Intelligent government

Artificial intelligence is already shaping the daily lives of New Zealanders. Whilst technology is advancing quickly, research shows that 81% of Kiwis believe some form of AI regulation is needed and but only 34% are currently willing to trust AI. This presents both a challenge and an opportunity.

Clear and effective governance, transparency and safeguarding structures are key for AI to succeed in government with and win the trust of New Zealanders.

This global KPMG report draws on primary research with 184 senior AI leaders of 16 different government functions across 9 countries, combined with detailed sector and country-specific insights. It presents a clear picture of where governments stand on their AI journey and where they must go next.

Exploring how governments can deliver value to citizens with AI

The emergence of generative AI, alongside advanced autonomous and agentic systems, is transforming how government and the public sector innovate and operate. Our findings reveal an actionable blueprint for governments and organisations aiming to leverage AI's potential to drive efficiency, reduce time-to-market and improve outcomes. This report provides insights into how to take a value-based approach to AI that helps to accelerate innovation, unlock new growth opportunities, and maximise the impact of their AI investments.

At-a-glance insights:

Government is in the early stages of AI but belief in the transformative potential of AI is high

63 %

have been using AI for less than two years

only 16 %

state that leaders fully trust AI, only 12% state that AI is integral to their organisation. Plus only 18% have integrated AI into their 5-year plans

79 %

agree that organisations that embrace AI will have an advantage over those who do not

Operating models are proving to be a major inhibitor to widescale adoption, with systems and data management reflecting a siloed structure

56 %

state that their operating model enables AI strategy alignment, but only 23% say their operating model enables this consistently

26 %

have a predominantly cloud-based technical infrastructure, but 55% do not yet have a unified data warehouse of enterprise data management

Strategic barriers are holding the government sector back, with internal resistance and privacy risks the leading challenges when integrating AI

How to realise value from your AI transformation journey

To address these challenges, KPMG introduces the three phases of AI value - a framework designed to guide organisations through the AI adoption journey. This phased approach can unlock significant value through AI-driven transformation, driving smarter and more innovative governments.

foundation

Enable

The Enable phase focuses on enabling people and building AI foundations. Organisations appoint a responsible executive, create an AI strategy, identify high-value use cases, boost AI literacy, align with regulations and establish ethical guardrails. AI pilots are launched across functions, while cloud platforms and pre-trained models are leveraged with minimal customisation.

network_node

Embed

The Embed phase integrates AI into workflows, products, services, value streams, robotics, and wearables, delivering greater value. A senior leader drives enterprise-wide workforce redesign, re-skilling and change, embedding AI into operating models with a focus on ethics, trust and security. AI agents and diverse models are deployed, supported by cloud and legacy tech modernisation, while enterprise-wide data enhances operations.

track_changes

Evolve

The Evolve phase evolves business models and ecosystems, using AI and frontier technologies like quantum computing and blockchain to solve large sector-wide challenges. AI orchestrates seamless value across enterprises and partners. Emphasising ethics and trust with real-time security, this phase uplifts human potential with broad and deep workforce training, fostering a creative, innovative and value-driven future.

We are already seeing early signals of this change with the development of the prototype New Zealand Government app and work on digital identity tools. These are important steps, but the real test will be whether government can build and keep public trust while scaling AI responsibly.

New Zealand has the ability to act decisively, the creativity to adapt global thinking to local needs and the responsibility to ensure an intelligent government reflects our values. By enabling, embedding and evolving AI, we can create a public service that is more efficient, more citizen-centric and most importantly trusted.

Intelligent government

This research outlines a detailed blueprint for AI in government and public sector organisations, helping to chart a path towards unlocking AI’s immense value.