New Zealand at a crossroads: AI-powered future or a future on mute?

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TUANZ Summit 2025 - Frances Valentine

At the TUANZ Tech Summit on 10 September 2025, two keynote speakers, educator Frances Valentine and the Prime Minister's Science Advisor Dr John Roche, delivered what felt less like speeches and more like a national call to arms. Listening to them back-to-back was to experience a one-two punch of exhilarating possibility and sobering reality.

Valentine painted a vivid picture of an exponential AI-driven future arriving at breakneck speed. A world of "mass intelligence" where the pace of technological advance is now outstripping investment. Following her, Dr Roche grounded this technological tsunami in New Zealand's stark economic reality: we are a nation falling behind our peers, and without urgent, strategic action, we risk becoming irrelevant.

Together, their messages weave a single, urgent narrative. New Zealand is at a profound crossroads. One path leads to us being passive consumers in a world shaped by AI superpowers; the other requires a collective, strategic, and deeply human response to secure our prosperity. The question they leave us with is not if this change is coming, but what role we will chose to play.

The gathering storm

The challenge begins with the sheer, unprecedented velocity of change. As Valentine explained, AI is no longer a future promise; it is a present-day reality with 50 to 75 updates from companies happening overnight, ten of which might be significant advances. While we were still grappling with generative AI, the technology has already moved on to reasoning, research, and becoming an ambient part of our workflows.

This exponential curve creates a formidable barrier for a small-medium advanced economy at the bottom of the world. Valentine laid out our disadvantages with stark clarity: we lack the vast datasets, the computing resources, and the immense capital to create our own foundational AI models. unlike the early Internet, which was built on an open platform, the core infrastructure of modern AI is proprietary, controlled by a handful of US and Chinese superpowers. This positions us not as architects of the future, but as consumers of services built by others, on their terms.

Dr Roche provided the economic scorecard that shows why this matters so acutely. New Zealand is no longer the wealthy country we imagine ourselves to be. Our GDP per capita lags 33% behind Australia and over 40% behind a comparable small, advanced economy like Denmark. This isn't just an abstract number; it means Kiwis must work 33% longer than an Aussie and 78% longer than a Dane to earn the same dollar. This productivity gap is not shrinking; it is set to grow if we continue on our current path. As Dr Roche bluntly paraphrased Paul Krugman, "productivity isn't everything, but it is almost everything," because it is what pays for our hospitals, schools, and roads.

The enemy within

While it is easy to blame our size, both speakers powerfully argued that many of our most significant barriers are self-imposed. Valentine pointed to New Zealand's chronically low innovation capacity, declining investment in R&D, and concerning demographic shifts that will see a shrinking workforce supporting a growing retiree population.

Dr Roche quantified his innovation problem with devastating statistics from the World Intellectual Property Organisation. While New Zealand ranks an impressive 25th in the world for innovation overall, and 7th for our institutions, we plummet to 45th place when it comes to generating cash from that innovation. His conclusion is damning: "our system doesn't work".

Furthermore, we are a nation divided digitally. While 70% of homes may have fibre broadband, the primary sector - which generates a staggering 82% of the money coming into the country - remains largely disconnected, creating a huge hurdle for adopting the very technologies that could boost their productivity. Perhaps most shockingly, while our businesses and government are adopting technology, as individuals we are laggards, ranking 101st out of 133 countries for personal tech uptake. This is not the profile of a nation ready to seize an AI-powered future.

Dr John Roche, Prime Minister's Chief Science Advisor

People, not prompts

The most powerful point of convergence in both speeches was the human element. The greatest barrier to our technological future is not a lack of technology, but a lack of wisdom and understanding. Valentine described an era of "intelligence overflow" where an abundance of information has created a "scarcity of understanding". We can use AI to summarise a report in seconds, but do we truly grasp what it is saying? The eerie demonstration of her own AI clone - created with less than $30 of software - vividly illustrated a technology that is both amazing and deeply unsettling, raising immediate questions about security, identity, and the future of knowledge-based work.

Dr Roche built upon this, arguing that as a tech community, we have a critical narrative problem. We speak a language of "software eating the world" and "big data" that fails to connect with ordinary people. Drawing on the work of Nobel laureate Daniel Kahneman, he reminded us that humans are not rational decision-makers; we are driven by emotion, intuition, and fear. People make decisions with their fast, intuitive "System 1" brain and use their logical "System 2" brain to justify the decision afterwards. This is why sensationalist headlines about AI causing harm spread like wildfire, and why fear of change is a more powerful motivator than a logical argument about productivity gains. As Dr Roche stated, "The saddest aspect of life right now is that science gathers knowledge faster than society... gathers wisdom".

To succeed, we cannot simply present the technology; we must bring people on the journey with us. We must answer the fundamental question: why?

We are not Ireland

When I sat down to write this, I was distracted by an article in The Conversation which resonated for me. John Roche hails from Ireland, my own birth country, but he never once even hinted that New Zealand should follow Ireland's model. Why? Because it makes no sense, except to politicians who love to find other people's coattails to ride on.

At the TUANZ Summit the major sponsor was AWS, who are making much of opening a datacentre in New Zealand, much to the delight of our political leaders, who are seizing on this one piece of what looks like good news. I'd love to be in the same room as the PM and his science advisor when they discuss that one.

Intelligent world-class leaders like Frances Valentine and John Roche are following in the footsteps of Paul Callaghan who urged us almost 20 years ago to start thinking about moving beyond primary production and tourism and finding something else that the worlds needs that we can do well. There are some very clever Kiwis doing just that (check out Mint Bio as just one example).

We need much, much more of this. We did 20 years ago, but we seem to lack a sense of urgency.

What this means for New Zealand's SMEs

So, where does all this leave the small and medium-sized businesses that are the lifeblood of New Zealand's economy and in aggregate its largest employer? The message from these speeches is that this technological shift is not an abstract problem for the government or big corporations; it is an immediate and existential issue for Main Street NZ.

1. The threat is here: Valentine's example of a major law firm losing its brightest young talent to an overseas, AI-powered firm operating remotely in New Zealand is a warning. Likewise, the disruption to Google Search, where 60% of searches now result in no click, is a direct blow to any small business that relies on being found online. The competition is now global, borderless, and powered by tools that can give rivals an insurmountable edge. The option to "just watch on for a little bit longer" is a luxury we, and our small businesses, can no longer afford.

2. Become a smart consumer: New Zealand SMEs will not be building the next ChatGPT. Their challenge is to become exceptionally fast, clever, and agile consumers an integrators of these powerful tools. this means moving beyond dabbling and embedding AI into the core of their processes to enhance efficiency, create better customer experiences, and unlock new services.

3. Productivity is survival: Dr Roche's productivity statistics are not an academic curiosity; they are a direct challenge to every small business owner. Embracing digital tools and AI is the most viable path to closing the gap that forces Kiwis to work longer hours for less return. It is the key to remaining competitive and profitable in a tough economic climate.

4. Master the human story: Most importantly, SMEs must heed Dr Roche's advice and lead with the human element. For a small business, this means bringing your team on the journey, assuaging their fears about technology and empowering them to use new tools. It means communicating with customers not about the tech you use, but about why you use it; how it leads to better service, higher quality, or a more personal connection. In a world of AI clones and automated responses, the SMEs that leverage technology to keep the "human in the loop" will build the trust and loyalty that no algorithm can replicate.

The challenge laid down at the TUANZ Summit is immense. We need a national mindset shift, a strategy for collective action like the one that rendered The Lord of the Rings (at a time when there wasn't enough computing power available to do that), and a story that brings all New Zealanders along. For the small business, not-for-profits and service providers at the heart of our economy, the path forward is clear: embrace the tools, focus on productivity, and win with the one thing the tech monopolies can never own; our humanity.