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.
We like to do self-congratulatory back patting from time to time at this blog. Why? Since we believe we get most of our economic predictions in NZ correct. The reason is that we chase facts, have good sources, and solid bases for making predictions, rather than an agenda of trying to brain-wash readers into our preferred way of thinking, like most journalists in our mainstream media.
In November 2021, we ran the headline The Next Election (in 2023) will be a Cost of Living Election. Although NZ was in the midst of Covid back then, cost-of-living did become the number-one election issue two years later. We predicted inflation would take off and interest rates rise to combat it, before any other commentator – including the Reserve Bank. Which brings us to election 2026. It will be a tax-choice election. And tight.
The National-ACT-NZ First coalition is in more danger than the polls suggest. We’re not far from 2025, which is its last full year of government before the next election. GDP in 2024 is officially not growing – we’re stagnant at zero per cent. That has put the coalition under enormous pressure to find the revenues to fund New Zealand’s welfare state – its health and pension systems, which are being stressed due to ageing population – let alone invest in water supplies, Dunedin and Whangārei hospitals, and build new infrastructure.
Should economic growth be tepid in 2025, which it likely will be, public services will become run down. NZ Labour’s solution will be a copy of the UK Labour Party’s “solution” being rolled out at we speak. Hiking taxes on the wealthy. Whoever leads NZ Labour in 2026 will defend their election platform along similar lines to the UK Chancellor now, “Labour will launch a new era of public and private investment in hospitals, schools, transport and energy as momentous as any in the party’s history in this week’s budget,” Rachel Reeves said. The choice will be presented as “underfunding public services” (National) versus “investment in the country’s future” (Labour). The folks targeted by Labour to pay the bills will be wealthy NZers. Just like the British PM Sir Keir Starmer is currently doing in the UK.
Why the similarity to British politics? Because, for all the pretence NZ is growing up, forging its own identity, when it comes to economics it certainly is not. In terms of those institutions, we’re still squarely a British colony. Our health system is the same model as Mother England’s. It’s ‘socialized medicine’ – which means single public provider/single public payer, whereby wealthier folks can opt out with private insurance. Our education is based on the UK’s ‘specialize-early’ approach, whereby after leaving school, students go, for example, straight to law, medicine, or engineering, doing specialized degrees – rather than the US ‘liberal arts’ approach, where you specialize later. Our parliament and court systems are ‘adversarial’, copying the British. We don’t have an ‘inquisitorial’ French-style approach where a judge is appointed to investigate facts. NZ corporate law is based on the British shareholder model. We drive on the left, being one of the few, other than Britain, and the Union Jack’s in our flag. Where did Jacinda Ardern learn politics? London, in UK Labour PM Tony Blair’s office – not exactly a marae. And her new best friend is Prince William.
What this means is that NZ has not moved on and done its economic institutions differently from the UK. When Margaret Thatcher started her market reforms in the 1980s, NZ did its market reforms at the same time. Both in the UK and NZ, there was a backlash against those reforms, although they have nearly entirely been kept in place in both countries.
Now both the NZ Labour Party and UK Labour Party are promoting capital taxes to go after the rich, and ‘rebuild’ public services – with the British set to increase their rate and NZ Labour set to propose them.
Ironically, those most in favor of demanding a break from the UK by saying the Treaty never ceded sovereignty, which includes the opposition leader, leftist armies of university academics, historians and legal ‘experts’, are the same ones who support classic UK approaches to economic management. They don’t want French style health-care, where everyone can choose to go public or private, since they hate privatization, like British unions. They don’t want Singapore-style savings schemes let alone US-style anything. That group are trapping us in a colonial mindset more than any other. They’ve colonized NZ economics and are about to propose UK Labour economic solutions for NZ election 2026.
This article was originally published by Down to Earth Kiwi.
