Generative AI Expected To More Than Double New Zealand’s Productivity: Report

New report for Microsoft forecasts generative AI adoption could add up to $102 billion per year to GDP by 2038 – provided several key barriers are addressed

• Workers set to save an average 275 hours per year through generative AI adoption
• Generative AI expected to add $76bn per year to New Zealand’s economy by 2038 – growing GDP 1% each year
• In an optimistic scenario, Generative AI could add up to $102bn to GDP per year by 2038
• Higher investment in skills, trust, policy and enterprise-level AI adoption is critical for New Zealand to fully realise the potential benefits
• However, comparatively low digital maturity is eroding potential returns and putting New Zealand’s competitiveness at risk

New Zealand, 20 August 2024 – A new report for Microsoft, New Zealand’s Generative AI Opportunity, reveals generative AI adoption is expected to add $76 billion to New Zealand’s economy by 2038, or more than 15 per cent of GDP. In the best-case scenario, the potential gains could reach $102 billion. However, with the country lagging on digital maturity, we stand to miss out on at least $33 billion unless greater focus is placed on developing the right policies, skills and trust in AI.

The extensive research conducted by Accenture examined more than 19,000 tasks performed across 400 occupations to model how their productivity might be improved by generative AI. This analysis found that nearly a quarter (24 per cent) of tasks could be augmented by using generative AI as a copilot to boost workers’ capabilities, and 14 per cent of tasks could be automated, freeing employees to carry out higher-value work. Workers would save an hour per day on average, adding up to 275 hours each year. This is projected to add $76 billion to New Zealand’s GDP by 2038, a share equivalent to twice the size of the current construction sector, while almost doubling the current rate of productivity.

The challenge is that while New Zealand workers are the third fastest adopters of generative AI tools globally, according to Microsoft’s Work Trend Index, the organisations they work for haven’t yet developed their own custom AI solutions. This has resulted in a “BYO AI” situation where employees are using a range of tools that aren’t working together to optimise productivity, data analytics and collaboration, nor aligned to a security and privacy framework. Treasury noted in its own recent analysis that New Zealand has been slower than many other nations to adopt generative AI at a business level, and lacks a cohesive AI policy similar to those already introduced by Australia and the EU.

Meanwhile, a 2022 Productivity Commission study found New Zealand was an outlier in terms of low foreign investment, low levels of international trade, lack of technical and leadership skills and AI regulation, which are holding it back from maximising returns on AI and putting our competitiveness at risk. The Microsoft report warns that unless a more strategic approach is taken, the potential gains to New Zealand’s GDP could almost halve to $39 billion and see us fall even further behind our competitors.

“For many organisations, the focus to date has been “how can AI reduce costs”, which is understandable in the current environment. But we can’t just be looking at generative AI as an opportunity to save money – it’s our chance to do more than we ever dreamed was possible, experiment and take risks, to take our whole economy to the next level,” said Vanessa Sorenson, Managing Director of Microsoft New Zealand. “I’d love to see local enterprises aim higher, for that best-case scenario $102 billion. Imagine what that could do for things like healthcare, social good and vital infrastructure in this country.”

The report notes that New Zealand already possesses some advantages – along with one of the world’s highest rates of AI adoption among workers, it has a reputation as a global test-bed for innovation. Its digital infrastructure is also about to receive a huge boost with the opening of Microsoft’s hyperscale cloud region in 2024, and other datacentres promised over the next few years.

“The report highlights that there is a really exciting opportunity to completely change the game in terms of productivity, but it will require creating the right conditions to change our trajectory. We’ve identified six key areas to build on for success, so we can go from “could do better” to “best in class,” said Justin Mowday, Country Managing Director of Accenture New Zealand.

These are access to infrastructure; skilled workforces; enterprise readiness; a collaborative ecosystem; clear policy framework and public trust and licence to operate. While New Zealand is performing well on the first pillar, more focus and investment are needed in skilling workers, getting our regulatory settings right, and enabling international and cross-sector collaboration.

The report also recommends a “less haste, more speed” approach that ensures workers are well supported to transition to higher value work – focusing on augmentation and leveraging generative AI as a training tool to enhance workers’ capabilities rather than replace roles or cut costs.

“As a global leader in AI technologies, we know we have a role to play in giving people the courage to innovate, and we’re investing and working with our partners to boost skills and understanding. But the more of us who work together, the higher we can reach. This report shows exactly we could achieve if we think big and act fast,” Sorenson said.

About Microsoft

Microsoft (Nasdaq “MSFT” @Microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more.

© Scoop Media