Prime Minister Christopher Luxon has announced a focus on "going for growth".
Photo / George Heard
Prime Minister Christopher Luxon has announced a focus on "going for growth".
Photo / George Heard
Opinion by Simon Wilson
Simon Wilson is an award-winning senior writer covering politics, the climate crisis, transport, housing, urban design and social issues. He joined the Herald in 2018.
The Māori economy is more than a quarter the size of New Zealand’s total economy.
Economic growth has a sometimes controversial relationship with environmental, cultural and social wellbeing.
Let’s say yes! Go for growth! And let’s be razor focused! I agree with the Prime Minister. We should say yes more often and we should be really focused on the things that will make this country a more prosperous, resilient, healthier and happier placeto live.
But I have to ask, why is the discussion of “growth” so focused on investors, immigration and regulations? Those things are part of the picture, but they won’t do the trick on their own.
The PM released a new 40-point action plan on Monday. Only one of those points explicitly relates to the Māori economy. None of them is designed to reduce emissions and many of them will do the reverse. Only one of them is directly related to poverty.
But economic prosperity is directly related to our other goals as a society. There are many ways in which good, sustainable growth with widely shared benefits can happen. Here are a few; I’ll follow up with another list soon.
Work with iwi
“In the regions, and I include Auckland in that,” said then-Prime Minister Bill English on Waitangi Day in 2017, “I would say that almost without exception the organisations that are most committed to development are the local iwi.”
He wasn’t kidding. In 2023 the Māori economy was worth $118 billion, according to the Ministry of Business, Innovation and Employment, up from $68b in 2018.
You want people committed to growth, not just to talking about it? Māori enterprise has grown 74% over just five years.
Those Mbie figures suggest the Māori economy now makes up about 28% of New Zealand’s total economy, even though Māori comprise only 18% of the population.
Urban sectors such as manufacturing, transport, construction and real estate account for two-thirds of the activity, reducing farming, fishing and forestry to only a third. Mbie says there are now more Māori employees in high-skilled jobs than low-skilled jobs.
It should be obvious any national growth strategy will involve close cooperative relations between the Crown and iwi. And yet the Government has allowed such a comprehensive collapse of those relations to occur, it’s a moot point whether this was done out of carelessness or deliberately.
On Waitangi Day, Justin Tipa from Ngāi Tahu gave the speech of the day, with Christopher Luxon sitting next to him.
Prime Minister Christopher Luxon with Ngai Tahu kaumatua Ta Tipene O'Regan on Waitangi Day. Photo / George Heard
He said the thriving trade relations Ngāi Tahu had with Pākehā in the 1830s were one of the key reasons his iwi had signed the Treaty of Waitangi. Yet by the late 19th century, Ngāi Tahu had become essentially landless, impoverished, and all but forgotten. Rectifying that was at the heart of their Treaty claim.
“The Ngāi Tahu story is instructive for us as a country,” he said, “because it’s a vivid reminder that the unchecked momentum of blind political, economic, and social forces can lead us to forget our obligations to one another, and our honour.”
Ngāi Tahu and the National Party, he said, have “a tradition of pragmatic and principled engagement between us”.
“We do need growth. We do need investment. We should be ambitious. Ngāi Tahu wants those things, too. But simply going for growth and liberalising the economy isn’t going to cut it.
“A nation is not a blank canvas. If our country continues to divide and fragment, we will lose the trust and stability ... that makes economic growth and prosperity possible in the first place.”
And, he added, “Disagreement is possible”.
“But what I’m saying is that we’ve got to have these disagreements in good faith — without making a mockery of the complex and contingent nation we’ve inherited. I think we’re failing at that at the moment.”
Translation: culture wars sabotage progress.
Support banks facing the future
When BNZ announced it was decoupling its investment strategy from fossil-fuel industries, Luxon attacked it for holding the economy back. “Most of our cars use petrol,” he said, and that would continue for a long time to come.
But no one is going to close petrol stations overnight. And yet it will happen, over time, with or without BNZ. Speeding up the transition is a great idea.
The bank flagged this policy in 2019 and it’s part of an invaluable strategy: invest in the future, or you risk creating stranded assets. The PM should understand that.
It also falls within the scope of the Environmental, Social, and Governance (ESG) Framework used by many New Zealand businesses to help create what KPMG calls “an inclusive, prosperous and resilient New Zealand”.
NZ First has joined in the outrage, with leader Winston Peters announcing on Monday they would introduce a Member’s Bill “aimed at preventing banks from ... perpetuating woke ideology in the banking sector being driven by unelected, globalist, climate radicals”.
Say no to progress, in other words.
Treat meth use as a health issue
In some parts of the country, the biggest barrier to economic development is methamphetamine.
Wastewater testing by the police revealed that nationwide, consumption doubled in the third quarter of last year, compared with the year before. Oranga Tamariki reports that 90% of the “reports of concern” it receives are related to meth.
The police and health authorities have a plan to deal with this. It’s called Te Ara Oranga and it’s funded in part from the proceeds of the Criminal Proceeds (Recovery) Act.
Te Ara Oranga treats meth use as a health issue, providing access to treatment and community support. That frees police and the courts to focus on “drug offenders who are involved in the most significant criminal activity”: organised crime.
Te Ara Oranga started in Northland in 2017 and it has strong support from agencies such as the Salvation Army, because it works. But eight years after the first pilot, it’s still not available nationwide and even where it does operate, it’s underfunded.
Don’t lower the corporate tax rate
The drums are always beating for lower corporate tax rates. And it’s true New Zealand’s 28% rate is notably higher than the OECD average of 23.9%. But we’re not an outlier: in Australia, Germany and Japan the corporate tax rate is 30%; in some other countries it’s even higher.
Australia proves low taxes are not essential. With higher tax rates, it has a stronger economy and stronger growth.
Finance Minister Nicola Willis and Luxon have joined the drummers but, tellingly, tax experts haven’t. One of them, Geof Nightingale, told the Herald yesterday, “The evidence in New Zealand that reducing the corporate tax rate drives investment is quite weak.”
Finance Minister Nicola Willis with Prime Minister Christopher Luxon, talking about economic growth in Auckland this week. Photo / Alex Burton
He pointed out that the company tax rate has been falling for 40 years, from 48% in the early 1980s, and each time it fell “there’s no clear evidence that it drove investment”.
Besides, as Nightingale also says, why should ANZ Bank pay less tax on its $2b profit?
There’s also little evidence that our tax rates keep investors away. In 2022, Inland Revenue reported that between 2001 and 2019, corporate investment had been higher here than in the United States, Britain and the OECD average.
Raise the minimum wage
We have a low-wage economy, which is one of the reasons so many New Zealanders emigrate to Australia. Many politicians and economists like to talk about building a higher-wage economy over time, but we will never get there if wages are allowed to fall behind inflation.
The Government announced a rise in the minimum wage of 1.5% last December, from $23.15 to $23.50. This was behind the inflation rate of 2.2% and the 4.1% rise in rents.
Build a new bridge over the Waitematā
Yes, we need more infrastructure. No, we do not need the most expensive options that politicians and officials can dream up. Thinking like this sucks life out of our economy, not only because of the cost, but because the bigger and more expensive the project, the more likely it will never happen.
The worst example is the proposal, seemingly supported by both National and Labour, to build road and rail tunnels under the Waitematā.
Just build a bridge. Many options have been proposed. Put a light rail line on it, build that line out to the north and south, and make sure walking and cycling over the harbour will be possible, too.
By the way, did anyone notice? Luxon’s slogan “Say yes!” means exactly the same thing as Jacinda Ardern’s “Let’s do it!”
