A new report has found that the adoption of generative AI could add a staggering $76 billion per year to New Zealand’s economy by 2038. This represents more than 15% of the country’s GDP, or twice the current size of the construction sector, writes Sarah Carney.
In the fast-evolving landscape of technology, few innovations hold as much promise as generative AI. A lot of the recent criticism about the “age of AI” has been that it’s all hypothetical, lacking meaningful figures.
However, more than a year since generative AI appeared on the scene in a big way, we’re seeing the results of early adoption – and they’re impressive.
At Genesis Energy, workers using Microsoft Copilot have reported seeing an hour’s worth of time being saved on average every week. Accenture has now done extensive modelling of 19,000 tasks performed across 400 Kiwi occupations, which showed even bigger potential time savings of 275 hours per year, which is massive.
If we get our approach to regulation and skilling right and build the right trust in AI to boost adoption, here’s what else we stand to gain.
The Accenture report commissioned for Microsoft, New Zealand’s Generative AI Opportunity, reveals that the adoption of gen AI could add a staggering $76 billion per year to New Zealand’s economy by 2038. This represents more than 15% of the country’s GDP, or twice the current size of the construction sector.
In an ideal scenario, where all the right conditions for success are met, these gains could soar to $102 billion. Gen AI also has the potential to double New Zealand’s productivity growth rate, representing a transformative opportunity for our economy.
Think for a moment how much that could do for wellbeing in this country. Even going by the more conservative estimate, $76 billion represents two and a half times the total health spend in the 2024 Budget. It’s also $8 billion more than the government’s entire infrastructure spend promised for the next five years.
There’s just one problem – New Zealand isn’t in a position to capitalise on this promise yet, putting it at risk of missing out on at least $33 billion (the conservative estimate) over the next four years.
“More focus and investment are needed in skilling workers, getting our regulatory settings right, and enabling international and cross-sector collaboration…”
More focus and investment are needed in skilling workers, getting our regulatory settings right, and enabling international and cross-sector collaboration.
New Zealand workers are among the fastest adopters of generative AI tools globally according to Microsoft’s Work Trend Index, yet local businesses lag behind their international counterparts in integrating these technologies into their operations, as noted in a recent Treasury report.
This has led to a “BYO AI” situation, where employees use a range of tools that don’t work together to optimise productivity, data analytics, and collaboration. Additionally, the Productivity Commission found that lack of AI regulation, coupled with a lack of technical and leadership skills, are holding the country back from maximising returns on AI and hindering the nation’s competitiveness.
Sarah Carney, chief technology officer, at Microsoft ANZ.
It’s encouraging to see Technology Minister Judith Collins announce plans to address our lack of AI maturity and seek new initiatives to boost adoption, including across the public service, in her recent Cabinet paper.
The Accenture report identifies exactly which steps we’ll need to take to unlock the full potential of generative AI in New Zealand. It outlines six key areas for development:
- Access to infrastructure.
- Skilled workforces.
- Enterprise readiness.
- A collaborative ecosystem.
- A clear policy framework.
- Public trust.
We also need to change our mindset around what AI means. All too frequently, businesses are thinking in terms of cost reduction, which is understandable given current economic conditions. However, to achieve the largest gains, this mindset must shift to from “how can gen AI save us money” to “how can we enable workers through gen AI?”.
The report recommends a considered approach that ensures workers are well supported to transition to higher value work, focusing on automation and leveraging generative AI as a training tool to enhance workers’ capabilities, rather than replace roles or cut costs.
With the opening of Microsoft’s hyperscale cloud region in 2024, along with additional datacentres in the pipeline, our digital infrastructure is set to receive a significant boost in the next few years.
These developments provide the computational power and onshore capacity needed to support widespread AI adoption. However, infrastructure alone is not enough. The size of the economic benefit will depend on the scale, speed, and approach to adoption, as well as how workers are supported to adapt to new ways of working. It’s vital the right settings are put in place to enable the best outcomes for the country.
New Zealand has historically struggled with low productivity, but the advent of generative AI offers a unique opportunity to change this narrative. By working harder to create the right conditions for success, we can move from a position of “could do better” to “best in class”.
Sarah Carney is the chief technology officer, at Microsoft ANZ.
