New Zealand Budget: A Missed Opportunity for Technology Investment!

The recent New Zealand budget has sparked significant debate and concern, particularly regarding potential job losses across government agencies. ACT Party leader David Seymour has highlighted that up to 7,500 people could lose their jobs across various government departments, including the Ministry of Business, Innovation, and Employment (MBIE) and New Zealand Trade and Enterprise (NZTE). This news has generated anxiety about the immediate economic impact and raised questions about the long-term strategic direction of the country's economic policy.

The Importance of the Technology Sector

The technology sector in New Zealand is a critical component of the national economy, with substantial growth and contribution. According to the TIN100 Report, the technology industry generates billions in revenue, employs tens of thousands of people, and consistently demonstrates robust growth. In 2023, the sector recorded impressive figures, further establishing its importance as a major economic driver.

Fintech: The Fastest Growing Sub-Sector

Within the broader technology landscape, the fintech sector stands out as the fastest-growing sub-sector. As detailed in the 2024 New Zealand Fintech Report, fintech has experienced extraordinary growth over the past decade. From a modest start in 2013, generating $161 million in revenue, it surged to $2.64 billion by 2023, with a compound annual growth rate (CAGR) of 32%. This growth is not just significant in scale but also in its global reach, with 84% of fintech revenue in 2023 coming from international markets.

Fintech's inherent digital nature makes it highly exportable, allowing New Zealand firms to compete and thrive on the global stage. This sector's potential to drive economic prosperity through high-paying jobs, innovation, and substantial export revenue is evident.

Why Not Focus on Technology Investment?

Despite the clear benefits and potential of the technology sector, the recent budget did not mention the technology sector. This oversight is puzzling, given the sector's ability to positively impact productivity, create high-paying roles, attract offshore investment, and draw top talent.

Investing in technology could significantly enhance New Zealand's economic productivity, which remains a critical challenge. By fostering a thriving technology hub, the country could leverage its Free Trade Agreements (FTAs) with the UK and Europe and its membership in the Digital Economy Partnership Agreement (DEPA) to access and expand into new markets.

Creating a Technology Hub

A strategic focus on technology investment could position New Zealand as a leading technology hub. This would entail not only financial investment but also supportive policies to encourage innovation, research and development (R&D), and collaboration between the government, private sector, and academia. Such an approach would help build a sustainable and competitive advantage in the global market.

By leveraging the country's strengths in Fintech and broader technology sectors, New Zealand could transform its economic landscape. This transformation would bring numerous benefits, including improved productivity, higher income levels, and enhanced global competitiveness.

Conclusion

The potential job losses highlighted by David Seymour underscore the need for a strategic shift in New Zealand's economic policy. Investing in the technology sector offers a clear pathway to mitigate these losses and drive long-term economic growth.

By harnessing the power of Fintech and other tech innovations, New Zealand can not only weather the current economic challenges but also pave the way for a prosperous and sustainable future. It is time for the government to recognize the immense potential of technology and make it a cornerstone of New Zealand's economic strategy.

As I previously mentioned, a Technology Taskforce feeding into Government would help accelerate a positive outcome.

I am attending the Trans - Tasman Business Circle post-budget lunch with Christopher Luxon and hope to get a chance to speak to him about this and my ideas.