Griffin on Tech: The effort required to overcome our productivity gap

“It’s time to hit fast forward,” Spark chief executive Jolie Hodson said yesterday in the cavernous atrium of the telco’s Auckland headquarters.

She was launching a new study Spark commissioned the New Zealand Institute of Economic Research to create, which suggests that a 20% uplift in use of advanced digital technologies like AI, automation, edge computing, and the internet of things, could increase economic output by $26 billion in the next decade, boosting GDP by up to 2.08% per year.

“New Zealanders generate significantly less output than many other small advanced economies,

despite working longer and harder comparatively as a nation,” Hodson added.

“Our productivity is a persistent challenge that has seen little change over many decades, but what is changing is the urgent need to address it.”

With a larger and ageing population, extreme weather events resulting from climate change, and inflationary pressure, we’ll need to do more with technology to maintain productivity. It’s a common refrain issued over the past two decades and backed up by numerous research reports dating all the way back to Helen Clark’s Knowledge Wave conference around the turn of the millennium.

So what’s the problem? According to NZIER’s quarterly survey of business leaders, there are big knowledge gaps when it comes to digital technologies, such as generative AI, with 44% of respondents agreeing that they lack enough information about it.

Clinical transcription software can save doctors hours of paperwork

Much of the productivity-boosting technology is already here. A demo at Spark of clinical transcription software, which listens to and records a doctor’s conversation with a patient, is saving the GP I spoke to one hour a day writing up notes. Saving five hours per week means that doctor can do other, higher value things. That’s a productivity gain.

Another demo showcased how computer vision technology is allowing roads to be automatically scanned to detect potholes instead of time consuming and less safe manual inspections. Another solution from Adroit sees sensors fitted to slip-prone land, which can send alerts when significant subsidence is likely to threaten roads and infrastructure. Spark showcased its partnership with the Minister for Primary industries in which Spark provides the technology for cameras on fishing boats, a case of where uptake of technology has been driven by regulation, but has significant spin-offs both for industry and the government.

This is all innovative, but now fairly standardised technology. Spark has a $15 million innovation fund, $12 million of which has already been committed to existing customer projects, to kickstart use of more advanced technology. It also announced 150 scholarships for business people for a four-week mini MBA programme from the Section business school, focused on AI, and designed by innovation leader Scott Galloway. Spark Business customers are eligible to apply for the scholarship. 

Credit to Spark for initiating a push on this, which will need to be replicated by many other businesses. Spark has invested significantly in a national IoT network, its Qrious data subsidiary, as well as in data centre infrastructure and IT services via its CCL business. It has an interest in these services being used to a greater extent by New Zealand businesses. It also has a valuable role to play in bridging that knowledge gap, showing businesses what the potential of the technology is to deliver productivity gains across industries.

But as NZIER points out, a dedicated national effort to advance technology uptake by one generation in a short period of time, is required. For instance, we need a national AI strategy to set priorities for where the country needs to go, a better functioning innovation ecosystem and better incentives to encourage uptake of advanced technologies.

Spark has partnered with MPI to provide the techonlogy for cameras on fishing boats.

NZIER pointed out that while we have the 15% R&D tax incentive available here, Singapore has just introduced a 400% tax deduction on expenses incurred for R&D projects for the first $400,000, and 250% on remaining qualifying expense. In Finland, 90% of innovating businesses collaborate with research institutes.

Part of the problem is that we don’t officially track the digital adoption of New Zealand businesses at a national level. 

“Unlike the European Union (EU) and many other developed countries, New Zealand has no robust or sustained way of measuring digital adoption or progress. As a result, there is no way of tracking how we’re improving, if at all,” NZIER points out.

We need to measure and benchmark our digital maturity at a national level

Our own efforts to reorganise our innovation ecosystem haven’t delivered the desired productivity increases and boost to GDP. We’ve a lot of work to do to get it right. As I wrote in BusinessDesk this week, many of the key planks of our national tech, science and innovation have been cancelled by the new coalition Government. At the moment they’ve been replaced by a handful of targeted initiatives, such as boosting the space sector, overhauling biotech regulations, and offering visa to highly-skilled workers.

But where’s the over-arching policies that will mirror the cohesive approach other small advanced nations have been pursuing for decades, and reaping the rewards from? I’m not seeing that articulated yet and given the constrained budget, businesses and the government will need to get creative to achieve that 20% uplift in use of advanced technologies Spark and NZIER suggest we need.