The Job Interview: Christopher Luxon and Chris Hipkins on transforming our economy - ‘We’ve got a productivity disease’

Just how far apart are the two Christophers on economics?

In the NZ Herald Job Interview this week National leader Luxon described himself as a centrist and cited Singapore’s former Prime Minister Lee Kuan Yew as an influence on his political thinking.

Prime Minister and Labour leader Hipkins promised his government will work more closely with the private sector if he is returned to power.

Both Luxon and Hipkins talked up the transformation of New Zealand to a high-wage, high-tech economy, in their NZ Herald Job Interviews this week.

“It boils down to a few things and that, that has been the fundamental problem of New Zealand over successive governments,” Luxon said. “Whether they’ve been National or Labour is productivity and our inability to deal with that. We’ve got a productivity disease in New Zealand.”

But while both talk a good game on driving productivity and improved economic performance, neither was able to offer any great detail on specific policies that will drive that change.

Asked to name the most economically transformational policy Labour was offering, Hipkins emphasised trade.

“I think our economy is not just one thing and anyone who argues that there’s just one magical thing that’s going to create this great bright economic future for New Zealand doesn’t understand the nature of the New Zealand economy,” he said.

But we were an export-led economy and that had been, and would continue to be, one of his key areas of focus, he said.

“We’ve got the new free trade agreement with the United Kingdom in force. Now we’ve signed the free trade agreement with the European Union. We’ve got the CPTPP. We’ve enhanced our trading relationship with China. These are all creating opportunities for New Zealand’s economy to grow that. There are new and emerging industries that we want to be able to make the most of as well.

“Our great potential for growth is in our innovation,” Hipkins said, citing support for the creative sector, film and television sector and the emerging digital gaming industry.

“Our space industry is one that I’m really proud of,” he said, despite dismissing National’s plan for a Ministry for Space as “ridiculous”.

Luxon, who has talked about emulating Ireland economic success, was asked what policies National offered to drive transformation.

“I have studied small advanced economies probably for the last 25 years. When I went to London was when I sort of really started getting into it because you start asking yourself the fundamental question, which is why are the other 5 million people countries wealthier than New Zealand? And you look at Ireland and Denmark and you look at Switzerland, you look at Finland and you look at New South Wales and you look at Singapore and Israel,” he said.

Luxon cited reform of the education system as fundamental.

“You’ve got to have a world-class education system,” he said. “So when you go to Ireland and understand the investment that’s been made in education, where there is a surplus of teachers. It’s an aspirational profession and they actually teach the basics incredibly well...That’s the key thing.”

The second thing was modern, reliable infrastructure, he said, acknowledging both Labour and National Governments had failed on this front.

“This is a 30-year problem in New Zealand. We run the country in many ways like it’s 1975.”

The country had also failed to embrace our science, technology and innovation sufficiently, Luxon said.

He said we had good innovation rates, but had been very poor at commercialising it.

Luxon said he’d increase foreign direct investment and improve the flow of capital into New Zealand to drive that commercialisation process.

When it came to government getting involved in directing business decisions, Luxon said he considered himself a centrist.

“I consider myself a pragmatist and what I’m interested in is solving problems.”

Both candidates were asked whether they thought exports of dairy should still be our largest export earner in 2050.

“We will still be a primary producing country and we’ll still be exporting primary products,” Hipkins said.

“But I think our great potential for growth is in our innovation. It’s in our ideas and it’s in our talent and we know we can continue to do that, but that would involve people with talent coming to New Zealand as well.”

Luxon agreed.

“It will be an important part of it,” he said. “But there’s other value-added industries that we can create. “If you think about aquaculture, ... I think there’s a lot of opportunity in education in New Zealand, I think there’s a huge opportunity in technology in general and it’s the applied technology and the applied manufacturing and actually putting smarts into what we do.”

Perhaps unsurprisingly, both candidates indicated they were keen to ensure housing was more affordable and that they would bring in policies to boost housing supply.

But neither was prepared to say prices should fall (or rise).