Yesterday, Barbara Edmonds and Chris Hipkins announced their first cornerstone official policy – a sovereign investment, infrastructure & growth fund. The original announcement was deferred out of respect for Jim Bolger’s passing.
The announcement was everything that one could hope for – an acknowledgement of the past:
“We’ve heard the lesson of last term: too much, too fast, not enough finished. The next Labour Government will be different.”
A look to the future:
“It’s time to build new ways of generating national wealth for the benefit of everyone. It’s time to back ourselves”
And a commitment to put a mirror to the accelerated efforts of privatisation and sale of state assets and returns to private investors & foreigners.
The fund will be “independently governed by the guardians of the New Zealand Super, and seeded with Crown capital and assets” – returns will go back into creating more wealth and local investment.
It presents a stark difference from the current government, which remains hollowly focused on a vision of privatisation, short term thinking and betting on sunset, vision-less industries.
Labour have also acutely addressed National’s desire to unequivocally privatise New Zealand in their second term – from Kiwibank, to schools, hospitals and water infrastructure being on the cards.
$200 million is the initial cash investment, but the fund will also be seeded with elements of NZ’s considerable state owned assets (over $400b available), ring fencing NZ assets and returns for the benefit of Kiwis.
Naturally, we can all look at the past and lament our lost opportunities. Robert Muldoon’s cancellation of NZ super has been called NZ’s most disastrous financial mistake with modelling revealing that he had not done so, we would be wealthier than Australia. And he did that by campaigning on the evils of “socialism”.
But there is no point lamenting the past. Regardless of outcome or pace, the fact is the intention is sound, the direction is positive, and it’s just the start.
It’s also starkly different to NZ First’s Future Fund
Winston Peters’ vision was about providing tax breaks to overseas investors – this is a fund by New Zealanders, for New Zealanders, with NZ assets/resources.
What else has Labour signalled?
Labour’s other signals to date include: Not privatising Kiwibank – which National/ACT have said they will do, reinstating Smoke Free generation which will anger the tobacco industry, banning live exports, restoring the original Dunedin hospital plan, honouring fair pay, repealing the MCA, and repealing the dangerous Regulatory Standards Bill
One single policy was never going to fix New Zealand’s deep structural economic problems. And it’s unrealistic to expect it to. What matters here isn’t the size of the fund, but the signal it sends about the kind of economic direction Labour wants to take.
We’ve spent decades running an economy built on asset inflation rather than productive growth. Two core issues sit underneath that: first, a chronic shortage of investment capital; and second, the fact that what capital we do have is overwhelmingly tied up in housing and land speculation. That’s pushed us into a rent-seeking, low-productivity trap: one where profits come from ownership rather than enterprise, where wages stagnate, and where real investment in innovation, skills, and efficiency is constantly deferred.
That dynamic doesn’t get fixed by simply “going big” on spending, or by reviving the Provincial Growth Fund model. Throwing billions around without changing the underlying incentives just papers over the cracks. What Labour’s proposal hints at is a shift towards something more enduring. Constructing a mechanism rather than a tapping into a moment.
Because, for all its faults, Labour isn’t stupid.
You can’t rebuild the financial foundations of an economy overnight, or by government decree. What this new fund does is start to create an institutional framework: a sustainable, long-term pool of capital built from SOE dividends, insulated from the fiscal and political cycle, that can grow steadily and support productive investment over time.
In other words, it’s a signal that the state intends to be an active partner in investment again. Not to crowd out the private sector, but to step in where it keeps failing to deliver.
So yes, $200 million on its own isn’t transformative. But that’s not really the point. The point is that it represents a return to solid, thoughtful Keynesian orthodoxy: the idea that government can and should play a coordinating role in steering capital toward the parts of the economy that actually build long-term wealth and resilience.
If that direction is followed through, if the fund becomes a nucleus around which other pools of national savings (like ACC, NZ Super, and eventually even KiwiSaver) can align, then we might finally start to break out of our rentier mindset and back into productive capitalism.
It’s not flashy, and it won’t win a headline war with “$3 billion” soundbites, but it does show a government beginning to think seriously again about structure, not just stimulus.
That’s the sort of foundation real growth gets built on.
I can't help but feel it will be as successful as Kiwibuild 100,000 houses, Kiwipower, Kiwiinsurance, Kiwirail, Kiwibank. But I'm not at all opposed to ringfencing say 10% of Kiwisaver into infrastructure like tollroads. Australia, Singapore, and Norway are all economies to try and copy a bit of… Australia = higher 12% superannuation employer payments, Singapore = education and state sponsored multi storey housing, Norway= sovereign wealth fund (but they got it from drill baby drill).
Now that is a balm for those wanting resilience equity and democracy in action.
Thoughtful considered and clearly in touch. A solid set of building blocks. Thanks MT.
Thanks PB. The thing is it's just the first policy – I have no doubt there will be encompassing and related ones as they progressively release.
Also – the $200 million is the capital injection component. It will also be seeded with SOA of which our total quotient is considerable
It's great to finally see Labour going after the structural shortcomings of our economy, rather than pandering to the landlord class out of fear.
Government investment in our future.
Past time!
Moving Res Publica's great comment here:
I think this is the wrong frame to look at this.
One single policy was never going to fix New Zealand’s deep structural economic problems. And it’s unrealistic to expect it to. What matters here isn’t the size of the fund, but the signal it sends about the kind of economic direction Labour wants to take.
We’ve spent decades running an economy built on asset inflation rather than productive growth. Two core issues sit underneath that: first, a chronic shortage of investment capital; and second, the fact that what capital we do have is overwhelmingly tied up in housing and land speculation. That’s pushed us into a rent-seeking, low-productivity trap: one where profits come from ownership rather than enterprise, where wages stagnate, and where real investment in innovation, skills, and efficiency is constantly deferred.
That dynamic doesn’t get fixed by simply “going big” on spending, or by reviving the Provincial Growth Fund model. Throwing billions around without changing the underlying incentives just papers over the cracks. What Labour’s proposal hints at is a shift towards something more enduring. Constructing a mechanism rather than a tapping into a moment.
Because, for all its faults, Labour isn’t stupid.
You can’t rebuild the financial foundations of an economy overnight, or by government decree. What this new fund does is start to create an institutional framework: a sustainable, long-term pool of capital built from SOE dividends, insulated from the fiscal and political cycle, that can grow steadily and support productive investment over time.
In other words, it’s a signal that the state intends to be an active partner in investment again. Not to crowd out the private sector, but to step in where it keeps failing to deliver.
So yes, $200 million on its own isn’t transformative. But that’s not really the point. The point is that it represents a return to solid, thoughtful Keynesian orthodoxy: the idea that government can and should play a coordinating role in steering capital toward the parts of the economy that actually build long-term wealth and resilience.
If that direction is followed through, if the fund becomes a nucleus around which other pools of national savings (like ACC, NZ Super, and eventually even KiwiSaver) can align, then we might finally start to break out of our rentier mindset and back into productive capitalism.
It’s not flashy, and it won’t win a headline war with “$3 billion” soundbites, but it does show a government beginning to think seriously again about structure, not just stimulus.
That’s the sort of foundation real growth gets built on.
I can't help but feel it will be as successful as Kiwibuild 100,000 houses, Kiwipower, Kiwiinsurance, Kiwirail, Kiwibank. But I'm not at all opposed to ringfencing say 10% of Kiwisaver into infrastructure like tollroads. Australia, Singapore, and Norway are all economies to try and copy a bit of… Australia = higher 12% superannuation employer payments, Singapore = education and state sponsored multi storey housing, Norway= sovereign wealth fund (but they got it from drill baby drill).