Opinion & Commentary
Hostility to aspiration and the tall poppy syndrome hold New Zealand back
In last week’s Sunday Star Times, Rod Oram wrote a remarkable column slating the 2025 Taskforce for its inaccurate, lazy and shallow analysis before rudely dismissing the chairman’s credentials and the report’s findings.
In a written version of an equally dubious analysis given on Radio National’s Nine to Noon show, Mr Oram claimed that the taskforce led by Don Brash did not ask ‘the really big, hard questions: what are our best opportunities in the world economy? How do we make money from them?’
This is a dubious claim.
Successive governments have asked that very question: where are New Zealand’s opportunities and how can we make money off them? Governments have regularly picked winners, based on arbitrary assessments of what will be successful – and provided industry support, subsidises, tax breaks, and protection from competition – rather than let the market decide.
Notable past examples are agricultural subsidies, super yacht building support, and tariffs protecting local manufacturers. Hardly roaring national economic successes. Business people ask themselves every day what they have to do in order to survive and prosper
When governments ask that question it used to be called central planning, which was a key tenet of state socialism. It didn’t work then. The twentieth century is a historical case study of why central planning doesn’t work, and there isn’t a shred of evidence it will work now.
In New Zealand’s case, there is substantial evidence that picking winners (central planning) didn’t work at all, especially in comparison with Australia. Australian economist Sinclair Davidson has recently shown using OECD data that New Zealand’s underperformance compared with Australia really took off in the mid-1970s with the rise of Muldoonism: coincidentally the very apex of ‘picking winners’ politics.
Apart from arresting our relative decline in the mid-’80s with the Douglas and Richardson reforms (of which Dr Brash was a part), this has been a trend ever since.
Bearing this in mind, the 2025 report proposes a minimal role for government wherever possible, and has been criticised for focusing on the size and not the quality of government. However, arguing for quality government is not helpful at all. No one ever argues for bad government.
In this case, it is the considered opinion of Dr Brash and the taskforce that less government would enable the private sector to create greater wealth and help bridge the gap in living standards with Australia. The very nature of a business is wealth redistribution through wages, contracting work, and dividends (which are spent in the economy), so this is a positive recommendation.
The remarkable rise in Crown expenditure by 45% in five years undermines this wealth creation process. But the cost is not just in this easily measurable spending increase; it is also in the areas where government ‘crowding out’ has occurred.
The government sector has ‘crowded out’ private activity that would have taken place otherwise. The activity could be in businesses not started, extra employees not hired, and opportunities not exploited due to a larger than justifiable non-tradeable goods sector.
A central theme of the 2025 Taskforce is what economists call a ‘knowledge problem.’ It arises when governments get involved in businesses and provide more than the minimum. Governments simply do not have the knowledge to make decisions as good as by those directly involved in a business, running a hospital, or making an investment decision.
The taskforce points out that smaller government, doing less, helps mitigate this problem.
Unfortunately, in many ways the cause of New Zealand’s failure is cultural: there is widespread ignorance of the concept of economic growth, a belief that wealth creation is a zero sum game (if one persons gains, another loses), and a stubbornness that New Zealand doesn’t need to do the things that make other countries wealthy – that somehow a ‘right’ to certain standards of living exists without have to create it. It is an idea of New Zealand exceptionalism.
These attitudes were bedded down under the Clark-Cullen government amidst the ‘failed policies of the past’ mythology.
It is an attitude that makes good policy a second order problem, as it will rarely be culturally valued and therefore politically palatable. It is this aspect of New Zealand life that really needs to change.
Mr Oram’s commentary shows that he has profound disagreement with, and distaste for, the taskforce’s recommendations, and that is fair enough. However, the report makes a bold effort to arrest our relative decline with Australia. Sitting on our hands doing more of the same will result in Third World incomes compared to Australia.
Given that Australia is our only meaningful neighbour, and the only country we share a common labour market with, this has to be of grave concern.
However, the recommendations have been dismissed out of hand. Perhaps this is a case of that most New Zealand of all attitudes: hostility to aspiration and the tall poppy syndrome.
Luke Malpass is Policy Analyst at The Centre for Independent Studies.
