Prime Minister Christopher Luxon and new Economic Growth Minister Nicola Willis talk to media after a visit to the Fisher and Paykel Healthcare facility in East Tāmaki, Auckland. January 31, 2025. Photo / Alex Burton
If the theme of 2024 was ‘cutting backs’, the one for 2025 is ‘growth’.
The word appears 31 times in Prime Minister Christopher Luxon’s State of the Nation 2025 speech — and for good reason.
Luxon said it’s the “key to brighter days ahead” after experiencing the “biggest recession since the early 1990s.”
“Growth is the solution — we must embrace it,” he said.
Finance Minister Nicola Willis has been handed a new economic growth portfolio, working on driving up tourism numbers, and international investment.
She’s announced Government’s ‘growth Budget’ is set to be released on May 22.
NZ Herald deputy political editor Thomas Coughlan told The Front Page the economy was shrinking at the end of last year.
“Every year from 2022 to now, every six months, Treasury redoes its forecasts. And each of those forecasts basically became more pessimistic than the last. So, it’s a good thing the Government is focused on it, because it’s essential to providing a good standard of living for people,” he said.
A major initiative the Government announced is the introduction of a ‘digital nomads’ visa — which allows people who can work remotely to stay in New Zealand.
“The hope is that this policy will attract lots of wealthy foreign workers who will have a great time in New Zealand, see all the sites, go to restaurants and bars, and spend money,” Coughlan said.
The Government is also eyeing RMA reforms, fast-tracking projects, health and safety law reform, more mining, and all-around less red tape in 2025.
“One would think that stuff like the Fast-track Approvals Bill that is attracting foreign investment to New Zealand to build things, create jobs, spend more money here, which will grow the economy.
“Those measures probably will mean that there is more growth than there otherwise would be. But, I think it’ll be very difficult to disentangle how much of that growth is thanks to these measures and how much is just thanks to the fact that the Reserve Bank’s cutting interest rates,” he said.
Independent economist Cameron Bagrie told The Front Page the focus shouldn’t solely be on growth.
“Productivity drives living standards and what we’ve seen over the past decade is a very big deterioration in productivity growth.
“It used to average 1.4% every year. In the last 10 years, the average has been 0.2%. So, that means living standards are basically stagnant. And if living standards are stagnant, you’ve got a pretty big economic incentive to leave and employ your trade overseas, which is obviously what we’re seeing,” he said.
Bagrie also thinks while we’re moving in the right direction, the question remains whether the country is going hard enough.
“And to be fair,” he said, “lifting productivity growth and economic performance is not just going to be a function of Government policy. The private sector needs to get out there and lift their game as well.”
He said New Zealand was poor at capital productivity — or, how we manage assets.
“Capital productivity for 30 years has pretty well consistently been a negative number. So, we build stuff, then we mismanage it, and then, lo and behold, odds are, we’ve got to build it again.”
Listen to the full episode to hear more about how the Government plans to grow our economy.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
Police confirmed there were no other passengers in the vehicle.