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Confirming our assumptions: Technology sector adding value to New Zealand’s economy

A new report has revealed the value of the technology sector on New Zealand’s economy and it has surpassed everybody’s expectations. Digital Nation New Zealand: From Tech Sector to Digital Nation, released this week by NZTech, aims to deepen the understanding of technology’s impact on New Zealand’s economy.

According to the report, technology is the fastest growing industry in New Zealand and the third biggest export earner.

NZTech is a non-profit organisation that acts as a voice of the technology sector. It worked with independent economic consultancy, New Zealand Institute of Economic Research (NZIER) on the report.

Graeme Muller

It is the first of its kind in the New Zealand technology sector, and NZTech chief executive Graeme Muller says it will create awareness of the exponential impact technology has on society. “NZTech has set out to determine just how important it [technology] is. Without an answer there is serious risk that as a country we will miss opportunities for both economic and social growth,” Muller says.

Microsoft New Zealand chief executive says digital technology is transforming New Zealand’s society in fundamental ways. “Our collective future will be shaped by how well we understand and respond to such change,” he says. “Government, businesses and the people of New Zealand are all stakeholders in this journey.”

The growing sector now has almost 100,000 employees, with 44,161 people in high-tech manufacturing and 54,750 working in ICT. While the technology sector generates a high number of jobs, it is challenged by skills shortages.

Muller says the New Zealand education system is not evolving fast enough to generate local talent to support growth in the sector. “We urge faster implementation of computational thinking and computer programming into curricula in New Zealand schools from year one.”

An increased investment in teachers’ skill development to enable them to teach with technology will create a generation who are more equipped to deal with technology’s rapid change, he says.

According to the Organisation for Economic Co-operation and Development, if New Zealand raises its education outcomes over 20 years to a level comparable with Finland, it would generate a 204 percent increase in GDP worth. Technology would be a key player in this evolution.

The Government is investing $28.6 million in three ICT graduate schools to deliver industry-focused education and research that builds connections between tertiary education providers and high-tech firms.

However, disruptive technologies such as robotics and artificial intelligence are threatening the traditional link between innovation and growth. A recent report by NZIER argued that 885,000, or 46 percent, of New Zealand jobs are likely to be automated within two decades. “New technologies will create demands for occupations, as well as new occupations,” Muller says.

NZTech also recommends the technology sector and the Government combine forces to start creating a position of New Zealand as a high tech capital of the world.

New Zealand’s exports are predominantly primary products, but Moller says there is scope to diversify the country’s export trade. “For a geographically isolated country, global connections are critical. Falling travel costs and greater connectedness due to technology have created new opportunities for trade in diverse sectors.”

Since 1990, exports from New Zealand’s high-tech manufacturing sector have grown from under $100 million to $4.4 billion in 2015.  Exports of high-tech goods and services from the ICT sector have also grown, to $1.9 billion in 2015.

Auckland start-up Hapara is an example of the potential of technology exports. Hapara developed a piece of cloud-based software that allows teachers to see what students have on their screen when using Google Apps. The company is now five years old and the tool is being used in every US state and in more than 30 countries.

For every 4 percent growth in the productivity of the technology sector, New Zealand’s economy will lift by $2.7 billion and wages will increase by 1.4 percent.

“Other national benefits gained from a four percent increase in tech sector productivity would be a $630 million increase in exports and an increase in the level of investment in the economy by around $400 million,” Muller says.

According to the report, if New Zealand firms made smarter use of internet services it could lift GDP by $34 billion.

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