Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ before he travelled to the UK to complete a PhD in Economics at Oxford University.
About 10 years ago when ACT was on 0.2 per cent of the vote with turmoil in the party and departure of leader John Banks, who was being prosecuted in the High Court over Kim Dot Com’s donations, a friend who worked in ACT’s office in Newmarket asked me to present at their meetings and help rehabilitate it. The party was under threat of extinction.
Two other folks about my age, Jamie Whyte, who became president, and David Seymour, back from Canada, were amongst others of the new (non Don Brash – non John Banks) generation who the party drafted in and bet its future on.
Around that time Roger Partridge and Oliver Hartwich became chair and exec director of the NZ Initiative, which arose from the defunct Business Round Table. I attended their meetings on behalf of a founder of the Round Table. Chris Luxon also attended, as CEO of Air NZ. I remember him presenting a proposal for a bed tax on foreign tourists. The news in 2016 read “Tourism Leader (Luxon) Calls for Bed Tax”. A few years later, the news in 2023 read “Luxon doubles down on Bed Tax Opposition”. Why is this history important? Because decisions made then underlie a gaping weakness in the new coalition and explain why it is behind in the polls today when it should be miles ahead.
During those post-John Banks times, I got to know Jamie. He had a PhD in philosophy from Cambridge University in the UK. His interest was in applying “libertarian” and “classically liberal” philosophies to real-life politics. David Seymour also held a philosophy degree, from Auckland. He was similarly attracted to those philosophies. I was not. When Jamie gave me a lecture one day about the difference between “libertarian” and “classically liberal”, telling me off for calling ACT libertarian, when he said it was instead the latter my eyes glazed over. A rift developed between me and them.
ACT was founded with the aim of providing practical economic solutions, often, but not always, using the power of competitive markets, to promote prosperity for all. It was never meant to be a party for the wealthy, who wanted the top rate of tax to be cut, and their big business interests protected. Quite the opposite, ACT began as the Association of Consumers and Taxpayers. Promoting abstract philosophies like “libertarianism” and “classical liberalism” had nothing to do with its formation.
Now here’s the thing. As time wore on, a transformation occurred. David discovered taking sides on non-economic moral issues, like euthanasia, freedom to have guns and legalization of drugs, all with a libertarian bent, gave ACT more publicity and attracted enough votes to push it over five per cent, compared to rolling out more boring economic reform plans of the type folks like me had been trying to do. But ACT (and National’s) pre-election budgets became lame. They could be summarized in a line: cut what they called “waste” and use the cuts to reduce taxes. As if 3,000 years of economics could be summarized in one sentence.
Libertarianism and classical liberalism, which mean nothing to the average Kiwi, also gained some traction with National, but more behind the scenes. Prime Minister Luxon’s economic adviser, Matt Burgess, who worked at the Initiative, adheres to these philosophies, as do the other of the PM’s economic advisers, Initiative Exec Director Oliver Hartwich and chair Roger Partridge.
And there you have it. National and ACT (and so now the NZ government, bar NZ First) acquired an empty non-economic growth policy stance. Why? It has little to do with economics and everything to do with philosophy. It is why Finance Minister Willis is lost, with no answers for the nation’s stagnation. It is why she has no plan. It is why she ran to Business NZ last week asking them what to do. It is why she runs to the NZ Initiative asking them what to do. It is why the PM runs to his Economic Adviser Burgess asking what to do and gets no answers. National and ACT rejected the proposed, fully costed, shift to mandatory savings that I personally handed them a decade ago.
As libertarians, they had nervous breakdowns about the word mandatory. Consequently today nearly a quarter of Kiwis have no private savings when they retire, and of the ones that do, their KiwiSaver balances average just $30,000. Meanwhile all Australians have retirement savings accounts, with average balances of $300,000. National and ACT blew up building wealth for low income NZ’ers. Today the PM and Willis have no idea how to raise funds to pay for the healthcare and retirement of Kiwis over the age of 65. They have done so in the name of libertarianism and classical liberalism, terms that I still don’t know the meaning of, along with five million other Kiwis.
Why did adopting a religious-style philosophy with born-again zeal cost National-ACT the chance to be 10 percentage points ahead in the polls today, after Labour nearly destroyed NZ? Because few people relate to libertarianism. It gets too few votes. In the US, those kinds of parties failed. Why? Because Americans who support smaller government and lower taxes (that is, who tend to vote Republican) don’t support a Republican who promotes libertarian causes like being pro-abortion, who advocate the legalization of drugs, who are anti-family values and support freedom to do whatever you like in your personal life, and who support the right to choose when it comes to ending life (or “euthanasia”). Many Republican voters are religious and find such policy stances offensive.
So we're left with a National-ACT coalition that gives free, competitive markets a bad name; which sides with big business and wants to give it freedom to do what the hell it likes; which doesn’t support sensible savings policies that necessarily require some compulsion, since a market failure exists around setting aside funds rather than consuming them now. On healthcare, the coalition is also lost – since the solution involves a mix of government funding – as redistribution is required to help those who cannot afford to pay themselves – but combined with public and private provision of services and competition.
This current group of National-ACT politicians lack imagination. They’re devotees of taking an impractical philosophical, religious, doctrinal approach to economics – one nobody who studies the modern subject relates to. They won’t be the ones who solve our burgeoning economic problems, despite the PM’s pep-talks aimed at raising staff (oops, sorry, that is “voters”) morale, and Willis’ determined use of her MA English and debating skills.
This article was originally published by Down to Earth Kiwi.
