Technology under-investment key to New Zealand’s small business productivity rut

The article is relevant to members in New Zealand and was current at the time of publication.

A CPA Australia survey found that successful businesses are more likely to be younger, tech-savvy and seeking professional advice. 

In New Zealand, these businesses are in the minority as small businesses continue to trail other countries in business growth, new hires and technology adoption. 

“It’s a bit of a grim outlook,” says Rick Jones Regional Head of CPA Australia. “But CPA practitioners have a really important role to play as the number one source of advice for many small businesses.”

The survey of more than 4100 SMEs across the region showed only 38 per cent of New Zealand SMEs reported growth in 2025, compared with the Asia-Pacific average of 63 per cent. Fewer than half expect growth in 2026 — again, well below their regional peers.

New Zealand also lagged on hiring, with just five per cent increasing employee numbers compared with 36 per cent across the region.

Several structural challenges were found to be behind the underwhelming numbers: an ageing business-owner population, underinvestment in technology, weak productivity growth and a domestic economy that has struggled to generate confidence.

Unfortunately, the contrast with many Asia-Pacific economies is becoming increasingly pronounced. Across the region, businesses are investing heavily in artificial intelligence (AI), digital capability and online sales channels. New Zealand businesses, by comparison, remain more domestically focused and cautious about innovation.

Only 32 per cent of New Zealand SMEs earned more than 10 per cent of their revenue online, versus a regional average of 56 per cent. Just 26 per cent said technology investment improved profitability, compared with 68 per cent regionally.

“AI was the leading technology investment across Asia-Pacific generally, but New Zealand businesses focused more on basic computer equipment,” Jones says. “We are still at the early adoption stage of AI where people realise it’s here but need to understand how it can help.”

Ageing SME cohort

According to Angus Ogilvie FCPA, Director at Generate Accounting, a lot of SME owners are Baby Boomers and may not perceive great advantages in adopting technology.

The survey found only 12 per cent of NZ SME owners were aged under 40, compared with the Asia-Pacific average of 38 per cent. Meanwhile, 68 per cent were aged 50 or over.

“For many, it’s ‘Take me through to retirement with the way we currently operate.’ They’re not digital natives.”

Yet businesses led by owners under 40 were almost three times more likely to grow than those led by owners over 60.

Ogilvie notes that most clients already use cloud accounting platforms such as Xero, but often only for basic invoicing functions. “In many instances, businesses aren’t even using the existing software they’re paying for,” he says.

This creates a clear opening for accountants to demonstrate practical productivity gains through automation, reporting, forecasting and AI-assisted workflows. 

Increasingly, practitioners are being asked not just to prepare accounts but to help clients understand where their business is heading and how to adapt.

The good news, says Jones, is that technology and software have allowed accounting practices to free up time to act as trusted business advisers. “There are also some small New Zealand businesses making it big on the world stage through innovative, technological solutions.”

Economy, economy, economy

The wider economic environment and the current fuel crisis are weighing heavily on decision-making. According to the survey, 54 per cent of New Zealand businesses identified rising costs as a major issue, compared with 39 per cent regionally.

“Economy, economy, economy,” Ogilvie says. “SMEs are doing it particularly hard.”

He points to hospitality, construction and property as sectors under significant strain. While lower interest rates were expected to stimulate activity, construction costs remain elevated and housing demand is soft.

“When businesses are struggling with cash flow, investing in technology can feel counterintuitive,” he says. “People are hunkering down and managing every penny.”

Yet that caution may also be reinforcing the productivity problem. 

Jones argues that the country needs a comprehensive small business strategy that supports existing businesses and encourages younger New Zealanders to get into small business. “It doesn’t matter who is in government. It must take a bipartisan, long-term view.”

Other growth constraints 

Red tape also remains a major frustration.

While recent government proposals to overhaul the Holidays Act 2003 and amend health and safety laws may ease some pressure, compliance complexity continues to consume time and resources that many SMEs simply do not have.

Tax administration is another flashpoint.

“We still have clients kicking tax liabilities down the road with some businesses entering liquidation burdened by significant tax debt,” Ogilvie says.

For accountants, this is where the advisory role becomes critical.

“A big part of the education process is getting clients’ affairs in order.”

The encouraging sign is that despite weak business conditions, many SME owners still value the lifestyle and independence that business ownership offers.