AI adoption could boost NZ productivity by NZD $108 billion by 2038
Artificial intelligence could help address New Zealand's long-standing productivity challenges, according to industry and government leaders. New Zealand's productivity growth has lagged behind similar economies for decades, as highlighted by international comparisons which place its GDP per hour worked about 40 per cent below other small advanced nations such as Denmark, Finland, and Sweden.
Productivity opportunity
Recent studies suggest that AI presents a significant opportunity to help close this gap. Research from Mandala has identified both AI applications and AI datacentre infrastructure as major drivers for future economic expansion. According to Accenture, generative AI has the potential to contribute between NZD $76 billion and NZD $108 billion annually to the New Zealand economy by 2038, effectively more than doubling current productivity rates.
Skills and access
As New Zealand businesses and government debate how to realise these gains, emphasis is being placed on developing skills to support the adoption and responsible use of AI. Microsoft is backing a National AI Skilling Partnership that includes government, industry, tertiary education providers, and community groups. The initiative aims to equip workers with the technical and digital skills needed to adapt to AI-driven workplaces.
The partnership is also focusing on ensuring fair and equitable access to AI training and technologies, particularly for communities that are under-represented in the digital workforce. Upskilling those in occupations likely to be affected by automation is considered a priority to enable transitions into new or augmented roles.
Industry collaboration
Several major employers are implementing their own digital skills programmes. Spark has made significant investments in training its employees and other organisations in AI fundamentals, while One New Zealand has launched a similar programme with a specific emphasis on responsible AI use. In West Auckland, Microsoft joined forces with public and private sector partners to deliver digital skills training to students, teachers, and job seekers, supporting the local creative sector.
Industry events such as the AI Forum New Zealand's annual hackathon aim to make AI training accessible to participants of all skill levels, with a view to using AI in tackling environmental and social challenges.
Education pathways
The importance of digital education is also being acknowledged at school and tertiary level. AI and digital technologies have been incorporated into the national curriculum, with the objective of preparing young people for future opportunities in a technology-driven economy. Most universities and tertiary institutions in New Zealand now offer AI-related courses, ranging from short-form training to advanced degrees.
Microsoft has partnered with Auckland University of Technology to provide upskilling opportunities for recent graduates. The company has also worked with academyEX to support digital skills initiatives, including events and education programmes for local government staff in Palmerston North.
Australian models, such as the Institute of Applied Technology - Digital in New South Wales, are being cited as examples of how industry and education can collaborate. These initiatives blend vocational and university learning to better align educational pathways with evolving technology and labour market needs.
Public sector digitisation
Accelerating the digital transformation of the public sector is identified as another key factor in improving productivity. Recent analysis indicates that advancing the adoption timeline for public cloud infrastructure by five years could result in government savings of NZD $1.1 billion by 2030 and NZD $3.6 billion by 2035. Shifting to scalable cloud-based technology would not only reduce operational costs but also enable the integration of AI in critical areas such as health, education, and justice services.
In healthcare, AI is already being deployed on the ground. Techion, in partnership with Awanui Labs and the University of Otago, is using AI technology to assess medical samples in regional clinics. This allows for immediate identification of cases that require expert review and is seen as a way to increase efficiency and extend advanced diagnostic services to regional areas, supporting around 70 per cent 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, Treasury.
