Prime Minister Christopher Luxon has told his ministers to take any action necessary to improve competition in critical sectors such as banking, energy, and groceries.
In a speech outlining his 2025 economic growth plan, the National Party leader said “nothing is off the table” when it comes to tackling uncompetitive industries.
“Too often we see reports of Kiwis getting a raw deal because of a lack of competition. In banking, energy, retail, construction and groceries. I’m up for action,” he said.
Radical reforms on the table could include: forcing the supermarkets to divest their wholesale businesses, splitting the big energy companies into separate generation and retail arms, and slapping big banks with an excess profit tax.
Luxon didn’t specify any individual reforms, but said he agreed with the OECD’s view that “insufficient competition was an important factor” in New Zealand’s productivity problems.
After a year of deep recession, the Prime Minister wants to demonstrate to the public his government has a plan to guide the economy out of the slump and into a brighter future.
Last week, he gave Finance Minister Nicola Willis an additional portfolio, Economic Growth, which formalised her existing role as the Coalition’s chief economics minister.
On Thursday, in his first speech of the year, Luxon promised to deliver a range of reforms that would not just dig NZ out of recession but increase its potential growth rate — which is currently thought to be about 2.4%.
“I’m here today to talk about the economy; and almost nothing else,” he told attendees at a political rally in Auckland. “It’s been a massive year of change and reform and I am confident we are now on the road to recovery. But recovery isn’t enough. We have to go for growth”.
His plan includes well-signalled policy changes such as reforming the Resource Management Act, deregulating health and safety rules, and allowing more mining in New Zealand. But he also revealed two new policies.
Foreign investment magnet
Firstly, a new agency called Invest NZ will be established to attract and support foreign investors who want to pump capital into New Zealand. It will initially be part of NZ Trade and Enterprise, before eventually being spun out into a standalone agency.
The idea is modelled on similar agencies in Ireland and Singapore which help connect international investors with opportunities, government grants, and local expertise to facilitate investments.
It will be run by Trade (and now Investment) Minister Todd McClay who already shared some responsibility for attracting foreign investment. McLay said the new agency would “streamline the investment process and provide tailored support to foreign investors”.
The government hopes offshore investors will want to put their money into banking, road, renewable energy, and manufacturing projects in New Zealand.
Secondly, Luxon announced the Crown Research Institutes would be reformed into four Public Research Organisations focused on bio-economy, earth sciences, health and forensic sciences, and advanced technology.
Judith Collins, the Science, Innovation and Technology Minister, said this would help to maximise the value of $1.2 billion in government funding that goes into the science sector each year.
Luxon said in his speech he wanted to see more commercialisation of research being done in these institutes and greater financial incentives for the scientists developing new technologies.
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