David Clark, now with the newly-created role of Minister for the Digital Economy, sits down with Newsroom to discuss the sector where the average job can be worth $440,000
David Clark hasn’t given up on transformation.
As health minister for most of the last term of government, he called for a fundamental review of the health and disability system and hoped to oversee its implementation. Instead, he gave up that role after his infamous lockdown beach visit and comments widely seen as throwing Ashley Bloomfield under the bus amid a border testing debacle.
Clark is still sticking to his ambitions for transformation, however, this time in the digital space. After the election, he was handed a number of new portfolios including a duo of technical-sounding roles that open up the doors to major change. Those are the commerce and consumer affairs portfolio and a novel job, Minister for the Digital Economy and Communications.
Getting government on board
Between the two portfolios, Clark is already planning for how life might change in the digital era, from banks being required to seamlessly share consumer data with competitors to get New Zealanders the best deal to a new, wide-ranging framework for how we can verify our identities online.
“We find ourselves where we are because of the way government has organised itself historically. But things are moving rapidly,” he tells Newsroom during a recent interview.
“The interesting thing for me, coming into the digital economy and communications portfolio, is that it’s new. It’s an attempt to bring together some disparate bits of government. It feels like a portfolio with a lot of opportunity.”
That separation between the different parts of the portfolio is highlighted by the fact Clark was presented with five Briefings to the Incoming Minister (BIMs) – missives prepared by ministries and departments highlighting the work they are doing in a given portfolio. Usually, a minister receives just one or two of these, but evidently five different departments work enough in the digital policy space to feel it was worth writing up a BIM.
“All of those were actually really good briefings but they essentially don’t talk to each other,” Clark says.
That’s part of the motivation for creating the singular portfolio, to help coordinate action across government. Clark has also brought together a Digital Ministers Group which is advising on the creation of a guiding framework for policy in the digital space. He and Jacinda Ardern have taken to calling it a Digital Strategy for Aotearoa.
In describing the strategy, Clark cautions that it isn’t through Cabinet yet. But he expects it will be broad and not too prescriptive, oriented around three principles: Mahi tika or trust, mahi tahi or inclusion and mahi ake or growth.
“What we’re trying to set here is the overarching vision,” he says.
While the strategy will give the tech sector a better idea of the direction of travel, it won’t address some longstanding concerns over slowness of government to act with regard to tech, the secretive nature of some of its digital work and its (slowly improving) competence in the space.
Those criticisms are something Clark pushes back on.
“I’ve certainly had conversations with folks in the tech sector who have been frustrated at times with how government moves. But equally, those who’ve become involved with government activities also have commented to me that they hadn’t appreciated the scale that you’re dealing with,” he said.
“If you’re a small start-up, the consequences of getting things wrong are you move on and do something else. If you’re dealing with government, the consequences of getting something wrong are much, much bigger.”
Clark calls it a “creative tension” and does concede that the Government needs to be more responsive. However, he says he thinks that’s happening.
“Working through some of the things about how information was used with the Covid app, there were some very important ethical conversations happening behind the scenes,” he said.
“It forces lots of those kinds of conversations and they’re actually really important ones to have.”
So, what are some of the concrete measures Clark wants the Government to put in place?
His big project this year is a digital identity trust framework. In February, Cabinet signed off on Clark’s first big policy proposal in the digital portfolio, authorising him to take a bill to Parliament later this year to create a framework enabling the development of a “digital identity ecosystem”.
What does that mean in real life? It means no more laborious efforts to prove who you are online.
It goes beyond a revamp of the troubled RealMe system in favour of fostering a decentralised approach to digital identity, where public and private providers alike can access your digital identity (with your consent) to determine you are who you say you are. The framework sets minimum standards and ensures interoperability – so that your bank and your GP can access the same information without you needing to sign a whole new set of forms. Participants would also have to be accredited by the Government to ensure that only those with the best intentions and good data privacy and security standards will have access to your digital identity.
Clark acknowledges that this is hard to talk about in ways that everyone understands, but believes it will have major impacts on the way we live our lives. An Australian study found that the benefits of getting digital identity right in a mature economy would be worth between 0.5 and 3 percent of GDP – as much as $9 billion for New Zealand.
It can also integrate into other work. With his consumer affairs hat on, Clark announced recently that the Government would progress in separate legislation a consumer data right. This would require certain sectors (probably banks first, then the electricity market) to share consumer data (with that consumer’s consent) with competitors, to help make sure they’re getting the best deal.
In the Cabinet paper seeking to establish the right, Clark gives two examples of how it could be used. In one, “an electricity retailer might receive a consumer’s electricity usage from another electricity retailer, and use it to offer the consumer a cheaper plan”. In the other, the right would enable “a mobile phone app that allows a consumer to share their banking transactions to monitor their carbon footprint”.
Consistent digital identity standards could make it easier for people to use this data right.
“The [digital identity framework] will support the development of trusted services that will enable users to securely share their identity online, which is likely to make it easier and safer for them to access their data under the consumer data right,” the Cabinet paper states.
In so doing, Clark hopes to foster an environment where other digital services in New Zealand can thrive.
NZ’s digital economy
There are a number of estimates for how much the digital economy contributes to New Zealand, but because of the abstract and amorphous nature of the sector – and the ways in which it can easily cross over into other industries – we have few definitive figures.
The Ministry for Business, Innovation and Employment, for example, estimates that IT services exports between April 2019 and May 2020 were worth more than $4b, while Stats NZ says the figure is closer to $1.5b a year.
Instead, Clark turns to anecdotes, pointing to a gaming company where the average job is worth $440,000 in revenue, including $400,000 in exports.
“It’s quite extraordinary compared to many other industries in the country. But it’s also true for our cyber specialties and lots of other niche techs that support other industries,” he says.
In Silicon Valley, the goal for a tech start-up these days is usually to get bought up by one of the big firms. That approach is visible in New Zealand, too, where three firms sold last year for a combined total of more than $2b. That includes gaming company Ninja Kiwi, sold to a Swedish corporate for $455m.
Clark isn’t worried that this could hinder New Zealand’s ability to develop its own digital sector, however.
“These things sit somewhat in tension. But there are industry players I’ve spoken to who are actively investing in lots of other tech firms locally. The ones that have succeeded, that have made their $100 million or whatever, are quite keen to support those people that worked in their firms that are now dong spin-offs to generate the next $100 million company,” he says.
“There is more capital around now than there was even five years ago. Significantly more. Those who are in the sector as entrepreneurs will tell you there’s a virtuous cycle. When they do sell, they then have the capital to invest locally.”
However, he concedes, “equally we want some of these companies to really succeed and remain here and have their roots here”. The two aren’t mutually exclusive, he says. Clark points to RocketLab, which does a lot of work offshore, but which has fostered the development of a whole ecosystem of local tech firms clustered around it.
This is the other half of the portfolio that Clark is fascinated with – how best to support and better develop New Zealand’s burgeoning digital economy.
“I’ve got five portfolios. This is one that really, I have to say, occupies a lot of my headspace because there’s a lot of change happening and there needs to be a lot of change happening,” he says.
“New Zealand has historically been challenged by being a small trading nation, a long way from markets. We wanted for a long time to have high-value products, sustainable jobs, with a low carbon footprint. These jobs are undoubtedly high-value, on average, and have a low carbon footprint. It’s another opportunity to sell our goods to the world.”