Government agencies budgeting tens of millions for AI

Government agencies are forecasting millions of dollars in spending on adopting artificial intelligence, prompting the Greens to raise red flags about the new technology.

Answers to Written Parliamentary Questions (WPQ) from the Green Party show more than $41 million budgeted to date on AI – including costs to acquire systems, maintain subscriptions, and train staff – in the 2026/27 financial year.

This includes $10m budgeted from Health New Zealand in the “HealthX” scheme to adopt AI in the health system.

In response to the Written Parliamentary Question, Minister of Health Simeon Brown said the scheme looked at “identifying, evaluating and scaling innovations and responsible AI solutions across clinical and operational settings”.

“The approved funding for HealthX comprises $3.5 million for workforce capability and $6.5 million for delivering AI and digital innovation initiatives, including assurance, procurement, contracting, deployment, licensing and subscription costs, training and adoption support, and benefits monitoring,” Brown added.

Green Party public service spokesman Francisco Hernandez told Newstalk ZB his main concern was that some of the support for AI was coming from baseline funding.

Hernandez added it was concerning to see some of the funding budgeted on “chatbots” that he thought would be better suited to “solving the critical shortage of nurses that we know we have”.

Government Digital Delivery Agency deputy secretary Phil Weir said AI represented a “small proportion” of the billions public sector agencies invest each year in digital services and technology.

“Spending on AI is allocated and managed in the same way as other agency spending. Agencies are responsible for ensuring investment supports their functions, represents value for money, and meets procurement, privacy, security and assurance requirements,” Weir said.

“I expect public service leaders to be actively looking at how the safe and responsible use of digital technology, including AI, can help them deliver better services, improve productivity and provide better value for New Zealanders,” Weir added.

ACC has a total budget of $6.1m for artificial intelligence-related activity for the 2026/27 financial year, while the New Zealand Transport Agency is budgeting $3.8m.

Education agencies are predicting to spend close to $5m on AI; this includes the Ministry of Education maintaining the Student Monitoring, Assessment and Reporting Tool (SMART) with an

“AI-related component” costing $1.85m annually.

Further detail was provided in certain WPQ answers, including from Corrections Minister Mark Mitchell, who said a total of $65,330.20 had been allocated for “130 Copilot Premium licenses” at Corrections.

Mitchell, in his role as Minister of Police, advised Police that spent $1.25m on AI from its baseline in the 2025/26 year “and expects to spend a similar amount in 2026/27″.

The Energy Efficiency and Conservation Authority’s draft budget of $315,000 on artificial intelligence includes $180,000 for “Subsense consultation analysis support tool”, $122,000 for Microsoft Copilot licenses, and $12,829 for Lexis Nexis.

Subsense’s website describes the product as “An AI-enabled submissions analysis and reporting platform built for New Zealand public sector consultations – faster, more consistent, audit-ready analysis”. It analyses submissions during consultation processes and is backed by consultant firm MartinJenkins.

Lexis Nexis is AI-powered legal and business advice.

The Ministry of Justice has allocated $903,000 in the 26/27 year on Copilot licences,  though Justice Minister Paul Goldsmith said broader AI-enabled capability typically comes as part of wider digital investments, and is “not separately budgeted”.

Ministry of Māori Development Te Puni Kōkiri is predicting to spend around $1000 per month on Azure AI Foundry “tokens”.

Hernandez said some of the technology seemed quite new and suggested “the New Zealand public is being used as a guinea pig for artificial intelligence” as he called for stronger guidelines and principles on the technology.

“We should always strive to adapt and innovate, but these should really onle be implemented with the consent and support of the people, the workers,” Hernandez added.

A 2026 cross-agency survey on artifical intelligence, published by the Government Chief Digital Officer, showed a significant increase in public sector staff using the technology for “administration, digital and technology functions, followed by communications, policy, project management, and corporate and human resources activities”.

Increasing the use of AI is part of the Government’s overhaul for the public service, expected to deliver significant cost savings.

Minister of Finance Nicola Willis has promised the overhaul will lift productivity and deliver better value for money.

“Businesses and households are using AI every day and, while parts of the public sector have seized the opportunity to innovate, others are still locked into outdated ways of doing things that prioritise box-ticking over outcomes,” Willis said at the time of the announcement.