Why is that the NZ economy doesn’t grow at a much faster clip, instead of slipping slowly down international rankings of GDP per capita, particularly compared to Australia. The very short answer is we lack a growth culture and unlikely to get one any time soon.
My economic rationalist friends recommend more deregulation, cut the size of government and reduce taxes. On the left, it will be said Scandinavian countries do quite well with their very high taxes, so cutting government expenditure is a bad idea and government should be more active with its economic development policies.
Kiwis want low taxes and expensive Scandinavian policies – just not possible.
There are four main reasons why NZ is not growing its economy at a level that provides for the growing needs and aspirations of its population for a first world lifestyle.
They are: environmental priorities, community values, Treaty byproducts and the intelligentsia.
Despite these negative factors, we do have outstanding companies such as Fisher and Paykel Healthcare, Rocket Lab, Zero and Weta Workshop. And we have an agricultural sector producing high quality food produce for Kiwis and the world. I salute them all for what they deliver and only wish we had twice as many.
Most corporates, particularly those listed on the Stock Exchange, are extremely ordinary as can be seen by looking at how our share index has performed in the last five years, compared to like countries. Clearly we have a managerial and director class who are sub performers. See Cameron Bagries’ comments to the Herald’s recent mood of the boardroom, where business leaders were mostly griping about the government.
Interestingly the UK has similar problems which their Labour Government, led by Sir Keir Starmer, wants to fix. Good luck to them. Starmer likened his mission to Margaret Thatchers, albeit with different targets.
Environmental: For a country that substantially lives off its exports and tourists, it’s disgraceful the Port of Tauranga has spent more than seven years, to get a consent. I see the government has put it on a so called “fast track” so let’s hope that results in works getting underway very soon.
There are numerous other examples of good projects being unduly delayed by the RMA etc, particularly mining which we should have more of. And then there are those that are not proposed because it’s all too hard.
In the last 20 years we have seen climate change arguments added to the arsenal of those who oppose so much development, as if our 0.17% contribution to CO2 matters. The top three CO2 contributors (China, India and the USA) are not committed to net zero by 2050 but China has set a target of 2060 and is going gang busters on renewables.
I am pleased the Luxon government has wound back the methane targets so fewer people will go hungry in the world, as we produce more food than would otherwise have been the case.
Community values: NZ has gone from being a mono cultural society pre 1800, to mostly bi-cultural up until 1945 and since then increasingly multi cultural. It makes for a more interesting and diverse society but brings people with different values together under one governmental system. Multi cultural societies are much harder to manage than monocultures for obvious reasons. Thus we lack shared community values on key issues such as the work ethic and personal responsibility. It means for instance, our generous welfare system, is easily exploited by the indolent.
The former Australian Labour leader Mark Latham often quoted his mother saying “in our street there are bludgers and there are battlers. We are on the side of battlers”. Difficult to imagine a NZ Labour leader making that statement.
At present we have around 409,000 people of working age drawing the benefit. This includes people on disability, sickness and those unemployed. I have no doubt many are genuine cases. I am equally convinced many others could be best described as bludgers. Some will have self inflicted problems including drugs and an inclination to live off others.
The Economist (October 10, 2025), said China’s leader “Xi and much of the party elite dislike what he calls “welfarism”. Overly generous governments create “lazy people” and “inevitably bring about serious economic and political problems” he warned in 2021.”
New Zealand is well into the welfare trap as is Australia and the UK. The slide into welfarism is one of the biggest challenges facing the British Labour government. In Australia Labor’s Albanese government face similar challenges.
Their media discusses the problems whereas ours seems to prefer sitting in the welfare trench.
I saw a cartoon on social media recently which had someone saying I have to pass a drug test to get a job so you should have to pass one to get a benefit. Why not?
As our government found with its recently new policy re unemployed 18-19 year olds and parental obligations, the welfare industry and its many allies in the left of centre media, are quick to oppose the policy without offering practical alternatives.
School attendance levels are improving from a low base but Maori and Pacific are below average which logically leads to them having poorer career prospects. Asian attendance levels are much better, but why, when so many are migrants and don’t come from homes where English in their first language?
Education Minister Erica Stanford is making credible steps to improve the curriculum and the system in general, but it is uphill work.
Post the Pike disaster the safety industry has gone overboard. Th recently announced changes to quake standards will materially help the economy over time, because it will eliminate the spending of billions on buildings that were not seriously unsafe for people.
Treaty byproducts: There are many positive features of the Treaty settlements and some associated policies. I don’t include post Treaty concepts such as “partnership” and “co-governance” in the list of positives.
However, the opportunities created for rent seeking (which some describe as extortion), are major. The rent seekers create a climate of uncertainty in the business sector, and add to costs of projects. It rarely gets reported and when it does often well after the event.
Then there is the degradation of the education curriculum to accommodate Maori values (think science). And while I fully support the teaching of NZ history in our schools (along with Maori studies), the curriculum should pass the tests of accuracy and some objectivity which at launch it did not. See Professor Paul Moon.
The way taxpayer funds are distributed to non-government organisations (NGOs), often lack the necessary oversight to ensure that the “investments” provide a good return to parties other than the direct recipients. The $4 million spent on whale songs to help fix Kauri tree disease is just one example. Anecdotal evidence suggests there are different standards for monitoring the distribution of taxpayer funds to NGOs, with far too many leery of questioning what’s happened to the money. Why? maybe because that might be seen as “Maori bashing”, an allegation made rather too frequently.
The intelligentsia: The intelligentsia, much of it in Wellington, comprises the public service, local government, judges, lawyers, the media, and the education system including universities and MPs. They dominate public discourse and collectively smother the climate for growth, because that’s not their top priority. They make producers such as farmers look like the bad guys. See letters to the editor and the media focus on perceived social problems, rather than business success.
I spent 50 years dealing with the public service as a journalist, in PR working for Labour leader Bill Rowling, the Manufacturers Federation and the NZ Meat Board, and later as a lobbyist at Saunders Unsworth. During most of that period I would have described the public service as diligent and honest, mostly providing Ministers with free and frank advice and then implementing whatever Governments decided.
I cannot say the same about the public service today. It is bloated, constipated by the process disease with a predilection to getting consultants to do core business. And it leaks. Sir Brian Roche has identified some key issues and good luck to him making progress. I won’t hold my breath on us getting a lean quality public service that is agile and cost effective, because the problems are far too embedded. As the NZ Initiative has documented, we have an absurdly large number of state agencies and Ministries with confused and unduly complex accountabilities.
The radical plans for Wellington’s so called Golden Mile (GM), opposed by the vast majority of businesses on the streets is a local example of the elite running amok at the expense of business. As someone who was closely involved with businesses on the GM for a few years, I saw their views misrepresented to the decision makers, some of whom were unaware of the scale of the opposition.
If it proceeds, expect several years of disruption during construction and most likely less business, because customers will find getting there too difficult due to street blockages for customers and tradies. This is big test for new Mayor Andrew Little and his colleagues.
Probably missed by most Kiwis is a civil war inside the legal profession with a few lawyers challenging the judicial activism of the Supreme Court and other judges. In plain language, on one side are the judges and lawyers who seem to believe the Treaty trumps democracy, versus the likes of Gary Judd KC, Roger Partridge and others who challenge the establishments’ view of the Treaty.
This maybe unfair but it appears to me if a Judge can find a way blocking business proposal he/she will.
Our legacy media is now clearly quite left wing and I am not convinced it believes in democracy for NZ. It struggled to accept that National and co actually won the 2023 election. The sniping since has turned many Kiwis off legacy media, including me. I stopped watching all TV news March 2024 breaking a 60 year habit of watching daily TV news in all four countries in which we have lived. Prefer the BBC over RNZ.
I subscribed to the NZ Herald for a while which is not bad on Wellington issues, where I live. Have dropped that now also but do look at the websites of several legacy media and subscribe to “Scoop” and “The Platform” which provide real alternatives. Noticed a new online service called “Centrist” which appears balanced.
I also pay for “The Times” in London which, despite being owned by Rupert Murdoch, does provide a high quality online service, at a very reasonable cost for Kiwis.
Declining news consumption is bad for democracy. But as NZ legacy media is not providing balanced news or showing a strong commitment to democracy, individual decisions to avoid it are entirely understandable, even if some end up poorly informed
PM Christopher Luxon is genuinely committed to increasing economic growth and I hope he succeeds. But simply having good policies will not be enough to change the overall climate of opinion. Treasurer Nicola Willis and the whole Cabinet need to break out of their current policy framework. They need truly new policies that create some excitement and incentives for business, and Kiwis in general.
Changing culture is incredibly difficult. Roger Douglas changed the business culture in the 1980s by “persuading” them so forget subsidies and tax breaks or special protection from competition. But the unique opportunities for this, created by former PM Muldoon, are not going to come again. Even less likely with MMP which in part was introduced to prevent governments from introducing such radical policies.
My assessment may seem pessimistic, but I think it’s realistic having regard for the last decade or so. Just go to the IMF or World Bank and look at how we have performed. It’s not pretty. Because the relative decline has been slow, many will have not noticed the slide.
Quite frankly we appear to be drifting more to South America than Australia, which is hardly stellar itself. I hope we don’t end up like Argentina, a great country we have visited and liked, which under radical economist Javier Milei, is undergoing a radical, traumatic policy revolution. He has some encouraging results so far but his formula has yet to prove to be enduring. Lee Kuan Yew achieved much for Singapore over 50 years or so but that required unique skills and a generally compliant population.
Kiwis, wake up or just accept relative economic decline and second best state services, because at the moment it looks like more Asian countries will zoom past us.
Barrie Saunders