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Data & Insights 2 min read

Aotearoa New Zealand’s $7.8 billion digitalisation opportunity

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Bridget Snelling

May 14, 2023

When it comes to productivity, it’s no secret Aotearoa New Zealand lags heavily behind our OECD counterparts. In fact, our recent research shows Kiwis would need to work 20 percent more to reach the average OECD GDP output.

For Kiwis working a 40-hour work week, this is equivalent to working an extra day per week to make up the labour productivity gap – and that’s just to reach the average productivity mark.

These are impossible numbers. 

We can’t simply put our heads down and work our way to better productivity. We need to ensure every hour spent working is doing something only a human can do.

The opportunity for digitalisation

This week we released new insights developed by the New Zealand Institute of Economic Research (NZIER) revealing a 20% increase in the number of businesses adopting cloud-based business tools in the future could add up to $7.8 billion to Aotearoa’s annual GDP through improved productivity. 

In uncertain economic times, we need to do everything we can to digitalise our small business economy and turn this country into a world-leading digital nation. 

The research also showed the payback period for businesses’ investment in digitalisation is relatively short, typically less than two to three years before they start seeing an ongoing positive return. 

In as little as two years, we can help rejuvenate the economy, potentially adding billions of dollars through the improved productivity delivered by the increased uptake of digital tools.

Taking lessons from international success stories

While economies around the world continue to rapidly digitalise, Aotearoa New Zealand’s digital competitiveness has fallen behind in the major categories of knowledge, technology, and future readiness. 

In the 2022 IMD World Digital Competitiveness Rankings, we ranked 27th out of 63 countries, down from an overall ranking of 19th in 2018.

Singapore and Denmark continue to lead the digital way globally and are key examples of what strong, committed government investment into digitalisation can do for an economy.

Singapore’s Go Digital programme includes extensive support for SMEs such as pre-approved solutions for digitalisation supported through the government’s Productivity Solutions Grant. 

It also offers SMEs a chief technology officer-as-a-service – a self-help platform empowering  business owners to identify their digitalisation needs and access digital consultants for custom advice and market-proven solutions. 

The roadmap to improving digitalisation in Aotearoa New Zealand

Of course, the business community can’t do this alone. The New Zealand Government needs to do everything it can to support our digital progress. 

We need policies encouraging the expansion of the digital economy by addressing the key barriers many business owners face including financial constraints, skills gaps, attitudes and awareness.

Our latest report by NZIER highlights the lessons from digitalised countries to inform future  actions and policies for digitalisation. 

In the short term, developing  a Productivity Solutions grant to fund business digitalisation is a key example of empowering growth. 

Overall improvement of digital literacy at all levels of society in the long term is crucial, as is boosting the competitiveness of Aotearoa New Zealand’s tech sector immigration policy. 

There’s no quick fix to a problem as complex as productivity. But we know investing in further digitalisation is a step in the right direction. 

For NZIER’s breakdown of high-priority actions for the Government, read the full report

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