The report is based on interviews conducted by Tuanz (Technology Users Association of NZ), who spoke to chief information officers at organisations including AA Insurance, Ford NZ, Transpower, Turners, Freightways, ANZ, Kiwibank, BNZ, KPMG, TSB, Barfoot and Thompson, Beca and Zespri.

“This Government came in with quite a lot of noise around what they wanted to do with tech and encouraging people to step up and use tech to develop their businesses,” Young told the Herald.

“So we thought ‘We’ll give them a year.’ But it was quite clear, talking to all the leaders, that they really struggled to put their finger on one digital initiative that had helped them.”

When the new Government came to power, it was clear Science, Innovation and Technology Minister Judith Collins had a passion for the tech sector, Young said, “But she also had a lot of other big portfolios”.

Collins was also appointed Attorney-General, Minister of Defence, Minister of the GCSB and SIS and – since the demoted Shane Reti took over tech – the Public Service.

Reti also had a lot on his plate, Young said, including a sweeping reorganisation of the science and innovation centre that involves the dismantling of Callaghan Innovation (which will be defunded at the end of June) and the establishment of a series of new public research organisations or PROs.

“We had thought that they would be better prepared and would come out with more last year around helping companies in particular understand what they can and what they should and shouldn’t do with AI,” Young said.

One of the new PROs will focus on advanced technologies such as AI and quantum computing, but details are still pending. The Government expects enabling legislation for the new agency to be passed in the December quarter and come into effect in early 2026.

After his round of interviews, what’s Young’s sense of what our chief information officers want from Budget 2025?

“It’s not necessarily about money. They would like to see some focus on leading the way. They’d like to see a strategy that’s not just a document, but something that’s actually got bipartisan support that actually helps address the challenges that are in place.”

The Government has made moves to liberalise visas, which has helped to address what the report calls a “persistent tech talent gap”.

But respondents wanted to see money going into stem (science, technology, engineering and maths) subjects in schools to nurture local talent.

“And they want to see the Government leading by example by digitising its own services. And some are keen to see some money go back into things like encouraging small businesses to take up digital services.”

The previous Government’s $44m Digital Boost programme, which saw free online tutorials for small businesses had its funding terminated in 2023.

The cut wasn’t mourned by everyone in the sector. Some in the (now defunct) ginger group NZ Rise noted that many of the tutorials were supplied by IT firms who trod a thin line between education and marketing their own wares.

Hope of increased support

“Despite current frustrations, some digital leaders remain hopeful that the Government will increase its support for digital start-ups, streamline processes and prioritise investment in emerging technologies,” the Tuanz report says.

“However, they emphasise that meaningful progress requires close collaboration between the Government and industry to drive digital transformation and innovation.

“One leader notes that large corporate organisations also have a responsibility to take the lead and work alongside the Government in shaping the country’s digital future.”

The report named several emerging technologies to watch, including:

Cyber-security was an area where AI was a double-edged sword, Young said. It could aid defences but also help facilitate sophisticated new attacks.

Similarly, some respondents were keeping a close eye on quantum computing – which promised efficiency breakthroughs but could also upend security as we know it, given its mind-blowing processing power could render today’s defences useless.

Escalating cyber-security risks was number one on the priority list, which also included bridging the tech talent gap, digital inclusion, accelerating technology adoption, harnessing data and Gen AI.

The report says NZ has slid in World Economic Forum ratings for cyber-security (from 38th in 2020 to 56th in 2024) and privacy protection (from 46th to 69th over the same period).

“In New Zealand, the lack of legislation or regulation beyond the Privacy Act remains a major concern for our digital leaders,” the report says.

The report adds: “Our low and stagnant rankings for cyber-security and privacy protection underscore the need for urgent action to strengthen our capabilities in these critical areas.”

The Government has adopted a “light touch” approach to AI, with no new laws or regulation to cover the technology, and no new investment to boost uptake of the technology – although some existing spending has been reallocated to boost business awareness of AI and make existing resources easier to find.

Key report recommendations include:

Shane Reti responds: AI strategy on the way

The Herald asked Reti for his response to the Tuanz report, particularly the section titled “Urgent call to action” that outlined concerns of lack of Government leadership and strategy.

“The Government has been clear about our plan to unleash economic growth through our science, innovation and technology sector, signalling strong support for digital innovation,” Reti said.

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“This quarter, I expect to release our National Artificial Intelligence Strategy as a principles-based strategy document – a key action in our Economic Growth Plan, highlighting the opportunities AI offers for economic growth both in the public sector and the wider economy,” Reti said.

“Through our science reforms, the Government is establishing an Advanced Technology public research organisation, which I expect to deliver research, capability and commercial outreach around technologies such as artificial intelligence, and quantum computing.

“We also have centres within Government that provide guidance and leadership on the use and sharing of data, such as the Centre for Data Ethics within Stats NZ.

“However, while Government has a role to play in facilitating digital transformation and good data practices, some of our greatest innovation happens in the private sector. That’s why our approach focuses on supporting businesses and getting regulatory settings right, to cut some of the red tape and reduce barriers for our talented innovators to use their ideas to solve real-world problems.

“For example, establishing Invest NZ to supercharge foreign investment and bring world-class talent and innovation to New Zealand, and passing a new Gene Technology Bill to enable safe use of gene technology, ending the near 30-year ban on gene technology outside the lab.”

Budget 2025 will be delivered on May 22.

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Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.