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Disruptor Scan - March 2024

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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. 

Sport NZ will continue to actively monitor these disruptors. All scans and commentary for each quarter can be found on the Sport NZ futures web-page. 

What are we seeing? 

The big issues signalling potential disruptors this quarter are the policy changes being introduced by the new coalition government; economic pressures being felt by local government and the public; heightened concerns about the response to climate change; the increasing prominence of AI and human augmentation; and the strengthening voice and power of athletes.   

Coalition government priorities: 

• The new government’s initiatives to reduce public service spending include seeking 6.5% to 7.5% cuts in most government agencies. While the cuts are intended to focus on back office their impact remains uncertain. 
• Weakening or stagnating national and global economic conditions mean that economic growth is likely to be limited over the next few years. 
• More stringent requirements for some benefits (such as disability support for caregivers) are being introduced, and the free school lunch programme is being reviewed. These may flow through to some young people’s learning and participation in sport and recreation activities. 
• The government is centralising some decision making for schools, potentially impacting a school’s ability to tailor programmes to meet the needs of their students. 

Economic pressure on local government and the public: 

• Local government is facing increased financial pressures, with rate rises insufficient to meet costs for addressing infrastructure and other investments. Central government has yet to decide how it will support local government after discontinuing the Three Waters proposal.  
• Some councils are already proposing cuts to some sport and recreation facilities (notably swimming pools) and reducing operating hours to reduce costs. Maintenance of some recreational facilities may also be reduced or deferred.  
• Without central government support, some local active and public transport projects may not proceed.  
• The decline of central business districts as a result of working from home, online shopping and big box retail is placing further pressures on council revenues.  
• The average rate rises for councils for 2024-25 is 15.3%, adding to the 7% cost of living increase in the 12 months to December 2023. 

• The latest household expenditure data shows that the average amount spent by households on cost-of-living items across the country was $1598 a week, up 18.4% compared to four years earlier. This is resulting in people cutting back on discretionary spending. 
• NZ is making slower progress on inflation than other countries, impacting spending in this year’s government budget.  

Climate and environmental impacts: 

• Despite continuing record-breaking temperatures and extreme weather events, national and international responses to climate change have been judged to be insufficient by the UN and science and environmental agencies.  
• The US Inflation Reduction Act is seen as a substantial shift in addressing climate change in the US, but it also encourages continued oil and gas exploitation.  
• Under pressure from farming groups the EU is weakening environmental requirements for agriculture. Industry opposition is also likely to weaken more general climate and environmental laws. Far-right groups in Europe are using farmer (and other) protests to build a larger support base and are expected to gain greater political power in European elections later this year.  
• NZ’s coalition government has positioned the climate and environmental portfolios outside of Cabinet and is replacing the Resource Management Act with a stronger focus on economic benefits (especially through rapid consenting processes). Also under the coalition government, oil and gas exploration permits are being re-issued. 
• The new government has given active and public transport projects lower priorities than other transport initiatives. Housing densification rules have also been relaxed and, longer term, may lead to greater urban sprawl for some cities. 
• Overseas, some insurance companies are now providing community-based insurance policies. These are tailored to specific needs (such as a community that relies on fishing or tourism) to reduce the financial impacts following a disaster and help speed up recovery. 

Artificial intelligence: 

• Generative artificial intelligence applications such as ChatGPT remain a dominant focus of technological discussions. The medium to long term applications and impact remains uncertain, with polarised views among experts on the existential risks and impact on jobs. However most agree that progress with AI makes it much harder to detect and control disinformation. 
• The US and Europe are introducing AI regulations to control their application, though the effectiveness of these is yet to be seen.  
• AI and the ability to manufacture the processors they rely on, is now a significantly important geopolitical issue. 
• The high energy and water use of generative AI are being recognised.  
• Large global sports clubs and organisations continue to adopt AI, especially for coaching, training, marketing, and fan experiences.  
• A common emerging issue among global companies is the rapid adoption of AI applications without enough consideration given to staff training and development to make the most effective use of these tools. 
• New Zealand is comparatively slow in adopting AI. However, the proposed trial of a facial recognition system by Foodstuffs is generating discussion about privacy and the use of such AI-based surveillance. 

Human augmentation: 

• A private sector initiative to hold a competitive event (Enhanced Games) using banned performance enhancing drugs will gain increasing attention if it proceeds. 
• A genetic testing lab at the Paris Olympics may find it difficult to identify genetic modifications because of the variety of ways in which modifications can be made, and the lack of a comprehensive database. 
• The range of neural-based methods to improve athletic performance is likely to increase. Determining whether these methods are acceptable and/or effective is likely to be challenging, and detection difficulties will hinder enforcement.  

Athlete voice and power: 

• To date, New Zealand athletes have not used their profile to express personal views to the extent athletes in other countries have. However, this appears to be changing.  
• The Hurricanes Poua kicked-off their season with a new haka calling out the coalition government, using their platform to amplify concerns of Māori around the country. 
• The Employment Relations Authority (ERA) ruled that HPSNZ is obligated to enter into collective bargaining with The Athletes Collective  (TAC) that represents around 60 elite cyclists and rowers. This signifies a strengthening of the athlete voice, and according to TAC’s chair, paves the way to secure strong protections for athletes. The decision is being appealed on the basis that HPSNZ does not have a formal employment relationship with athletes. 
• The flip side of enhanced profile can be heightened scrutiny, as is currently being experienced by Australian footballer Sam Kerr charged with racially aggravated harassment.  
• The Paris Olympic and Paralympic Games will provide a platform to express views that may be contrary to those of their national sports body and country. Given the tensions around current global conflicts, this could create geopolitical tension and, depending on your view, impact the social licence of sport. 

Other points of note 

• Disparaging references to ‘woke’ policies are becoming more common among some politicians and industry leaders, placing pressure on diversity and inclusion initiatives in sport and recreation. 
• There has been strong and broad community support for addressing Māori social and economic inequalities and embracing Te Ao Māori. The need for this was again emphasised by a report, Without racism Aotearoa would be better, that confirmed that Mokopuna Māori felt an enhanced sense of pride and wellbeing when connected to their language and culture , while the absence of that meant feeling lost or confused. The report included insights of ongoing racism and discrimination embedded in the community, at school and in government systems.  
• NZ has dropped one place to 11th in the World Happiness Report that looks at factors such as social support, income, health, freedom, generosity and absence of corruption, across 140 countries. Notably, people under 30 in NZ are only the 27th happiest the world, while those 60+ are the 6th happiest. 
• NZ rates only 52nd from 71 countries in a Mental State of the World report.  
• The closure of Newshub and cuts to TVNZ may impact in-depth, local content.  
• The IOC has criticised Russia for politicising sport through its diplomatic offensive to promote its ‘Friendly Games’ in September 2024, circumventing sports organisations in the countries targeted.  

What should we be thinking about? 

• Be conscious of the cost pressures on participants and how you can continue to deliver to them in this fiscally strained environment. 
• Work with your RST to actively advocate the value proposition of physical activity, sport, and recreation to local government. 
• Actively monitor the wellbeing of your staff. 
• Add climate change to your risk register and actively explore required adaptation. 
• Explore applications of AI and support participants in engaging with the technology and digital literacy skills likely necessary to participate in sport and recreation. 
• Be open to partnerships with technology companies that could lead to innovative solutions. 
• Actively explore the possible trajectory of elite sport and consider the actions you can take now to align to your preferred trajectory. 
• Ensure effective partnerships with community organisations to promote collaboration and engagement with athletes and their families as innovations emerge. 
• Reflect on whether our voice within international federations is strong enough.