2 days ago
If New Zealand wants productivity gains, it must close its AI divide
Much like steam once powered factories, artificial intelligence (AI) is now fuelling the next leap in human productivity.
The Government has signalled its intention to harness technology and AI to boost productivity across both the public and private sectors. Yet, the data tells a more sobering story. According to Stats NZ, labour productivity in New Zealand lags behind the OECD average - shrinking by 0.9% in the year to March 2024, while the OECD average rose 1.2%. We are falling behind at a time when the global economy is accelerating.
New Zealand's productivity needs urgent intervention and AI is a critical part of the solution. Research from Accenture shows that generative AI can drive efficiency gains of up to 30% and reduce costs by 20%. Companies that successfully embed generative AI into their operations while investing in data, technology, and talent can expect significant returns in top-line productivity.
But there's a catch: New Zealand businesses aren't ready. Digital maturity is a key indicator of AI readiness, and our latest research shows 40% of companies in Australia and New Zealand sit in the bottom quarter globally.
There are promising signs. Government and local government initiatives such as the Auckland Technology Alliance, AI Activator, Elevate, and GovGPT demonstrate a growing commitment to responsible AI integration, aligned with OECD principles. Finance Minister Nicola Willis announced increased funding for tech startups through the Elevate venture fund. If these investments are directed toward high-potential companies, they could trigger a steep improvement in productivity.
Minister for Technology Judith Collins recently stated the need to increase awareness and adoption of AI to ensure we keep pace globally. "It is crucial businesses are supported to improve their awareness and uptake of AI, so they can capitalise on the benefits," she said.
She's right. But to get there, we need to build strong digital foundations first.
Build the digital core
AI doesn't operate in a vacuum. It depends on a modern digital backbone - cloud infrastructure, clean and accessible data, and agile operating models. This is what we call the digital core.
At Accenture, we advocate for a 360-degree approach: modernising systems, reducing technology debt, upskilling employees, ensuring inclusivity and diversity, and prioritising sustainability. There is no one-size-fits-all model, but these are non-negotiables.
The payoff is real. When we implemented generative AI across our sales teams, we saw a 35% lift in productivity. Across our client base, "reinvention-ready" companies, those that have invested in becoming digitally mature, are seeing productivity improvements up to 240% greater than their peers.
AI opens global doors
AI and digital tools also allow Kiwi businesses to scale internationally without the burden of physical expansion. According to Accenture's Emerging Market Consumer Report, one billion new consumers will enter the global market by 2035 in regions like India, Nigeria, and Indonesia. Yet 40% of global consumer brands are still absent from these markets.
There is real potential for companies and innovative products to make a bigger impact on the global stage, by selectively expanding into markets that have rich potential, and digitally taking New Zealand products and services to the consumers in those markets, we can dramatically increase our output internationally.
Gen AI will reshape every business
Through its ability to collect, analyse and interpret vast amounts of data, applied Artificial Intelligence is already helping compress the timeframes and resources previously needed to make strategic business decisions. With the continued innovation in the technology and AI sector every role in every business has the potential to be reinvented.
Applied AI is already compressing decision-making timelines and transforming operations. Every role in every industry is being reshaped. Yet New Zealand is significantly lagging in Digital Maturity according to a recent xxx report. While this has shifted over recent years with increased funding in the technology sector, and the continued release of new AI tools, too many companies are still reliant on manual, paper-based systems that reduce productivity and hinder innovation.
To compete, Cut the tech debt
Outdated IT systems are a major barrier to progress, draining capital and delaying transformation. Building a strong, cloud-based digital core, powered by AI and quality data, is essential to unlocking productivity.
At Accenture NZ, operating 85% in the cloud has significantly boosted our own productivity by reducing costs and complexity.
Build a workforce that can lead with tech
Technology is only half the equation. People are the other half. Every dollar spent on digital tools should be matched by investment in skills and capability.
According to a joint study between Microsoft and Accenture, employees could save nearly an hour every day or 275 hours a year through generative AI. This is projected to add $76 billion to New Zealand's GDP by 2038. 14% of tasks could be automated and 26% of tasks gen AI could act as a co-pilot. That's not about replacing jobs it's about augmenting them. AI gives employees superpowers: enabling them to focus on strategic, higher-value work. That matters in a country where 1 in 10 workers feel overqualified for their role.
To stay competitive, we must invest in widespread digital upskilling - today, not tomorrow.
Robin Sharma once said, "Don't confuse activity with productivity. Many people are simply busy being busy."
New Zealand can't afford to be busy being busy. To reverse our productivity slide, we must build the foundations for AI, accelerate digital maturity, and empower our people to lead in a tech-driven world.
The window of opportunity is open. We must step through it.
