Why New Zealand must invest in productivity: by Ben Speedy - ASB Executive General Manager, Business Banking.
This content was prepared by ASB and is being published by The New Zealand Herald as Advertorial.
One of my earliest memories is watching my father leave before dawn to protest the removal of government farming subsidies.
It was the 1980s, the era of Rogernomics – one of the most debated seasons in New Zealand’s political history, against a backdrop of high interest rates, a rising dollar, and deep uncertainty about what came next.
For those families, and for our community in southern Hawke’s Bay, it was an abrupt decision that impacted our livelihoods overnight. But those painful years became the catalyst for something remarkable: the world-class food and fibre industry New Zealand has today.
Farmers were forced to become market-led, diversified, and innovative. Output per hour in the primary sector has increased by 72% since 1996, not because of policy papers, but because capital, knowledge and capability came together in a way that made doing things differently feel possible.
That story should give us confidence, but it should also make us uncomfortable.
The rest of our economy hasn’t made the same progress. The average worker in the top-performing half of the OECD generates around 40% more economic value per hour than we do. New Zealand’s capital stock per worker (the tools, technology and infrastructure that support people to do their jobs) sits at roughly half the level of Australia and Finland, and up to 60% lower than Denmark.
Part of the reason is where we have chosen to put our money. Too much of our wealth has been tied up in property. Bloomberg recently described New Zealand as a “tiny, but extreme” example of what happens when a housing boom goes into reverse. That obsession with housing has come at a cost: capital that could have flowed into productive businesses has instead chased property values. And too much of what’s left is flowing offshore.
We can all feel something is wrong, but the average Kiwi has tuned out and made it background noise. It feels abstract, a problem for businesses to deal with, but in reality it affects every one of us. The cost of living, stagnant wages and the sense that working harder doesn’t mean getting ahead is the painful consequence.
But turning it around won’t come from more debate – it will come from the decisions we make next. Right now, that’s the gap. There was no clear pathway forward to improve.
Looking across the Tasman, Australia’s labour productivity growth has averaged just 0.4% over the last decade – the lowest in 60 years. It is now a federal budget issue, with the Australian government last month announcing a dedicated productivity package to respond.
New Zealand faces the same pressure. If we can’t lift productivity, higher taxation becomes the only remaining lever to fund the services we expect – a conversation New Zealand has consistently shown we don’t want to have.
Too many of our businesses have become experts at adapting to change rather than driving it. As Dr Victoria Hatton put it recently, the best businesses have a clear strategy and the conviction to execute it, anticipating and reshaping their markets rather than waiting to see what happens next. Our primary sector is the poster child for this, and the rest of the economy needs to follow.
AI has the potential to lift productivity in ways we have not seen before. But the real dividend comes from what businesses do with the time AI frees up. For New Zealand to truly transform, we need to reinvest in innovation to create higher-value products and services, the kind of change that compounds over time.
The pathway forward is the same one that transformed our primary sector: redirecting investment into productive businesses, equipping owners with the tools and know-how to act, and building the confidence to make transformational decisions, not just incremental ones.
ASB is not waiting on the sidelines. Last year, we embedded Masters-level students in 13 businesses through the NZ Product Accelerator, cutting R&D costs at an outdoor equipment company and building intelligent systems at a medical supplier. Smart, targeted interventions that helped businesses act on opportunities they already understood but hadn’t yet moved on.
We are now scaling that model with 100 students placed nationwide this year; an AI bootcamp reaching 4000 businesses with Xero and academyEX; and for manufacturers ready to go further, access to independent consultants, with ASB reimbursing consultancy costs and providing competitive financing. Up to two days per week could be freed up per business by powering productivity through AI supported by the bootcamp and specialised on-site productivity support. At scale, this provides time back to reinvest and grow.
But this needs to be bigger than one bank.
The private sector has to lead, the same way farmers did a generation ago, without waiting for permission. New Zealand is approaching a significant intergenerational wealth transfer. The defining question is whether we direct that capital into productive businesses, or watch it flow into property and offshore.
I grew up watching my father and his neighbours face one of the hardest economic moments in our modern history. They didn’t wait for Wellington. They adapted, they invested, and they built something we are still proud of today.
What made that possible was capital, knowledge and capability coming together at the right moment. That combination is available to us now. The question is whether we choose to use it.
For more on ASB’s Pathway to Productivity, visit asb.co.nz/productivity