINESS L READINESS FINANCIAL FINANCIAL MARKE MARKET T DEVE DEVELOPMENT

LO LOW HIGH CAPABILITY T BILITY TO INNO INNOVATE TE NEGA NEGATIVE TIVE POSITIVE POSITIVE

SOU SOURCE: KPMG GL KPMG GLOB OBAL CEO SURVEY AL CEO SURVEY

IMP IMPACT OF CT OF DISRUPTION DISRUPTION

Disruption

ONL ONLY 28% OF Y 28% OF CEOS RA CEOS RATE THEIR TE THEIR ORGA ORGANISA SATI TION ON CA CAPABILITY TO TO INNO INNOVATE HIGH TE HIGH

How innovative? What sort of innovation?

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

SOU SOURCE: OE OECD

How innovative is New Zealand business?

2014 OR LATEST AVAILABLE YEAR, % OF GROSS DOMESTIC PRODUCT BUSI BUSINESS SS SPEN SPEND D ON ON RESEARCH RESEARCH & DEVEL & DEVELOPM PMEN ENT FOR SELECT COUNTRI T FOR SELECT COUNTRIES

WHA WHAT HAS T HAS BEEN BEEN WHA WHAT MIGHT T MIGHT HA HAVE BEEN VE BEEN

How innovative is New Zealand business?

1.3%

SPEND ON SPEND ON INNO INNOVATION TION

$245BN

GDP T GDP TODAY

2.8%

SPEND ON SPEND ON INNO INNOVATION TION

$330BN

GDP T GDP TODAY

SOU SOURCE: OE OECD

CUST CUSTOMER OMER INTIMA INTIMACY CONNECTION & CONNECTION & COLLABORA COLLABORATION TION

What’s holding back New Zealand business?

PIV PIVOTAL LEADERS LEADERS STRA STRATEGI TEGIC C ANCHOR ANCHOR AMBIT AMBITION ON & A & ATTI TITUDE DE INVESTM INVESTMENT NT & & RESOURCE AL RESOURCE ALLOCATI TION ON CA CAPABLE PEOPL PEOPLE DEPL DEPLOYMENT MENT DISCIPL DISCIPLINE NE

What sort

• f innovation

by New Zealand business?

INPUT INPUT COMP COMPANIES ANIES FA FARMERS/ GROWERS GROWERS TRADERS TRADERS/ MARKETERS MARKETERS FOOD, FOOD, CONSUMER, CONSUMER, INDUSTRIAL INDUSTRIAL CONSUMERS CONSUMERS FOOD FOOD RET RETAILE ILERS

WE GET WE GET

$37

BN BN

THEY P THEY PAY

$250BN

BN

70%+

What sort

• f innovation

by New Zealand business?

INPUT INPUT COMP COMPANIES ANIES FA FARMERS/ GROWERS GROWERS TRADERS TRADERS/ MARKETERS MARKETERS FOOD, FOOD, CONSUMER, CONSUMER, INDUSTRIAL INDUSTRIAL CONSUMERS CONSUMERS FOOD FOOD RET RETAILE ILERS

Too much of this…

BRIGHT BRIGHT IDEA IDEA PRODUC PRODUCT DEVEL DEVELOPMENT PMENT COMMERCIALISA COMMERCIALISATION TION MARKETING MARKETING

What sort

• f innovation

by New Zealand business?

Not enough

• f this…

ST STAR ART HERE… T HERE… MARKET RESEARC MARKET RESEARCH CUS CUSTOMER TESTING OMER TESTING BRIGHT BRIGHT IDEA IDEA PRODUCT DEVEL PRODUCT DEVELOPMENT OPMENT COMMERCIA COMMERCIALIS LISATION TION CUS CUSTOMER EXPERIENCE OMER EXPERIENCE CUS CUSTOMER FEED OMER FEEDBACK CK

What sort

• f innovation

by New Zealand business?

Innovating for prosperity

CASE STUD ASE STUDY: MO MOAN ANA

Innovating for prosperity

CASE STUD ASE STUDY: MO MOAN ANA STRA STRATEGI TEGIC C ANCHOR ANCHOR CA CAPABLE PEOPL PEOPLE DEPL DEPLOYMENT MENT DISCIPL DISCIPLINE NE INVESTM INVESTMENT NT & & RESOURCE AL RESOURCE ALLOCATI TION ON

CUST CUSTOMER OMER INTIMA INTIMACY CONNECTION & CONNECTION & COLLABORA COLLABORATION TION AMBITION AMBITION & A & ATTITUDE TTITUDE PIV PIVOTAL L LEADERS LEADERS

Innovating for prosperity

CASE STUD ASE STUDY: MO MOAN ANA

FISHER FISHERS

TRADERS TRADERS/ MARKETERS MARKETERS FOOD, FOOD, CONSUMER, CONSUMER, INDUSTRIAL INDUSTRIAL CONSUMERS CONSUMERS FOOD FOOD RET RETAILE ILERS

Innovating for prosperity

CASE STUD ASE STUDY: MO MOAN ANA

FISHER FISHERS

CONSUMERS CONSUMERS

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

More innovation at customer end

New Zealand needs:

More connection More spend on innovation Speed up

The role of Government

SOUELLA CUMMING SOUELLA CUMMING SIMON HUNT SIMON HUNTER BRUCE BERNA BRUCE BERNACCHI CCHI

CONNECTION CONNECTION AND AND PACE CE

Innovating for prosperity

INNO INNOVATIVE TIVE

CONNECTION CONNECTION AND AND PACE CE

The role of Government

DELIVERY OF OUTCOMES

SOUELLA CUMMING SOUELLA CUMMING

Innovating for prosperity

CASE STUD ASE STUDY: INVESTIN INVESTING IN CHILDREN G IN CHILDREN

The role of

Government

The role of

Government

CASE STUD ASE STUDY: CO COGNITIVE TECH ITIVE TECHNOL NOLOGY OGY

The role of

Government

CASE STUD ASE STUDY: SOCIAL SOCIAL HOUSI HOUSING MODEL G MODEL

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

CONNECTION CONNECTION AND AND PACE CE

The role of Government

SIMON HUNT SIMON HUNTER

Innovating for prosperity

INNO INNOVATION TION

SUPPORTING BUSINESS

CONNECTION CONNECTION AND AND PACE CE

Innovating where the value is

1% 14% 5% 20% 30% 30%

0% 0% 25% 25% 50% 50% 75% 75% 100% 100% EXAMPLE V EXAMPLE VALUE CHAIN E CHAIN KNOW KNOWLEDGE DGE & & PUBLIC GOOD PUBLIC GOOD SUPPL SUPPLY PRIMAR PRIMARY ACTIVITY TIVITY AD ADVANCE NCED ACTIVITY TIVITY SUPPL SUPPLY CHAIN CHAIN RET RETAIL T TO CONSUM CONSUMER

HIST HISTORIC ORICAL FOCUS AL FOCUS

80% O OF NE NEW Z ZEALAND ALAND’S R S R&D E EFFOR FORT VS 20% OF V VS 20% OF VALUE CHAIN E CHAIN

FUTURE FOCUS FUTURE FOCUS

80% OF NEW ZEA 80% OF NEW ZEALAND’S D’S ADDED ADDED R&D EFFOR R&D EFFORT SHOULD FOCUS WHERE SHOULD FOCUS WHERE 80% OF THE 80% OF THE VALUE IS E IS

IMMA IMMATURE TURE NETWOR NETWORK

Investing in innovation networks, connections and collaboration

CONNECTION CONNECTION AND AND PACE CE

IMMA IMMATURE TURE NETWOR NETWORK

Investing in innovation networks, connections and collaboration

CONNECTION CONNECTION AND AND PACE CE

AD ADVANCED NCED NETWOR NETWORK IMMA IMMATURE TURE NETWOR NETWORK IMMA IMMATURE TURE NETWOR NETWORK

Investing in innovation networks, connections and collaboration

CONNECTION CONNECTION AND AND PACE CE

BUILDING A CITIZEN I. BUILDING A CITIZEN I.T. ECOSYSTEM FOR PROSPERITY ECOSYSTEM FOR PROSPERITY

CONNECTION CONNECTION AND AND PACE CE

The role of Government

Innovating for prosperity

BRUCE BERNA BRUCE BERNACCHI CCHI

INNO INNOVATION TION

FUNDING

OPPORTUNITIE UNITIES

Funding Innovation

OTHER 7% GST 38% INCOME TAX 55%

TA TAX SOURCES SOURCES

SOU SOURCE: OE OECD

OPPORTUNITIE UNITIES

Funding Innovation

SOU SOURCE: OE OECD

TAX / AX / GDP GDP OECD COUN OECD COUNTRI TRIES

31.4% 31.4%

OPPORTUNITIE UNITIES

Funding Innovation

Base erosion and profit shifting

INTERNA TERNATIO TIONAL NAL HARMONY HARMONY FRA FRAGMENTED INTERNA MENTED INTERNATIONAL IONAL TAX SYSTEM WITH MORE AX SYSTEM WITH MORE CONTRO CONTROVERSY VERSY

OR OR

CHALLENGES CHALLENGES

Funding Innovation

AG AGEING POPULA POPULATION ON DIGIT DIGITAL L ECONOMY ECONOMY INCREA INCREASE SED D MOBIL MOBILITY INCREASED T INCREASED TAX AX DISHARMONY DISHARMONY

FUTURE PROOFING FUTURE PROOFING

Funding Innovation

IMMIGRA IMMIGRATION TAX MIX AX MIX SUPERANNU SUPERANNUATION ION BUSINESS GROWTH USINESS GROWTH

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

New Zealand needs:

World-leading innovation from Government to deliver outcomes Networks sponsored by Government to drive the scale and pace of business innovation Innovative tax policy settings to fund a prosperous future

The role of

communities

KIM J KIM JARRETT ARRETT

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE

REDUCE REDUCE

CONNECTION CONNECTION AND AND PACE CE

The role of

communities

Innovating for prosperity

INEQUALITY

COST T COST TO THE INDI THE INDIVI VIDU DUAL AL

The cost of inequality

COST T COST TO THE INDI THE INDIVI VIDU DUAL AL

The cost of inequality

SOU SOURCE: ST STATIST ISTICS NZ NZ FEM FEMALE MAL MALE

COST T COST TO BUSINESS BUSINESS

The cost of inequality

62,000

NEW JOBS IN NEW JOBS IN AUCKLAND BY 2030 CKLAND BY 2030

COST T COST TO THE COUNTR THE COUNTRY

The cost of inequality

SOU SOURCE: OE OECD IMP IMPACT OF INEQU OF INEQUALITY ITY WITHOU WITHOUT IMP T IMPACT OF INEQ OF INEQUALITY AC ACTUAL AL

COST T COST TO THE COUNTR THE COUNTRY

The cost of inequality

SOU SOURCE: OE OECD IMP IMPACT OF INEQU OF INEQUALITY ITY WITHOU WITHOUT IMP T IMPACT OF INEQ OF INEQUALITY AC ACTUAL AL

CASE STUD SE STUDY

The cost of inequality

Innovating for prosperity

New Zealand needs:

More education innovation

CONNECTION CONNECTION AND AND PACE CE

More housing innovation More health innovation More collaboration Less inequality Fast

Innovating for prosperity

CONNECTION CONNECTION AND AND PACE CE