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6:41 pm, October 20th, 2025 - 53 comments
Categories: chris hipkins, kiwisaver, labour -
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Why is Labour proposing $200 million for a growth fund when New Zealand First got $3 billion?
As a condition in the coalition agreement between Labour and New Zealand First in late 2017, the Provincial Growth Fund was established with $1 billion going into it for three years.
To provide just one of many lenses of how effective the spend of that fund was, check out this BERL report on what it did for the Gisborne area:
New Zealand has a very bad habit of proposing half-hearted responses to big policy problems like economic growth, but the Provincial Growth Fund wasn’t one of them. It went big, it went hard, it spent its money, overall it did good.
Labour’s announcement today is, as ever, in the right direction but very small.
It’s akin to giving one pill when a whole course is needed. That’s the “sub-therapeutic dose”: it’s the right kind of medicine but so small in dose it just doesn’t do anything measurably good.
Like the Provincial Growth Fund, you have to go big to make a measurable difference in a term.
Some may recall debate around the NZSuperFund that it should have a specific % of its fund allocated for New Zealand assets. That didn’t make it. Labour’s current proposal directs the new New Zealand Future Fund (paralleling Australia’s Future Fund) to invest within New Zealand.
Good on them.
What is not yet present is the direction to turn this into a therapy even more powerful than the Provincial Growth Fund.
ACC has $51.1 billion under management.
NZSuper has $85.1 billion under management.
These two funds already cooperate in specific ventures, some of which are in New Zealand.
But how about inviting this small new fund to join in with those ventures they already have underway?
Isn’t this forming at a state level a common-wealth of funds towards common ends?
And here’s the big one: the whole of our Kiwisaver accounts amount to $123 billion under management across a variety of providers both default and other. Why not make a New Zealand investment worth everyone’s while with our own direct savings? What could be more egalitarian than to commonly shoulder the load of economic development need, and do our own long term pockets some good?
$200 million buys you approximately half a floor of one hospital.
Start with $3 billion like you did in 2017. That would wake the markets up as well as every province in the country.
NZSuper started with $2.4 billion and it continued to be gifted over a billion a year while Labour led government. That’s in part how it got to $85 billion.
If Labour is to generate more than yet another sub-therapeutic dose to our economic malaise, it needs to harness the true power of our common savings.
Otherwise it’s one pill, swallowed, unnoticed, and our sickness continues.
The Provincial Growth fund paid $6mil into Gisborne to build a RUGBY F&^%$ing grandstand. For a decade the council had been working on to facilities strategy.. worthy causes like a facility in Ruatoria and a MUCH needed waka ama shed. A rugby grandstand was nowhere in the top 10 priorities. I have my theories in how a $6mil grandstand for 100 people at 5 games a year got $6mil in funding from Labour. BERL can stick their reckons.
So far I haven't seen anything that could be regarded as being economically useful over the longer term from the Provincial Growth Fund.
That is because when I look at any capital investment in NZ, I look at its effect on export profits.
That is because we as a country are still economically in a hole.
We are too small a internal market to generate effective growth and wealth within the country. We need to import a range of materials and goods that we can't extract or make here. Fuels being the obvious example.
The probability of getting a another significiant economically viable oil or gas field in NZ is close to zero – but don't believe me – ask anyone who has ever done a degree in earth sciences of geology. Or ask the companies who over that past 30+ years that have drilled and found traces of fields that simply aren't worth developing. And petrochemicals are about 15% of our import bill and rising.
The majority of of our exports are commodities, which have effective profit margins when they hit the docks of less than 5% when you look at them over a decade. There are occasional ups, but overall the commodity profit margins have been progressively dropping ever since the 1950s. Our ones all require heavy capital investment in the form of loans which are what eats out their profit margins and exports it to overseas financial investors.
The country is too far from anywhere to provide a base for significiant investment into manufacturing for nearby markets. So the only significiant industrial investment we see is to turn local resources like hydro electricity into aluminium or local gas and electricity into methanol. Both of which starve local industry of resources they could use. That is why we had ample power and gar in the 1980s, and now (with some really stupid political economic policies) we do not.
Then you look at the PGF. The infrastructure is useful for farming and forestry, and local businesses. But does bugger all to increase productivity export profit growth. It would be pretty
Advantage is making a political assessment – ie how to get votes. Problem is that it is another stupid assessment by someone who probably has never focused on how to improve the NZ economic position overall for what is still a growing population with high wealth expectations..
That can only be done by improving internal productivity – how to use our resources more effectively to reduce our imported costs, OR how to improve the profitability of our exports.
I can't see anywhere that the PGF did either. Where it has invariably been in the peanut return level compared to the overall waste of capital.
The only thing that has grown the profit of exports over the last past 30 years has been in various technology based sectors selling our brains, knowledge, and skills offshore in high value and low freight exports.
Some of that has come from parts of the agricultural side with things like wines or medical precursors. Most of it has come from the software and engineering side using the internet as the effective transport system. Usually small startups getting bigger.
200 million is a hell of a lot for that side of economy. The continual drip feed of that kind of money into the tech sectors is what has allowed it to grow into the mass of well paid highly profitable for the country jobs. Mostly not in R&D costs – but in getting out to the market costs.
Instead we get stadiums which have bugger all effect on our balance of trade.
A curious announcement, to be sure. However, it is implied that the $200m are just the elenent to be stumped up from tax revenue. A couple of interesting quotes from the RNZ coverage (which I'd love to embed a link to, but the mobile site is *extremely* awkward for copying and pasting, so I'm fed up after posting the actual quotes):
Labour's Finance spokesperson Barbara Edmonds said the fund would be "seeded with a number of Crown assets, plus an initial capital one-off injection of $200m" […].
[…] Labour said tax would not be the government's "only source of income", saying it was time to "build new ways of generating national wealth for the benefit of everyone.
NZ First's planned fund is also mentioned, eith Hipkins claiming he missed all mention if it.
My feeling is that there are several possible reasons for announcing it like this right now:
It is one way around the cost of business finance and lack of equity capital obstacles to economic development.
A 5% windfall profits tax on bank profit would raise some money each year.
They make say $7.22 billion – 5% is $350M pa (28 to 33%).
The article quoted says that the 200 million is just an initial placement; presumably there will be more to come in later years.
The ACC, etc. built up their funds over many years.
200 million is chump change, as I predicted Hipkins is producing policy that is in the image of the man. Timid, visionless, milquetoast centrist tinkering with a decadent neoliberal system that is near total collapse into authoritarian oligarchy.
Just tax wealth not work for Christ's sake.
Well put. I think if Hipkins is the answer we're asking the wrong question as they used to say.
I've always described him as a timid incrementalist which doesn't go down well in the "our next PM" echo chambers.
He could well be, but I hope it will be leading a coalition where the Greens hold his feet to the fire and provide a spine, rather than accept a few crumbs thrown their way by Labour.
Yes, the question then becomes how can we help the Greens in that endeavor?
Good question. I re-joined the GP following the 2023 election as part of my response to this terrible government. It keeps me in touch with other members locally, it gives a chance to contribute to policy feedback, and I've attended several provincial quarterly gatherings which are a chance to meet and ask questions of MPs etc and join in discussion. I'm trying to do what I can.
While any government led by Labour will be heaps better for far more Kiwis than the current disastrous coalition, I am sceptical that Labour will go far enough, hard enough. I fear Hipkins will not want to frighten the horses.
I will watch with interest as the next election nears to see for any signs that Labour will take the Green Party seriously as part of a potential left-leaning coalition. I would hope to see some GP MPs as cabinet ministers (Swarbrick, Abel, Genter, Pham and perhaps a couple more).
It'll depend on where to next, as add says we've got billions in a couple of funds, maybe he's dripping it out, so luxon gets to be mister ugly angry for months, and hopefully they've learnt from the kiwibuild fiasco of not over promising.
"Sub-therapeutic dose" is an excellent metaphor. And I would extend the metaphor by saying that all a sub-therapeutic dose achieves, is to cast public doubt on the efficacy of the medicine itself. Or to put it another way, the best way to kill an idea is to execute it poorly.
In medical terms, a sub-therapeutic dose just builds bacterial resistance – making the medicine less effective, both for the patient concerned, and for the general population.
If we’re using this metaphor, the risk would be increasing public resistance to a policy which is perceived as ineffective (too small, too late, too slow to build)
Surely the most important political point of this announcement is locking state assets in public ownership? When there is has been a long period of public approval for no asset sales.
What a load of bollocks. When your metaphor is BS, you just produce BS.
Not my metaphor……
If you want to address the metaphor with the owner of the post – perhaps you should do so directly.
Yes, your metaphor – medically speaking, you spouted a lot of BS.
If the Author or you want to stay with the metaphor, then you should know that sub-therapeutic doses are administered deliberately to test how a [physiological] system handles it and/or to establish safe levels/dosages. I can see an analogy with Labour’s announcement but I think I’d be in a tiny minority that sees it this way.
Really.
The risks of sub-therapeutic doses of antibiotics in increasing antibiotic resistance are very well known.
Here's just one example:
https://en.wikipedia.org/wiki/Subtherapeutic_antibiotic_use_in_swine
LOL! Pearls for swine
Can't claim it as my own sorry.
It was from Favid Skilling, can't claim it myself.
Ash Sarker is very clear about the result of UK asset sales here, 13 mins, and Labour and the Greens need to be equally clear here. To her credit Chloe Swarbick is pretty good at this. Which is why the right keep attacking her as 'looney'
https://youtu.be/KEcW8WVqdC8?si=nsj8Yrm0Zfkpozrf
I was hoping that the current Government would conduct a serious review of the "investments" made by the PGF under the last administration.
I strongly suspect that the PGF just turned 3 billion into 1.5 billion with SFA to show for it.
Governments (of any stripe) are notoriously poor at picking winners when it comes to investing. Like it or not, the market does an infinitely better job.
Businesses with great operating models and innovative products / solutions dont need capital. There are people lining up to throw money at them.
On the other hand, businesses with poor operating models and dodgy premises cannot attract sophisticated investors because those investors know how to pragmatically look at the operating model and can sniff out magic thinking and run away. The along comes a Shane Jones type with a chequebook full of other people's money. Do you seriously think Labour would do a better job?
Personally, I want NZ Super and ACC to focus specifically on driving investment returns when they invest. Anything else is destroying capital.
You obviously didn’t read what Labour’s proposing, so far, and created a red herring.
https://www.rnz.co.nz/news/political/576485/cautious-optimism-for-labour-s-future-fund-though-some-question-lack-of-detail
In your book that’s obviously a mortal sin, but it’s bollocks anyway.
Spoken like a true believer, but a most dubious claim. In any case, you missed the memo of Labour’s announcement – the rest of your comment is just biased BS too.
That all sounds quite compelling in theory. In practice though, NZ's private sector is rubbish at both investment and R&D, which has led to capital shallowness and lower productivity than our competitors.The most we can say is that the market would "do an infinitely better job" if the people and companies making up that market could be arsed doing that job. In the face of market unwillingness to invest in anything much beyond property, we're dependent on the public sector taking up the slack.
We once had a Development Finance Corporation.
One problem we have now is the high cost of business finance.
Both banks and our savers/investors have favoured residential property ownership.
The issue is how to build the level of equity funding (venture capital etc) to follow (matching funds) any government lead.
We need more funding of universities in the economic development (including support for those graduate students) and to research (pure research and industry based, then applied research via tax credits etc).
Leaving national economic success (and wealth growth) to the private sector is dumb.
The PGF enabled regional development local councils could not afford.
They had something to show for it.
It was not about creating an economic return or value, but value for the communities.
The government never spends "other peoples money", all NZ Dollars are created by the government and so we spend its money.
Labour just don't seem that clever to me – or rather they seem to think they are far more clever than they actually are and they are sophisticated masters of the riddle of solving the Gordian knot without cutting it. It seems to me though all they've done is come up with a Hipkinism -a half hearted, watered down policy mainly about elite politics – placating the business community with an covert "we'll do nothing to seriously challenge the status quo" message, clumsily try and steal a NZ First policy without actually rocking anyone's neoliberal sensibilities and present themselves as technically competent alternative government in waiting. Never mind that technical competence is increasingly a pointless exercise when corruption and oligarchy is running rampant, that neoliberalism is a busted flush (honestly, who wants to defend a system of capital that can't even feed 100,000 it's own children adequately? Hipkins and Edmonds apparently), or that business will never support a Labour govt if they've got even the weakest right wing alternative.
Look, we all know Labour is loath to take on capital head on – and with good reason. Capital and its running dogs in the corporate MSM would crush any attempt in short order. But if Labour were really clever, and imaginative, and wished to end the cronyism and corruption and rent seeking of the oligarchs while plugging into the zeitgeist of the popular view that the system isn't working they'd try the strategy of the indirect approach. The indirect approach has two principles.
Direct attacks on entrench capitalist interests almost never work and should never be attempted.
To defeat capital, one must first disrupt its equilibrium. This cannot be an effect of the main attack; it must take place before the main attack is commenced.
So – how would we attack capital by an indirect approach? I would argue Labour needs to be campaigning on the renewal of the social contract and democracy. For example – if you promote, say, a smartphone and social media ban for under 16s you create an indirect approach which allows regulation of foreign technology giants. Or if you promote term limits for list MPs, linking MPs wages to those of teachers, nurses and police officers, and ending the revolving door to lobbying firms for ex-MPs and legislating for complete transparency of funding of political parties, unions, think tanks and lobbyists then you will be very popular with voters and striking at the foundations of the right wing media eco-sphere. Announce a powerful and well funded corruption commission – and promise it'll investigate links between party donations and government policy. In other words, disrupt the equilibrium of capital and it's concierge class, then launch your main attack…
Including me! I'd vote Labour if this was on their agenda. However, I think self-interest would rule out Labour MPs running with this.
I think that this article and the comments misses the point of the anoucement. As stated in an interest.co.nz article: ' The Labour Party plans to combine state-owned assets into a new sovereign wealth fund that will invest only in New Zealand businesses and infrastructure.' https://www.interest.co.nz/public-policy/135782/future-fund-could-borrow-against-20-billion-existing-state-assets-enable-new
The $200m is stated as seeding funding. The value of the state-owned assets are to be used to borrow against. The article above speculates that the value of these assets could be $20b. The whole point is to use an alternative funding source to tax payer funding. This anouncement along with others in comming months will form a set of policies able to deal with the current dire economic situation created by the coalition goverment.
Yes & it's thinking of the long term, like in 20-30 years it'll actually be something & that generation will be so glad that it was started now, like we would be had something like this started 20-30 years ago.
Why borrow for this fund when the government is a currency issuer?
Kinda paves the way for nzf and labour to kiss and make up, clever
Yes, I thought that, too, but it is a bit of a risk.
This article seems to have teased out a lot of the right whingers from the standardista community, imho.
Luxon made me laugh with his criticism of the policy. Clearly, his coalition would rather dispose of state owned assets than make them work for the country. And let's see how his criticisms of this proposal line up with criticisms of his government's inactivity:
"totally underwhelming" – you just have to look at the string of opinion polls on whether the government is going in the wrong direction since the election to tick that one off…
""So where's that going to come from? Where is the costing for that? What is the implication on that on the delivery of the deficit, for example? Where is the thinking behind it all? There is no detail, there is no costings" – Think the promotion of the tax changes and how average new zealanders would be so much better off, to say you'll find that one prominently displayed in the Luxon textbook on how to run the country…
"a whole bunch of buzz words and jargon and no detail" – What I will say to you is, this proposal deals with some really big rocks. A policy like this needs to be results-driven, so it can achieve growth, growth, growth, trade, trade, trade. I'm wealthy, I'm sorted. (Big Tick for Luxon there)
"market-sensitive reasons, what a load of rubbish" – Speaking to AM on Tuesday, Luxon stood by his Government's decision to scrap the iRex contract for two new Interislander ferries and terminal upgrades – locked in by the previous Labour administration… But when asked about what it was costing to scrap the original project, Luxon refused to say. "Look, that's being worked through as they are in negotiations with the shipyard company HMD," Luxon said of KiwiRail. "I'm not going to touch that because, obviously, they're commercially sensitive and they're ongoing negotiations. (Tickola on that one)
To sum up, this just shows that Hipkins was right to say that if he released policy too soon, the government would just go in and pour cold sick over whatever was announced. That's exactly what happened here. This is a key policy of one of his own coalition partners, but Luxon hasn't gone out and criticised NZF in the way he just did to this one, and NZF proposes to pour more money into the startup fund.
https://www.rnz.co.nz/news/political/576485/cautious-optimism-for-labour-s-future-fund-though-some-question-lack-of-detail
https://www.stuff.co.nz/politics/350459034/christopher-luxon-stands-by-scrapping-interislander-project-after-aratere-debacle
I like how people want bigger ambitions and announcements, maybe we can ask Ardern to return to announce 100,000 homes again? That was a good motto.
No other government apart from the 1935-1949 government built as many state homes homes per year as Labour 2017-2023.
The total home building rate reached levels not seen since the 1970's.
Going on about one dumb comment (soon after retracted) would not seem to be very helpful Tui.
You should be talking about the reality per SPC's comment above.
I do – https://mountaintui.substack.com/p/i-hate-labour-butwaitwhy?utm_source=publication-search
But what I am saying huge slogans isn't the only thing we should be after. Just my take.
Fair comment-I usually love your stuff so I was surprised to hear that repeated by you when usually such stuff comes from Luxon or Willis or Bishop or Goldsmith or Seymour or Stanford or Collins or Jones or Peters or Brown and so on ad infinitum.
When I list those names it brings home what a nasty reactionary bunch they are.
DOC talks about the Tuatara as one example of a living dinosaur, but there are plenty of others around.
At a time when what the vast majority of people want help with the cost of living i.e. supermarket costs, energy cost, insurance cost, high rates this policy regardless of its merits is rather hopeless in terms of next years election.
What voters and in particular Labour voters are after is government that makes their lives better and preferably in the short term.
The election is there for the taking but if it’s just this highbrow stuff then why bother.
It is not just a matter of costs but relativity with incomes.
The MW will go up at the inflation level or higher under Labour.
Pay equity will be back. The Fair Pay Agreement too (Industry Awards).
A dedicated fund / vehicle to build new Zealand businesses, and retain them in NZ ownership, rather than hock them off as soon as an offshore investor shows interest, should grow wages and increase the number of high paying jobs.
The endless stream of New Zealand businesses that go through the Kiwi cycle of found, grow and hock is a big reason for our inability to sustain growth, and that growth to be sustainable. The idea has got merit but really needs fleshing out a lot more to be a policy that's part of a winning manifesto.
It's not high brow at all – it's perfect sense which will expand out into a range of other benefits
Also these comments are making me laugh. Do people not realise this is one of a range of policies?
Laugh or cry?
It’s as if people don’t read properly because they want to find fault with it and criticise – it’s easy to be against something but much harder to be for something, which is one big reason why we have the Coalition.
I see that Bryce Edwards used this short sighted article (no offence to the author) to claim that The Standard is unhappy with the policy.
Then the comments get swarmed with misleading takes, which is how people take it away.
It's what helps the right wing, in my view.
Bryce Edwards is spinning a narrative based on selective & biased reading and misguided ‘opinions’ using his vivid imagination.
Indeed, the cognitive off-loading by people is one step on the way to disengagement from robust public debate and meaningful & constructive participation in political/democratic processes, which serves the Right (and they know it).
If people want to criticise something, they should at least familiarise themselves with it unless they want to sound like brainless parrots.
Agreed, and was disappointed to see it used as "evidence"
I won't consent to my Kiwisaver account being restricted to New Zealand investments.
The only change is that there would be an Investment Fund operating in New Zealand – that would create new opportunities for the Kiwisaver Funds as per their New Zealand investment (most investment would still be offshore).
What assets would it borrow against?
Kainga Ora assets are connected to new building finance. No
Power company shares maybe. Some would be for new energy projects (deeper thermal) and companies in this area – various conversions to gas, solar for homes/businesses/on-site batteries etc.
Kiwibank is trying for its own growth. No.
Against NZSF. Maybe. But any liability would be to government debt (as this asset is fixed in purpose).
I do like the idea of a 5% windfall profits tax on banks $350M pa of new equity each year.
Though this could be used specifically for lower cost business finance – such as insurance for banks lending to businesses that are deemed good for the economy.
Leaving another funding source way for developing equity – one way here would be go in with matching funds from Kiwisaver Investment Partner groups (housing, gaming, software, farm tech etc).
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.
Finally a winner – thanks Res Publica
I second that!