PM Christopher Luxon speaks to media post his State of the Nation address. Video / Sylvie Whinray
Opinion by Matthew Hooton
Matthew Hooton has over 30 years’ experience in political and corporate communications and strategy for clients in Australasia, Asia, Europe and North America, including the National and Act parties and the Mayor of Auckland.
Christopher Luxon’s State of the Nation speech emphasised economic growth but lacked concrete policy changes.
Invest New Zealand aims to attract foreign investment, focusing on critical sectors like banking and infrastructure.
Love or loathe him, agree or disagree with his policies, there’s still something impressive about Donald Trump’s immediacy in implementing his promised programme.
Straight after arriving in the Oval Office, the returned United States President signed more than two dozen major executive orders covering allmanner of topics.
While some face legal challenges, experts say most appear professionally drafted, obviously well ahead of his taking office.
For better or worse, on day one, Trump has imposed his authority and agenda on his Government.
His preparation and speed of delivery recalled Argentinian President Javier Milei repealing more than 300 regulations immediately on taking office, two weeks after Christopher Luxon.
US and Argentinian Presidents have far greater executive power than New Zealand Prime Ministers. Still, Trump’s and Milei’s senses of direction and urgency contrast starkly with the past three New Zealand Governments, elected without any real idea of what they would do.
Years of working groups and procrastination followed. Bill English left office in 2017 after nine years of working on social investment, without implementing it. In her five years, Jacinda Ardern failed to introduce her capital-gains tax, build her 100,000 houses or even choose a route for light rail.
Faced with three coalition partners needing to get comfortable together, Luxon’s first year followed a similar path. His State of the Nation speech yesterday was meant to inject a new sense of urgency on economic reform.
To some extent, he delivered. In parts, Luxon’s speechwriters produced almost Obama-esque rhetoric about the importance of economic growth. But his policy team arguably let him down. After summarising change already made – including Chris Bishop’s fast-track consenting regime which Luxon said will “supercharge” the economy – the PM’s only two new announcements were of a new bureaucracy to be called Invest New Zealand and mergers of the Government’s existing science and research agencies.
The applause from the business audience lasted only 11 seconds. Taxpayers’ Union boss Jordan Williams called the speech “more about feels and repeating old announcements than concrete policy changes”.
Still, the pro-growth rhetoric was a good start and Beehive strategists say they didn’t want that message to be overshadowed by too much new detail. Similar to Sir John Key’s “rolling mauls”, they say new pro-growth initiatives will be announced all through the year, with yesterday’s moves only the start.
The first, Invest New Zealand, to be formed by splitting the existing New Zealand Trade & Enterprise agency, will be led by Trade Minister Todd McClay. While Trade Ministers have always had responsibility for attracting foreign direct investment, Luxon added emphasis last week by changing McClay’s job title to Trade and Investment Minister.
Luxon’s only two new announcements were of a new bureaucracy to be called Invest New Zealand and mergers of the Government’s existing science and research agencies.
Luxon says Invest New Zealand is based on similar outfits in Ireland and Singapore and will operate as “the Government’s one-stop-shop for attracting foreign direct investment”.
It will “roll out the welcome mat, streamlining the investment process and providing tailored support to foreign investors”. Its KPIs are to “increase capital investment across a range of critical sectors like banking and fintech, key infrastructure like transport and energy, manufacturing and innovation”.
Invest New Zealand will need to be established before Luxon’s foreign-investment summit in mid-March, to which he will invite funds managers he and McClay have met around the world.
The summit and Invest New Zealand must be careful not to overdo the sizzle at the expense of the sausage. Before hanging out their shingles, Ireland and Singapore already had the low corporate taxes and light-handed regulations Luxon has yet to deliver.
If Invest New Zealand and the summit are to succeed, they must offer already-investable propositions to investors, not corporate videos and other generic marketing.
Serious investors aren’t moved by glitzy sales jobs, and travelling to remote New Zealand involves a big investment of time even for the private-jet set. It isn’t just a waste of their and our officials’ time if they arrive here to be given information available on the internet. It would be highly counter-productive, being the last time they would then be prepared to make the trip.
Invest New Zealand and summit organisers must also beware of charlatans talking a big game but with little behind them. New Zealand still has a habit of falling for Giovanni Di Stefanos.
Christopher Luxon had already insisted former Transport Minister Simeon Brown (left) must have investable propositions ready for the foreign investment summit in March. Photo / Mark Mitchell
Luxon appears cognisant of these risks, already insisting former Transport Minister Simeon Brown must have investable propositions ready for the summit. Hopefully, that portfolio being transferred to Bishop, also the Infrastructure and Housing Minister, indicates the clearly investable propositions will extend beyond transport.
Likewise, care is needed when establishing the four new Public Research Organisations (PROs) to replace the existing Crown Research Institutes (CRIs).
Luxon says each PRO will have a particular focus: the bioeconomy, Earth sciences, health and forensic sciences, and advanced technology. “Each are expected to have a sharp focus on commercialisation – harnessing Kiwi talents for maximum economic impact,” he announced.
That makes some sense, but it must be remembered that some of the world’s most important and profitable scientific advances – including penicillin, x-rays, the telephone and even the internet – came about largely by accident, emerging from projects focused on something else.
It wasn’t government bureaucrats who decided to invest in creating the personal computer, Windows, Amazon, Facebook, the iPhone or Xero. It was the private sector.
Similarly, no bureaucrat thought there were billions to be made – or how to make them – by designing and manufacturing boxes and coffee lids in North America or toys in China.
Luxon had better not believe his bureaucrats will do a better job of identifying or discovering the next big economic thing than the messier worlds of scientists investigating improbable ideas and the free market throwing up even crazier ones.
Still, the PM has at least stamped his mark on his Government’s agenda with his priority of “growth, growth, growth”.
This, he says, will be an “outstanding year for New Zealand”, being “all about a doubled-down focus on economic growth”.
Moreover, Luxon has been confident and transparent enough to make promises that are measurable. He will want per-capita economic growth in the year to June 30, 2025, to be at least a bit better than the -0.6% Treasury forecast in its Half-Year Economic and Fiscal Update (HYEFU) before Christmas.
More importantly, since the new urgency was announced only this week, Luxon will need forecasts for per-capita economic growth in this year’s HYEFU to improve from the 2.2% already expected for 2025/26, and the cumulative 6.7% growth forecast from July 1, 2025, to June 30, 2029.
After all, if the focus of Luxon and his economic team doesn’t deliver higher per-capita growth than that expected anyway, he, they or both may as well throw in the towel.
