October 2024 Disruptor Scan
October 2024 Disruptor Scan
Commentary
This quarterly scan aims to alert the sector to possible disruptors to sport and recreation within a two to five-year timeframe. It is designed to be used for discussion on possible implications or the need to adjust approaches. The following are the significant shifts in the quarter July-September 2024
What we are seeing
Societal and economic narrative:
1. New Zealand faces several societal challenges, with 40% of citizens feeling the country is worse off since the last election.
2. The government's focus on debt reduction and productivity has been criticised for lacking a comprehensive strategy to address economic, social, and environmental issues. Rising living costs remain a concern, with 36% of households reporting insufficient income.
3. Housing affordability and homelessness remain significant issues for low-income individuals, despite increased public housing supply. Rising rents and house prices are outpacing inflation and wage growth, exacerbating housing needs. While public housing has expanded, demand still far exceeds supply.
4. However, the latest NZIER Quarterly Survey of Business Opinion (QSBO) indicates a notable rise in business confidence for the September quarter, helped by inflation decline and reduction in interest rates.
5. The Reserve Bank governor has highlighted disparities in financial access for Māori, despite the potential of the Māori economy to contribute significantly to economic growth. He calls for collaboration between public and private sectors to improve this situation.
6. Increasing costs for sports facility rentals are creating barriers for schools and clubs, potentially making some sports elitist as families have less disposable income.
7. New Zealand experienced a record net migration loss of 55,800 citizens over the past year, surpassing the previous 2012 record. This, combined with lower net migration gain, has led to slower population growth.
8. The term "zombie towns" has resurfaced due to economic challenges in various regions, including the closure of paper mills and uncertainty in industries like skiing and lamb processing. Wellington faces business closures attributed to various factors including public service cutbacks and high living costs.
9. International studies suggest a generational "health drift" in some countries, with younger generations experiencing worse health outcomes than previous generations at the same age. In English-speaking countries, life expectancy for those under 50 has stagnated over the last two decades, primarily due to suicides and drug or alcohol-related deaths.
10. On a positive note, the ascension of Nga wai hono i te po as the new Māori queen has generated widespread support and is expected to increase the influence of the Kiingitanga movement.
Environmental challenges:
11. A global scientific coalition warns of a critical, unpredictable phase in the climate crisis, with 25 of 35 planetary vital signs at record extremes. Urgent action is demanded. New Zealand's government unveiled a five-pillar climate strategy, but details are scarce.
12. The fast-track approvals process for 149 projects raises environmental concerns, particularly regarding previously rejected mining and dam proposals.
13. The UN environment programme reports accelerating global resource use trends, expected to persist. Additionally, a study reveals a 73% decline in average population size across 5,000 vertebrate species over five decades. These findings underscore the pressing need for comprehensive, effective climate and environmental policies.
Central vs. local government tensions:
14. The relationship between central and local government has become more marked by growing tension and power imbalances. We have seen central government urging local authorities to concentrate on essential services and infrastructure while limiting their autonomy and funding.
15. To address funding shortfalls, local governments might need to explore alternative revenue sources. This could involve advocating for a larger share of national tax revenue or seeking authority to implement new local taxes. Such changes might disproportionately affect low-income residents and potentially create disparities in access to essential services.
AI adoption risks:
16. Recent findings from the NZ AI Forum indicate widespread AI adoption, with 67% of surveyed organisations using AI, primarily generative AI. Nearly all users report improved employee efficiency, and half note financial benefits. Marketing and administrative tasks are the most common applications. However, Accenture reports that many companies struggle to scale AI effectively.
17. AI deployment may also have employment issues for ‘zombie towns’, with research suggesting AI would hit regional cities harder than more sophisticated job markets associated with major centres.
18. Concerns are rising about AI-generated misinformation, hacking, and spam. The EU's Artificial Intelligence Act now imposes risk-based requirements on AI systems, with stricter regulations for higher-risk applications impacting health, safety, or human rights.
19. The New Zealand government has initiated AI-focused programmes to boost business capabilities, including in the sports sector. These initiatives provide access to AI tools, facilitate research collaborations, and offer funding through Callaghan Innovation. This aligns with the government's broader strategy to accelerate AI adoption across industries, positioning AI as a key driver for competitive advantage.
Olympic and Commonwealth Games viability:
20. The viability of major international sporting events, such as the Olympic and Commonwealth Games, continues to face scrutiny due to recent developments. Japanese corporate sponsors have demonstrated reduced enthusiasm for the Olympics, influenced by several factors. These include the delayed 2020 Tokyo Games, limited on-site audience sizes that diminished sponsor visibility, increased costs, and various corruption scandals.
21. Toyota's chairman has expressed concerns about a misalignment between the International Olympic Committee's goals and the company's vision. Nevertheless, Toyota remains committed to supporting individual athletes and the Paralympic Games.
22. In another significant change, the 2026 Commonwealth Games will now be hosted by Glasgow after Victoria, Australia, withdrew from hosting. This event will see a considerable reduction in scale, with only 10 sports being represented instead of the usual 18. This raises questions about the long-term sustainability of the Games format.
23. Additionally, there is a growing wave of protests against "overtourism" in countries like New Zealand. Local communities are voicing concerns over issues such as housing affordability and a declining quality of life due to excessive tourist influx during international sporting events. While the effectiveness of these protests appears limited at present, their significance may increase as sustainability challenges become more pronounced in the context of major sporting events.
Questions prompted by these developments
24. The strengthening of these disruptors should prompt continued or heightened emphasis and/or discussion on whether strategies and plans place sufficient emphasis on:
- Transforming the sport and recreation systems to be more inclusive, accessible, and responsive to the diverse needs of all New Zealanders, particularly those facing economic hardship and social disparities.
- Adapting our activities, facilities, and events to be more sustainable and resilient in the face of a rapidly changing climate.
- Improving communication and collaboration with local government to ensure effective delivery of sport and recreation services at the community level.
- Strategically integrating AI into our operations to enhance performance, engagement, and sustainability while mitigating potential risks.
