NZ to invest $20m to propel tech sector growth

New Zealand Technology Sector

New Zealand will invest $20 million over the next four years in two tech sector growth initiatives under its Digital Technologies and Industry Transformation Plan (ITP) – a key commitment from its just-released 2022 Budget.

The initiatives are hoped to provide an extra leg up to New Zealand’s burgeoning tech sector, helping to generate high-value jobs and export revenue, the Government said.

Among the initiatives was a commitment to grow the local Software-as-a-Service (SaaS) industry.

“New Zealand has a number of globally successful SaaS companies and we want that to increase,” Minister for the Digital Economy and Communications, David Clark said.

He added that the SaaS subsector has seen “sustained growth despite the Covid-19 pandemic”, nearly doubling both its export revenue and headcount in five years.

According to one estimate, New Zealand hosts more than 500 SaaS companies on its shores.

The second commitment, an industry-led marketing initiative in partnership with the Government and dubbed ‘New Zealand’s Tech and Innovation Story’, is aimed to lift the profile of the local tech sector and bring the island nation “closer” to much larger tech markets in the US, Europe, and Australia.

“As a small island nation, a long way from traditional markets, a strong digital economy allows us to leverage what kiwis have to offer – no matter our geographic location, the time or place,” Clark said.

He added that funding for the initiative “will build on work already underway to promote our vibrant tech sector both locally and internationally”.

“We will begin shifting perceptions of our country and rebrand as a global contender in the tech market.”

The $20 million pledge will, the Government said, not only increase momentum for the growth of NZ’s SaaS community and wider tech sector, but also support new upskilling opportunities, with the creation of dedicated short courses for digital skills development.

New Zealand has historically struggled with a “skills mismatch”, according to Clark. As such, the Government is pursuing options to train domestic talent, encouraging “New Zealanders from all backgrounds to participate”.

However, after enacting some of the strictest border closure measures in the world during Covid, efforts will also be made “rebalance” the country’s immigration system, helping businesses “lure skilled labour from offshore”.

This includes the creation of an occupation ‘Green List’, providing a fast-track to residency pathway for a number of key senior tech roles. Among the ‘Green Listed’ roles include ICT managers, software engineers, ICT security specialists (who are paid more than $120,000) as well as multimedia specialists (paid over $95,000).

In 2019, the Government launched a dedicated Digital Technologies Industry Transformation Plan (ITP) – one of eight ITPs – in an effort to support the local tech industry in “[fulfilling] their huge potential as generators of high-value jobs and export revenue”.

The ITP was updated in June 2020 in response to the impacts of Covid-19.

The digital technologies ITP articulates a long-term vision for the sector and an action plan to help move the sector towards that vision.

The Ministry of Business, Innovation and Employment’s (MBIE’s) consultation on a draft of the Digital Technologies Industry Transformation Plan (ITP), which closed in March, stressed the “significant potential in Software-as-a-Service and interactive media”.

The digital technologies sector contributed $7.4 billion to the economy and since 2015 this has grown about 77 per cent faster than the general economy, the Government noted.