Published on the 22/01/2026 | Written by Heather Wright

MBIE gives iStart readers all the details…

New Zealand’s government is hoping to move AI out of the hype cycle and into the day-to-day reality for small businesses, launching a pilot which will see a minimum of 51 SMEs getting a helping hand to make practical use of the technology to lift productivity and competitiveness.

The AI Advisory Pilot, which launched this week, will see businesses receive co-funding of up to 50 percent of eligible costs, capped at $15,000 per business – made up of a maximum of $2,500 for an AI roadmap with the remaining up to $12,500 supporting implementation. The government says a starting $765,000 has been allocated initially for the pilot.

“The results will help build evidence about what works, what doesn’t and how AI support could be designed more broadly in future.”

Come the mid-year, the Ministry of Business, Innovation and Employment is hoping a review of the pilot will provide a roadmap on the best path for future support for small businesses in adopting digital technology.

Diana Loughnan, head of innovation and business capability for the Ministry of Business, Innovation and Employment, says the pilot is one way of testing how MBIE and the government can best support SMEs to lift capability, productivity and growth in a practical, business-led way.

“The results will help build evidence about what works, what doesn’t and how AI support could be designed more broadly in future,” she told iStart.

Importantly, no specific tools or fashionable AI use cases are being mandated for the program.

Loughnan says that has been a very deliberate decision, with the pilot intentionally open on tools and use-cases, designed to reveal what SMEs truly want when they have some expert guidance – and what benefits they really get from those offerings.

However, she says MBIE is expecting to see strong interest in areas such as process automation and workflow efficiency, customer service tools such as chatbots and enquiry triage, marketing and content support, data analysis and reporting and back office productivity such as scheduling admin.

“For some businesses, the benefit may be immediate efficiency gains; for others, it may be improved readiness for future digital investment,” Loughnan says.

AI’s potential for SMEs has long been talked about, but reports show that while big business is embracing the technology, many smaller businesses, if not most, are stuck at square one – unsure where to start, what tools to trust, and how to safely implement.

MYOB’s 2025 Business Monitor survey showed only 32 percent of SME owners or decision makers had started using AI tools in their business, though that was a significant jump from the year before, when just 17 percent were doing so. An NZIER and Spark survey at the end of 2024 revealed 68 percent of SMEs had no plans to evaluate or invest in AI technology.

“AI is rapidly becoming part of how Kiwi businesses work,” Loughnan says. “New Zealand’s AI Strategy for Artificial Intelligence estimates adoption generative AI could boost the economy by as much as $76 billion by 2038 [about 15 percent of national GDP], showing the scale of potential gains available to business owners that engage early and thoughtfully.”

Chris Penk, small business and manufacturing minister, says AI is becoming part of how Kiwis work every day across many industries. “It can quickly sort information, answer simple customer questions at any hour, draft and check documents and handle repetitive digital tasks that normally eat into the day.”

He says small business owners tell him they’re keen to use AI to clear space in their busy schedules, so they can focus on the parts of their business they enjoy, but many are unsure where to start or how to use the tools in a safe and practical way.

So how’s it going to work?

The pilot is being delivered through the Regional Business Partner Network (RBP), which has 15 regional service providers around the country, with businesses identified and invited by their local RBP growth advisor to participate.

It will run for at least six months from 19 January, with Loughnan noting it is deliberately time limited and capped in scale so it can generate ‘valuable insights’.

Loughnan says selection of candidates for the pilot is guided by the business’ readiness and willingness to engage, clear potential for AI to deliver business value, fit with the pilots learning objectives and capacity to co-invest alongside the government funding.

Loughnan says the pilot itself uses a staggered, business-led approach to ensure AI support is appropriate and targeted.

It is, effectively, a two-step dance. Step one will see participating businesses completing a readiness assessment through the Regional Business Partner Network, which looks at factors such as digital maturity, capability and priority challenges.

Participating businesses will first complete a readiness assessment

“Businesses do not need to have a specific AI idea to take part,” she says.

Step two will see businesses where AI has been assessed as a good fit paired with an approved AI service provider to AI roadmap and, where appropriate, implement it.

“This staged approach ensures specialist advice is provided at the right time, with a clear separation between readiness assessment and technical delivery,” Loughnan says.

Shane Reti, minister for science, innovation and technology, says the support provided will include clear guidance on privacy, data management and responsible use, ‘which can feel challenging to navigate with AI being such a new tool’.

He says expanding into AI support is a ‘natural’ next step for the Regional Business Partner Networik.

The service providers involved were selected via a closed request for quotes from providers recommended by the Regional Business Partner Network. They were then assessed against criteria including delivery approach and methodology, technical capability and experience, resourcing and readiness, responsible AI practices, value for money and contribution to SME capability and New Zealand’s digital ecosystem.

A monitoring and evaluation framework has been developed to track the benefits of the pilot. Among the areas being reviewed as part of the monitoring and evaluation are the type of tools and use cases businesses adopt, how the tools are implemented in practice, and the outcomes achieved, such as time savings, cost reductions, improved decision making and return on investment.

Also being tracked are changes in capability and confidence using AI and early operational improvements such as time savings, reduced admin effort and improved turnaround, against the ROI signalled in each company’s AI roadmap.

“This approach allows the pilot to build an evidence base around what works, for whom and in what context, rather than assuming value in advance,” Loughnan says.

After June 2026, the success, or otherwise, of the pilot will be assessed to see if targeted expert support and step-by-step guidance can accelerate measurable productivity gains.

For the many thousands of businesses who won’t be included in the pilot, Loughnan’s message is stay tuned, with the pilot just the first test bed that could determine the path forward in encouraging New Zealand businesses on their AI journey.