DefenceTech the next frontier in Aotearoa?

The recent remarks by Minister of Defence Judith Collins, advocating for New Zealand to pursue a “DefenceTech” sector, have ignited a bit of debate amongst our members. While the ambition to position New Zealand as a leader in high-technology defence is commendable, it raises questions about feasibility, alignment with national strengths, cultural alignment and the government's commitment to the broader digital technology industry.

She is already having conversations behind closed doors on this, engaging with High Tech firms. In this interview the Minister praises existing NZ made DefenceTech initiatives, eg: drone technologies and surveillance, describing us as a High Tech country, defence has always been about Tech.

Is this a good move? lets discuss.

The Current State of New Zealand's Tech Sector

New Zealand's technology sector has experienced substantial growth, contributing $22.6 billion to the nation's GDP in 2023—a 7.5% increase from the previous year. This sector now accounts for 8% of the country's GDP and has been instrumental in job creation, with each new tech job generating an additional 4.8 jobs in other sectors. (Source NZTech).

NZTech also report that the agritech industry, for instance, generated approximately $1.6 billion in revenue, accounting for 11.4% of the top 200 technology exporters' total revenue, indicating growth in adjacent sectors.

The NZDIA (NZ Defence Industry Association) doesn’t tell us anything about their membership or size of this industry today.

How does this Compare?

$22.6 Billion is hard to quantify without comparing with other industries and GDP get sliced and diced in many different ways. Infometrics reports 2023 GDP with these broad strokes - where Digital Tech is buried in “other services” and by their calculation contributes $15.8 Billion:

• Among the broad economic sectors other services accounted for the largest proportion of GDP (34.5%) in New Zealand.

• Goods-producing industries accounted for the second largest proportion in New Zealand (17.2%).

• Primary industries accounted for the smallest proportion in New Zealand (5.7%).

You should also checkout this lovely visualisation from FigureNZ.

Back to “DefenceTech”.

Government Support: A Mixed Record

No matter how you calculate it Digital Tech is growing and contributing to our economy strongly. Despite these successes, government support for the tech sector has been inconsistent. The cancellation of the Industry Transformation Plan for Digital Technologies is a notable example, signaling a lack of sustained commitment to nurturing the digital tech ecosystem. This decision has left many in the industry questioning the strategic direction and priorities of government investment.

The government does have a languishing Digital Strategy and what appears to industry as a fragmented approach to Cyber Defence so it’s unclear how they will be able to coalesce efforts on Defence Tech if this is the new favoured sector (alongside space of course).

There was once a fascination with Israel - the world leaders in successfully commercialising Defence Tech - including a delegation there led by Simon Mouter in 2016 focused on Startups. Interestingly the then Minister for Defence - Gerry Brownlee - wasn’t promoting a DefenceTech sector at the time.

Challenges in Developing a DefenceTech Sector

Venturing into the DefenceTech arena presents several challenges:

• Talent Shortage: The tech sector already faces a significant skills gap. Developing a defencetech industry would intensify competition for a limited talent pool, potentially stifling growth in other critical areas.

• Investment Requirements: DefenceTech initiatives demand substantial financial resources. Given the current underinvestment in digital technologies, it's hard to imaging how the government would secure and allocate the necessary funds.

• Alignment with National Strengths: New Zealand's global reputation is built on its expertise in agriculture, forestry, and food production. Redirecting focus to defencetech may dilute efforts in these sectors, where the country holds a competitive advantage.

If New Zealand were to venture into the DefenceTech space, we’d face stiff competition from nations like the United States, Israel, and China, which have deeply entrenched industries and decades of strategic investment. Alongside other nations eg: United Arab Emirates and Saudi Arabia who are aggressively developing their own DefenceTech sectors, leveraging sovereign wealth funds and international partnerships to bolster capabilities.

Unlike these countries, New Zealand lacks the institutional infrastructure, talent pipelines, and scale required to compete effectively in this arena. We would also contend with dominant global players—well-established corporations and state-run enterprises with access to advanced research and substantial resources -many of whom already operate here and sell to our government.

Without significant groundwork, the likelihood of New Zealand carving out a competitive niche in this space is slim, especially when compared to opportunities in sectors like agritech and food tech, where we already have a strong global reputation and the ability to lead.

Then there are questions about moral, ethical and cultural alignment?

A Positive Outlook on this idea

Minister Collins may envision a strategy where New Zealand contributes to DefenceTech not by competing directly with larger nations, but by carving out a niche in specialised areas like disaster response technologies, peacekeeping tools, and defence-focused environmental monitoring.

These areas align with our global reputation as a collaborative and innovative nation, while also reflecting our unique commitment to sustainability.

For example, developing tools to monitor and protect critical ecosystems in conflict zones or using advanced data analytics to support humanitarian missions could position New Zealand as a leader in defence solutions that prioritise environmental and human wellbeing. By leveraging our expertise in environmental science and technology, we could offer valuable contributions to international defence efforts that emphasise resilience and responsibility.

But she will need a clear strategy and suitable funding to back this.

Is DefenceTech the next frontier?

I am sure there are amazing companies out there in Aotearoa developing solutions for the defence industry today, I am also sure there are large multinationals operating here and selling to our government as well. The question I’ve been discussing with members is whether this is a frontier NZ should swing behind, whether we should commit to the infrastructure and expenditure to back ourselves into this industry as an area of focus.

My thought after listening to a range of arguments is we would need to act and engage completely differently to any previous efforts. We have a Gaming industry dependant on rebates to achieve growth so maybe this model might work again? We also have a SAAS industry complaining about loss of government funding to organise meetups and activities for their members - so looking to government for help with infrastructure.

Minister Collins is in a unique position as Minister of both Defence and Technology to be able to create pathways to innovation - but she will also need to address our declining talent pool and tendency to fragment in the name of a “number 8 wire” mentality first.