August 2023 Disruptor Scan
August 2023 Disruptor Scan
Commentary
1. A quarterly monitor of possible disruptors within a two to five-year timeframe is brought to the sector to alert it to possible disruptors, and where the likelihood and/or strength of disruption is strengthening or weakening. This provides the basis for discussion on possible implications and any requirements to adjust approaches or develop a ‘plan b’.
2. These disruptors will continue to be actively monitored as part of Sport NZ’s futures process, with each connected to a summary descriptor, housed on its futures web-page.
What are we seeing?
3. The five big issues for this quarter are the ongoing cost of living crisis, the nature and scale of climate change-related impacts, implications of generative AI, potential changes to local government, and political positioning for the upcoming general election.
Cost of living
4. Despite the rate of inflation slowing, and the nurse and teacher pay disputes being resolved, or close to, the outlook for the rest of the year will be hard for many New Zealanders. Removal of the fuel tax subsidy and continuing high food prices may make it harder for those on lower incomes to participate in sport and active recreation.
5. Some clubs and parents are complaining about council facility fees and competition costs, and declining school sport participation is being reported from some schools and attributed to costs. In some more deprived areas schools are reducing sports fees, while some charitable organisations, like Te Kiwai, are giving one-off cash payments to help students cover gear and other sports costs.
6. Bringing public attention to the cost of facility provision comes with some risk as ratepayers generally pick-up most of the cost, without necessarily being aware of this.
7. The decision of the Alberta Government to withdraw its bid for the 2030 Commonwealth Games, following Victoria pulling out of hosting the 2026 Games raises viability concerns about mega-event hosting, notably in times of economic strain, and the relative importance of sport when compared to more fundamental competing priorities. The use of existing stadia by New Zealand and Australia at the Women’s Football World Cup may be viewed as one of the cost saving initiatives required.
Climate change-related impacts
8. In Aotearoa many communities are still recovering from the January and subsequent storms. Some communities may be permanently disrupted, with their houses irreparable or the land being too unstable. While some communities have received a displacement payment, some are becoming frustrated at slow property assessments and insurance pay outs, and uncertainty of whether they can go back home. Central and local government are finalising a house buyout scheme.
9. On the East Coast rugby and other sporting fixtures have been disrupted for months due to closed roads. At the July Connections Conference Chair of the Climate Change Commission Dr Rod Carr warned sport that it would continue to be impacted due to climate change events, and it needed to adapt.
10. In the northern hemisphere record breaking summer temperatures have affected many parts of Europe and North America and triggered large wildfires. Sea temperatures have also reached record highs, have affected marine life, and contributed to widespread toxic algal blooms. Outdoor physical activities have been restricted during parts of the day in some areas because of the risk to life from the temperatures. Outdoor swimming has also been restricted in some places due to risks from algal blooms.
11. The southern hemisphere has also experienced unseasonably warm temperatures, especially in South America. Concerns are growing that the pace of climate change may be moving more quickly than many models have predicted. Calls from the UN Secretary General are becoming increasingly strident - “We are hurtling towards disaster, eyes wide open. It’s time to wake up and step up.”
Implications of generative AI
12. Generative AI applications (like ChatGPT) are being rapidly tested or adopted by many organisations. Some are helping select treatments for specific patients or helping design new medicines. Others are improving business efficiencies and productivity.
13. Some commentators suggest that AI is an existential risk, but others highlight that the shorter-term impacts on employment, surveillance and misinformation need to be the focus. There is growing pressure to regulate AI systems and applications. The EU is the most advanced in developing regulations, but there is considerable uncertainty about what should be regulated and how. Companies and some governments are concerned regulating in haste may stifle beneficial AI advances and enable countries like China to outpace western tech companies.
14. AI applications are slowly being adopted by sports clubs and organisations, with the main uses currently being to enhance data analytics, and contribute to coaching and training programs.
15. In other technology developments, more effective treatments for specific cancers and Alzheimer’s and other forms of cognitive are being developed.
16. Drugs that may help with weight loss, and others that could potentially mimic exercise benefits may affect (positively and negatively) participation in physical activity, although this has yet to be studied.
17. There is increasing interest in the use of psychedelics in small quantities to improve mental health, although clinical data don’t demonstrate efficacy. Micro-dosing by athletes may increase in attempts to improve performance.
Potential Changes to Local Government
18. The Future for Local Government report recommends a new operating model for local government, including amalgamations, greater funding from central government, and better partnerships with iwi and hapū. Among the 17 recommendations there is a strong alignment to the characteristics of our sector’s preferred future, notably the desire to entrench wellbeing as central to local government work. Whether the report’s recommendations will be accepted is uncertain, with comments from the main political parties relatively muted.
19. The growing financial pressure on many councils is leading to some budget cuts that affect sport and recreation, and/or increasing fees for sporting facilities.
Lead up to the general election
20. The Greens and Te Pāti Māori are proposing wealth taxes and, along with Labour, removing fruit and vegetables from GST. National and Labour have ruled out wealth taxes. Other policy statements made so far do not indicate that there will be substantive systemic changes to address costs of living and inequality regardless of which major party forms the next government.
21. Similarly, neither Labour nor National have made addressing climate change a priority. Their transport policies and spending remain largely focussed on new roads, with active transport initiatives minor, if mentioned at all.
22. Disruptions to primary and secondary education from school strikes seem to have been
resolved, although only 59.5% of students met the criteria for regular attendance at schools and kura in term one, and 8.3% were attending less than 70% or less. Attendance is linked to both student wellbeing and to attainment.
23. Changes to the health system under Te Whatu Ora are underway, but long hospital and specialist waiting lists are causes of concern in many regions. Reliance on migrants to fill critical healthcare vacancies will also remain an ongoing challenge.
24. Being tough on crime is an election issue with increased anxiety on youth crime and gang tensions, with a Herald poll finding 67 per cent of respondents felt more unsafe now than they did five years ago.
Implications?
25. A newly developed Impact Report reflects impacts from the current quarter’s disruptor scan and looks out over the next quarter.
26. The short-term economic outlook is likely to have the most immediate impact on the sport and recreation system over the next 3 months. Rising costs of living, persistent inflation and increasing interest rates, and supply chain disruptions are causing economic pessimism. Businesses are under increasing stress given growing international competition for labour, reduced tourism, and decreased trade demand from China. Transport and wage costs are increasing, and productivity remains low supply.
27. Collectively, this impacts the affordability to deliver and access sport and recreation, and places increased pressure on funding sources, notably local and central government. It also increases the challenge to attract and retain staff, with salaries an important consideration.
Issues for sector consideration
- Be conscious of cost pressures on participants.
- Add climate change to your risk register and actively explore required adaptation.
- Advocate the value proposition of physical activity, sport, and recreation to local and central government.
- Explore actions to build financial resilience.
