Artificial intelligence (AI) is poised to play a crucial role in addressing New Zealand’s longstanding productivity challenges, according to industry and government leaders. For decades, the country has experienced productivity growth that lags behind similar economies, with its GDP per hour worked estimated to be around 40 percent lower than nations like Denmark, Finland, and Sweden.
Recent studies point to AI as a significant opportunity in closing this productivity gap. Research conducted by Mandala identifies both AI applications and AI datacentre infrastructure as pivotal drivers for future economic expansion. A report from Accenture suggests that generative AI could contribute between NZD $76 billion and NZD $108 billion annually to New Zealand’s economy by 2038, potentially more than doubling current productivity rates.
As discussions unfold among New Zealand businesses and government officials on how to harness these potential gains, a focus is emerging on developing skills necessary for the adoption and responsible use of AI. In this regard, Microsoft is backing a National AI Skilling Partnership, which encompasses government, industry, tertiary education providers, and community groups. The initiative aims to equip workers with the technical and digital skills essential for adapting to AI-driven workplaces.
The partnership also emphasizes the importance of ensuring fair and equitable access to AI training and technologies, particularly for communities that are currently underrepresented in the digital workforce. Upskilling individuals in occupations likely to be impacted by automation is considered a priority, facilitating transitions into new or enhanced roles.
Major employers are also stepping up to implement their own digital skills programs. For instance, Spark has made significant investments in training employees and other organizations in AI fundamentals, while One New Zealand has introduced a similar initiative focused specifically on responsible AI use. In West Auckland, Microsoft has collaborated with public and private sector partners to deliver digital skills training to students, teachers, and job seekers, aiming to bolster the local creative sector.
Industry events, such as the AI Forum New Zealand’s annual hackathon, aim to democratize AI training by making it accessible to participants of all skill levels, with the goal of leveraging AI to tackle environmental and social challenges.
The necessity for digital education is also being acknowledged at both school and tertiary levels. AI and digital technologies have been integrated into the national curriculum to prepare young individuals for future opportunities in a technology-driven economy. Most universities and tertiary institutions in New Zealand currently offer a range of AI-related courses, from short training modules to advanced degrees.
Microsoft’s collaboration with Auckland University of Technology aims to provide upskilling opportunities for recent graduates. The company has also engaged with academyEX to support digital skills initiatives, including education programs for local government staff in Palmerston North. Australian models such as the Institute of Applied Technology – Digital in New South Wales are being referenced as exemplars of successful industry and education collaboration, blending vocational and university learning to align educational pathways with the evolving technology and labor market landscape.
Another key factor in enhancing productivity is the digital transformation of the public sector. Recent analyses indicate that if New Zealand accelerates its public cloud infrastructure adoption timeline by five years, it could result in government savings of NZD $1.1 billion by 2030 and NZD $3.6 billion by 2035. Transitioning to scalable cloud-based technologies is expected to reduce operational costs and facilitate the integration of AI in vital sectors such as healthcare, education, and justice services.
In the healthcare sector, AI is already being utilized effectively. Techion, in partnership with Awanui Labs and the University of Otago, is employing AI technology to assess medical samples in regional clinics. This initiative facilitates immediate identification of cases requiring expert review and aims to enhance efficiency while extending advanced diagnostic services to regional areas, which support around 70 percent of New Zealand’s diagnostic market.
“Most New Zealand firms innovate by adopting new technology – this is key for growth. However, despite some advances, technological diffusion in New Zealand is still low and slow. To lift our productivity through innovation, focus is needed on stronger relationships and networks between industry, government, and researchers, and with increasing capacity and capability,” said Jo Hughes, Deputy Secretary of Economic Policy at the Treasury.
As New Zealand embarks on this transformative journey, the collaboration between industry, education, and government will be vital in unlocking the full potential of AI to drive productivity and economic growth, setting the stage for a more competitive future.
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