The Government has released the final version of its plan to support and grow the New Zealand tech sector, which it estimates contributes $7 billion per annum to the country’s GDP.
The final version of the Digital Technologies Industry Transformation Plan (ITP) updates the draft of the ITP that had been released in January 2022 for consultation (with feedback on the draft in an appendix to the ITP), following a collaborative process between Government and industry that began in 2019. The ITP sits alongside and works in conjunction with the Agritech ITP and the Advanced Manufacturing ITP. Other work streams that support the sector are also noted in an Appendix at the end of the ITP. You can access the ITP here.
The ITP highlights many facts and figures in an overview of the tech sector. Some key highlights include the sector contributing $7 billion to New Zealand’s GDP in 2021, and a 10.4% annual compound growth rate since 2016, which is then compared to the wider economic growth rate of 5.1% over the same time period. The sector currently employs around 44,000 people, with a concentration in urban areas however there are trends of regional growth following the rise of remote working.
The key part of the ITP are its focus areas, covering four areas of immediate focus and three future focus areas.
Immediate Focus Areas
For the four immediate focus areas, the ITP outlines the initiatives underway or about to commence in each of those areas. The four focus areas are:
Growing Export Success
The digital technologies market is largely export orientated, and the ITP has placed particular emphasis on the sub-sectors of Software-as-a-Service (SaaS) and Game Development. This reflects MBIE’s interest in the sub-sectors it sees as high export growth and potential.
In support of SaaS growth, the ITP proposes to introduce SaaS focused short courses to upskill the talent pool, the establishment of a SaaS database to enable businesses to benchmark their growth and to continue supporting kiwiSaaS which is a network connecting businesses, founders and employees. The ITP states that success will be increasing the SaaS sector compound annual growth rate from 16% to 19% in 2023.
For the game development sector, the ITP notes the funding that has been committed to the Centre of Digital Excellence (CODE) for the establishment of new regional hubs and to expand its grants and skill development programme to game development studios nationwide. Since the ITP was released the May 2023 Budget included a 20% rebate on game development expenditure (for studios with a minimum of $250k expenditure), which further supports this area.
Telling Our Tech Story
The ITP notes that an obstacle to the tech sector’s growth is the lack of international awareness of New Zealand as a hub for technology and innovation. In response to this gap, $4 million over two years has been allocated to promote New Zealand’s capabilities on the world stage.
The ITP also notes that $1 million has been allocated to developing a domestic tech story too. Its purposes include inspiring New Zealanders, showcasing different pathways into the sector and creating visibility of different role models who are not well represented in the sector.
Enhancing the Skills and Talent Pipeline
The ITP recognises the importance of skilled labour within the domestic market, rather than an overreliance on immigration. Three areas of priority are contemplated, being improving the awareness of tech careers, creating accessible pathways into digital careers and encouraging upskilling and reskilling to enhance the maturity of the tech workforce. Other objectives and priorities for this focus area are also discussed in the ITP, including a need to increase and perpetuate diversity in the workforce, and having immigration supplement and not replace the domestic workforce skills supply. The ITP notes that success is increasing the number of jobs in the digital technologies a sector to 58,000 by 2030 and increasing diversity of women, Māori and pacific peoples to a target percentage in 2030 of 50%, 10% and 6%.
Enriching Māori Inclusion and Enterprise
The ITP notes that achieving a thriving digital tech market requires meaningful Māori inclusion and enterprise. However, Māori are significantly unrepresented, constituting only 4% of the workforce. The ITP discusses a number of initiatives that are underway to address this focus area, such as funded research on Māori in the tech ecosystem, the creation of the Māori Tech Annual Report which promotes visibility to Māori technologies companies and the funding of Tokona Te Raki Stage One Digital Apprenticeships. The ITP sees success in this area as increased Māori participation as business owners, entrepreneurs and workers.
Future Focus Areas
The ITP briefly notes three areas of future focus:
- Data-driven innovation (ie greater access to and use of data to drive growth and innovation)
- Artificial intelligence
- Government procurement
In this section the ITP notes some prior work that has been done and the importance of progressing these areas. However, particular actions have not been identified yet.
Of perhaps the most interest are some notes on what the Government intends to do in government procurement. These include:
- guidance to support government agencies to increases New Zealand business’ access to ICT contract opportunities;
- establishing a Data Governance forum focused on data interoperability and adherence to data standards;
- including data standards compliance and uniformity within procurement technology changes or implementations;
- publishing government spend information, including estimated spend on pipeline work.
The ITP is a good document for anyone interested in understanding the Government’s priorities in the digital technologies sector.
