Sinking lid

Victoria University AI lecturer Dr Andrew Lensen, who was academic lead for the report, told the Herald, “We need to be careful in interpreting these statistics, as they are based on 166 self-reported responses from a subset of New Zealand employers.”

Lensen added: “Still, they align with what I’m hearing more broadly: while some job losses are occurring, the more common trend is a ‘sinking lid’, where roles are not being refilled when people resign.

“Economic conditions play a part, but workers are also reporting being expected to do more to cover unfilled vacancies.

“New AI tools can offset some of this, but only in certain circumstances.

“I believe the Government should step up with stronger support for those affected by AI-driven workforce changes, including retraining initiatives and unemployment benefits that ensure people can live with dignity during this transition.”

New career opportunities

AI Forum executive Madeline Newman noted that, on the flipside, 55% of respondents say AI has created new career opportunities, reinforcing the importance of upskilling and career mobility for the current workforce.

AI allowed staff to focus on more high-value work, Newman said.

Efficiency gains, cost savings

The survey found 91% of respondents reported efficiency gains from AI. At the sharp end of things, 25% reported annual savings of $50,000 or more.

While AI adoption had increased, Muller said the amount businesses spend on the new technology has “fallen dramatically”.

Previously, a third of organisations had spent more than $50,000 on AI set-up. This year only 7% spent that amount, and 75% of organisations are now spending less than $5000 on AI set-up.

Muller said the fall reflected the “democratisation of AI” as firms shifted from expensive, bespoke solutions to off-the-shelf tools like ChatGPT, Copilot and Claude.

The off-the-shelf tools had become a lot more capable over the past year, Muller said, making it cheaper for large organisations to deploy AI and levelling the playing field for small to medium-sized businesses.

What’s next?

Muller said it was still early days for the new technology.

The NZTech boss sees two factors expanding uptake over the next year and beyond: the adoption of AI agents (which can perform tasks and make decisions by themselves, within parameters) and the spread of AI from white-collar firms, who are natural early adopters, to industries like trucking and horticulture – not in terms of AI robots doing the driving or picking but using AI to hone their office systems.

Muller has praised the Government for the creation of a new advanced technology agency, which will be formed next year with AI as one of its primary focuses, but he has also acknowledged a “difficult” transition from Callaghan Innovation, which was defunded at the end of July.

“Yes, the transition from Callaghan is bumpy and funding [$231 million, reprioritised from existing budgets] is modest next to Australian or UK bets – but this is another great opportunity to position New Zealand as a high-value, export-intensive tech economy,” Muller said.

Although the Government’s recently released AI Strategy has drawn criticism from some quarters as being too light on aims, support, funding and detail, Muller said in terms of regulation, where there will be no new laws or regulations specific to AI, “The Government has probably got the balance right, for now.”

He noted an International Monetary Fund report that found the EU AI Act, occupational regulations, and data privacy laws collectively reducing potential productivity benefits by over 30%.

In New Zealand, “The strategy is to be light on regulation, with the hope the business world leans into it,” Muller said.

“There’s probably a bit more that can be done to help organisations get it further into the economy.

“I think the Government has an opportunity to show leadership in that space by taking it up more themselves and demonstrating its use.

“The Government uses about 36% of all the information technology in New Zealand and, therefore, they stand to gain quite a lot by shifting to AI.

“And if they were to sing from the rooftops about all the great experiences they’re having, or the challenges they’re facing and how they’ve gone around and managed challenges, that would help shift the dial for a lot of business people.”

Although he highlighted the potential productivity benefits of the New Zealand Government’s regulation-light approach to AI, Muller added, “At the same time, we’ve got to keep having conversations. This technology moves so fast.

“We need parallel streams of work, finding ways these tools can help us have a better life and be more productive and then, on the other side, how we want it to turn up in our environment, how we look after our people, and how we make sure that no one’s using it in the wrong way.”

The report was based on a Qualtrics survey of 166 business decision-makers. The report was supported by Victoria University, AWS, Heft and Minter Ellison Rudd Watts. Read the full report here.

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.