I had the misfortune recently to encounter, both offline and on, a group of individuals advocating for their cause du jour. The cause itself is irrelevant, what is important is that these individuals were adamant that their cause was worthy of Government funding, but seemed oblivious to the fact that, with limited resources, funding their cause meant reducing funding to another.
New Zealand’s political debates are filled with promises of better healthcare, stronger social services, and a world-class education system. But behind every discussion about public spending is a sad yet unavoidable reality: None of it happens without money. And under the economic system we have, that money comes from growth. If we are serious about funding the things we claim to value, we need to stop treating economic expansion as an afterthought. Instead of minor adjustments to policy, we need to think on a much larger scale.
This is not to say that the current capitalist model is beyond question. There are valid discussions to be had about whether the entire system should be restructured. But as long as we are playing by the rules of a market-driven economy, we cannot pretend that we can support strong public services without focusing on growing the economy that funds them. That means prioritizing investment, scaling businesses, and ensuring New Zealand is fully connected to global markets.
Investor migration is a perfect example of how New Zealand has lacked urgency in economic planning. For years, the country has sent mixed signals to the world. Sometimes we welcome capital, and other times we try and hold on to the disproven hypotheses that we can prosper while still remaining a walled garden. We’d quite like to have our cake and eat it too.
Over the weekend the government announced a changed to the active investor immigration policy. Essentially the change opened the door wider to foreign nationals prepared to invest in New Zealand. It was a virtual rolling out of the welcome mat and the unfurling of the red carpet.
As would be expected, there were howls of protest from individuals who suggested that “the Government has a fascination with the wealthy.” Probably a fair criticism but also a justified fascination as we see just how New Zealand’s relative position in terms of GDP per capita and economic standing lessens over time.
But (and again, noting that this hypothesis assumes an absence of fundamental change to the economic model) we need to understand that investment is not just beneficial but necessary. We cannot create prosperity by dividing up a stagnant economy into smaller and smaller pieces. Countries that offer the best public services do not do so by taxing a struggling economy more aggressively. They do it by ensuring their GDP is high enough that public revenue grows naturally. Denmark, Switzerland, and Singapore are examples of countries that can afford strong social services because their economies produce enough to sustain them.
New Zealand often approaches economic policy as if the goal is to slow decline rather than drive expansion. When investment arrives, it is often viewed with suspicion. There is a tendency to see foreign capital as something to be controlled rather than encouraged. That mindset needs to shift. We should be working to attract high-net-worth individuals who bring not only money but also expertise, global networks, and access to international markets. The question should not be whether we allow investment, but how we maximize its impact. It needs to flow into high-growth industries that drive innovation, create jobs, and increase long-term productivity.
For this to happen, New Zealand must offer an environment where investors actually want to build. That means ensuring stability, with tax policies and regulations that do not change unpredictably. It means creating an immigration system that gives long-term certainty to those who want to invest and grow businesses. New Zealand should not just be a place where money is parked. It should be a country where investors see the potential to scale businesses, develop new industries, and contribute to the economy in a meaningful way.
There is often a false debate between economic growth and social investment as if they are competing priorities. In reality, they are deeply connected. If we want more funding for health, education, and social services, we need more revenue. If we want more revenue, we need more economic activity, more successful businesses, and more high-value investment.
This is the reality of the system we are operating within. If we want to have a discussion about replacing the system entirely, that is a separate debate. But as long as we live in a market economy, there is no alternative to growth. The sooner we accept that, the sooner we can build a country that can afford the future we all want. And the sooner issues du jour will attract a far more nuanced and longer-term conversation.
You hit the nail on the head, Ben. You did miss a key point though – as a society, and as consumers, we have the choice over what kind of growth we’d like. Sustainable growth is great, such as the weightless economy, but extractive growth that degrades our planet or people, not so much.
Ben, We definitely need more investment in Aotearoa but I fear that while the new settings may increase the attractiveness of the AIP and may even marginally increase the amount of that investment going into productive investments it does little to attract people who truely want to migrate. The requirement of only 21 days presence in New Zealand during the period of investment hardly helps to build connections to the country and people. The government will, no doubt, be able to tout the amount of money brought into New Zealand but this pales compared to what could be done if policy changes encouraged Kiwis to put more of their investible wealth into productive investments here. As a nation New Zealand has the sixth highest per capita investible wealth in the world! Sadly, the majority of that wealth goes to property investment rather than investing in infrastructure (through public private partnerships, for example), private equity investments in businesses to grow them and increase their efficiency or, my persoanl favourite, venture capital.
Spot on Ben. The robbing Peter to pay Paul mentality is implicit in too many conversations here in Aotearoa. I would love to see more discussion, as you have here, about explicit tradeoffs. All public funding is about tradeoffs and you’re exactly right, we want to grow the pie so that we can increase funding to our core services and improve them.