Shane Jones is committed to state-led economic development.
New Zealand First and ACT sit further apart on the economics spectrum than do Labour and National. On other parts of the policy spectrum the two are more aligned, but this column’s focus is primarily on economics and, particularly, the economics of NZF. I leave Christopher Luxon’s future memoir to describe the strains in the coalition government from the differences between the two partner, but he may have even found the tensions helpful. Had he only a single coalition partner – be of it of the far-right or the centre-right – his government would have been dragged towards positions with many of which it would have been uncomfortable.
At its heart, NZF is the inheritor of what can be called economic ‘Muldoonism’. (This is not to say that those who adopt it have Robert Muldoon’s personality or style.) Muldoon’s economic approach was an extreme version of the way the economy had been managed for the previous century when economic development was state led with a high degree of state intervention.
Struggling with unprecedented inflation, Muldoon intensified the use of interventions, but they were always there. Recall that the first wage-and-price freeze in the post wool-price-shock era was supervised by Jack Marshall, who would insist he was an economic liberal although he died too early to give a comprehensive view on Rogernomics; he probably would have sympathised with the market liberalisation but thought it too extreme.
Winston Peters, the only leader NZF has had, is not deeply into economics; his university training was in law, politics and history. He left little mark when he was Jim Bolger’s Treasurer from 1996 to 1998 although he was always alert to the political implications of Treasury recommendations. (In contrast, Muldoon would engage with Treasury advice – and overrule it.) Peters has been happier as Minister of Foreign Affairs. (Perhaps he has been more pro-American under a National-led Government, echoing Muldoon and supported by Judith Collins.)
Peters left the National Cabinet in 1992 and its caucus in 1993 to set up NZF, because he strongly objected to the government’s neoliberal policies – Ruthanasia and Jennicide. That resulted in vitriolic neoliberal attacks. In 2017 he said, ‘Far too many New Zealanders have come to view today's capitalism, not as their friend, but as their foe. And they are not all wrong. That is why we believe that capitalism must regain its responsible – its human face.’ He is no friend of the socialist left either.
Muldoon equally strongly rejected the neoliberals, but he could not find a way to respond to economic change, given the coalition of interests he depended upon. Peters, born in 1945, is a generation younger than Muldoon, born in 1921. He does not seem to have thought greatly about how to adapt Muldoon’s interventionism to the changing economy, already occurring even when Muldoon was in power.
NZF’s number two, Shane Jones, born in 1959, is almost a generation younger that Peters. He has more of an economics background including earning a Masters of Public Administration from Harvard, advising the government in near-economic areas (such as the environment and treaty settlements) and managing business in the fishing industry. Most of the portfolios he has held – fisheries, infrastructure, regional development, building and construction – have a strong economic component. (He is also currently associate minister of finance and of energy.)
There are parallels between Jones’ ‘fast track’ legislation and the 1979 National Development Act we associate with ‘think big’. While they are not the same, for we have learned much in the five decades since it was enacted, they are in the same spirit. The underlying theme of the state as actively promoting economic development goes back to Julius Vogel and even earlier.
More than anyone else since Muldoon, Jones frequently connects his interventions and subventions – especially those in the regional development portfolio – with the expectation that his party should be politically rewarded for them. Muldoon would applaud the various policies that Jones has promoted; there is no other cabinet minister whose economic policies Muldoon would applaud more (although to repeat, almost all are a progression on Muldoonism – not a replication).
Jones is not alone. Chris Bishop, sometimes canvassed as the next leader of the National Party and one of its most successful cabinet ministers, also approaches his portfolios with a state-led development bent. (Bishop and Jones are social liberals on issues where Muldoon was generally not).
So the more-than-century-old tradition of state involvement in New Zealand’s economic development continues on the right, despite the neoliberal attempt to crush it. (That it continues on the left is more understandable.) Muldoonism was fortified by ‘Rob’s Mob’ – ‘ordinary blokes’ (but there were women); blue-collar conservatives antagonistic to the elite. Their children and grandchildren have succeeded them and are the core of NZF supporters and voters.
I am tempted to draw the conclusion that the ongoing ‘Rob’s Mob’ is evidence of a widely held belief that the neoliberal strategy of leaving development to the private sector has failed. It is not a universal belief; ACT still has its supporters (although some are not unknown to break from their general principles and demand favourable treatment by the state when it is in their interests).
It is hard to identify any period of New Zealand’s history in which the withdrawal of the state from the promotion of economic development resulted in good economic performance. That is true for all the other smallish economies I have looked at. Even large economies get into state involvement – witness the US under the Biden administration, whereas President Trump’s withdrawal of state industrial support is causing difficulties which are temporarily obscured by the AI boom.
At issue then, is not whether New Zealand should have a(n explicit) state-led development strategy but what kind of strategy. My assessment is that Muldoonism had come to an end. Affluence, diversity and choice, new technologies and specialisation, the rise of the service sector, globalisation and increasingly complex supply changes, and resource depletion (including pollution and global warming) make the Vogel approach to state-led development obsolete. There has been a lot of change over the last five decades.
What to replace it with is only partially understood – but it is certainly not ‘do nothing’, nor to go back to Muldoonism. I am not sure that NZF has it right, but at the very least its economic policy means we are reminded of the challenge.