The National-led coalition government rode into power in 2023 on a wave of public dissatisfaction. Voters were fed up with soaring living costs, stagnant growth, and what felt like “broken” markets in essentials like groceries, housing, electricity, insurance and banking. The National Party, Act, and New Zealand First all tapped into this discontent during the 2023 election campaign – implicitly promising to fix what the previous Labour Government wouldn’t.
There was a real opportunity for these three parties to champion bold reforms against oligopolies and crony capitalism, restoring genuine competition and easing the cost-of-living crunch. Each party, on paper, had both political incentive and ideological justification to lead such an agenda.
Two years on, it’s increasingly clear that any radical reform urgency has fizzled out, replaced more by a protection of the status quo. Despite some fiery rhetoric, the governing trio have failed to coherently tackle the “broken” aspects of New Zealand’s economy. National flirts with tough talk on supermarkets and banks but seems reluctant to upset its corporate allies. For a party that claims to worship competition, it has been remarkably protective of cartels.
What explains this inertia? Ironically, the very parties that should be fixing New Zealand’s rigged markets are hampered by their own ideological blind spots and elite alignments. The result is a government that talks a big game about change, but in practice shrinks from challenging the powerful vested interests behind our dysfunctional economy.
Today I’m focusing on the National Party’s failure to fix dysfunctional markets and deal with crony capitalism. The column is Part Four of a series on “Broken New Zealand and Elites”. The previous ones are here: 1: New Zealand is off the rails, 2: Are Business leaders to blame for the broken state of New Zealand?, and 3: How Crony capitalism is ruining New Zealand.
I’ll follow up this column with some thoughts about the same problems afflicting the Act and the NZ First parties.
Neglecting the popular mandate for reform
Of the three parties, the centre-right National Party holds the largest mandate to take on the failing markets. National leader Christopher Luxon declared during the campaign that “New Zealand is off the rails” and that under Labour the country had “gone backwards”.
National positioned itself as the agent of change to get New Zealand “back on track”, implicitly acknowledging that markets like groceries, housing, insurance, and energy were failing ordinary Kiwis. One might expect, then, that once in power National would zero in on breaking up cosy oligopolies and pushing pro-consumer reforms.
Such a reform programme would be valuable for the National Party, not only because voters desperately want relief, but also because it would distinguish their party from the previous Labour administration, which was seen as all talk, no delivery on market fixes.
Strategically, there’s a huge electoral upside for National in taking on the monopolistic markets. New Zealanders care more about the cost of living than almost anything else right now. If National were to dramatically bring down food prices or power bills by busting a duopoly or two, it would earn enduring gratitude from swing voters. This would be National’s pathway to capturing and holding the political centre for a generation: to become the party that finally stood up to big business on behalf of the consumer.
National’s chance to chuck off the perception that it only cares for the rich
Such a monopoly-busting programme would also shatter the lingering public perception that National “only cares about big business and the rich.” In fact, some political commentators noted it would be “a nice change” to see a government of the political right boldly challenge corporate giants. Such a move could therefore win over centrists who normally distrust National’s closeness to the business elite.
Crucially, going after monopolistic behaviour shouldn’t even violate National’s principles. After all, National claims to believe in free markets, and genuine free markets require competition, not cosy cartels. National likes to invoke its 1990s legacy of economic reform; one could argue that smashing duopolies in 2025 would be a natural continuation of that pro-market, pro-consumer tradition.
And unlike the left, National wouldn’t face accusations of being “anti-business socialists” for cracking down on price-gouging oligopolies. If anything, a conservative party has more credibility to do it without scaring off investors. It would be very easy for National to lead an unexpected “crusade for the little guy”. This would strengthen its support base and neutralise opposition attacks about protecting elites.
National is hostage to crony capitalists that support it
So why hasn’t this crusade against vested interests happened? Thus far, National’s appetite for radical market reform looks tepid at best.
The first part of the problem seems to be that the National Party is actually hostage to the super-profits being made in all these sectors. The beneficiaries of the oligopolies are all around National, including making the donations that make the party the richest in the country. By keeping monopolistic businesses in sectors such as electricity, banking and supermarkets so over-inflated, they keep National’s traditional constituency and funding base happy – the very class of investors, directors, and fund managers connected to these assets.
To genuinely reform these markets would be to act against the interests of its own patrons. It’s a dilemma facing the party. But, faced with a choice between a strategy that could secure long-term political dominance by winning over a generation of swing voters and one that protects its elite base, National has chosen its base. It is sacrificing a populist victory for the preservation of corporate patronage.
Luxon is a big part of the problem
Prime Minister Luxon’s instincts seem misaligned with any anti-crony capitalism agenda. His career as CEO of Air New Zealand and a senior executive at Unilever has shaped a worldview that instinctively favours big capital. Therefore, in office, his personal interest gravitates towards giants like Fonterra, while the small and medium-sized enterprises that form the backbone of the economy are largely ignored.
Insiders note that since taking office, Luxon has been “fixated” on courting corporate heavyweights, chatting up the likes of Fonterra and Air New Zealand, while paying scant attention to small businesses or consumer advocacy. His background suggests he sees the economy through the lens of large corporations’ success, believing what’s good for Air NZ or Fonterra must be good for New Zealand.
That worldview makes him naturally averse to cracking down on those same big players, even if doing so would benefit the public. Indeed, there’s very little evidence Luxon even perceives the supermarket or banking duopolies as a serious problem. Instead, he appears to view them as efficient national champions rather than rent-seeking cartels.
Simply, Luxon’s corporate ideology and personal network bias him toward maintaining the status quo. And if the captain isn’t truly on board with reform, National’s ship won’t change course.
Even if Luxon was rolled and replaced by the heir apparent, Chris Bishop, there’s unlikely to be any shift on this. In fact, Bishop gravitates even more towards wealthy vested interests than Luxon.
Bishop, notably, is a former lobbyist for the tobacco industry, and his career path suggests a comfort with back-room dealings and a likely sympathy toward the arguments of lobbyists and vested interests. What’s more, in his current suite of ministerial portfolios (Housing, Infrastructure, Transport, and RMA Reform) Bishop is geared towards enabling large-scale capital projects and making it “easier to get things done” for developers and financiers. His focus is on removing obstacles for incumbents, not creating challenges for them.
In general, Bishop embodies the cosy relationship between National and corporate interests. He has been at the centre of some of the Government’s most troubling pro-business manoeuvres, including weakening environmental regulations and fast-tracking projects for National Party donors.
Is Nicola Willis the only hope?
While National’s frontbench doesn’t inspire confidence here the one bright exception is Nicola Willis. As Finance Minister she has actually been the leading voice within National pushing for action on dysfunctional markets.
Willis has made waves by openly chastising the banking and grocery sectors. Upon receiving a lacklustre competition report on banks, she blasted the industry’s lack of rivalry, quipping that banking in New Zealand “resembles a cosy pillow fight, with profit margins coming first and everyday Kiwis coming second”. She warned the “Big Four” Australian-owned banks that her government “won’t be cowed” by them and vowed to implement all the Commerce Commission’s recommendations. Similarly, Willis put supermarkets on notice, implying she’s not afraid to consider breaking up their duopoly if they don’t change their ways.
By her own account, industry lobbyists for the banks and grocery chains have been very upset with her newfound zeal. Unlike Luxon and Bishop, Willis seems to wear such corporate complaints as a proud badge of honour. She appears genuinely interested in market reform, more so than any Finance Minister in recent memory.
This unexpected populist streak from a senior National minister has some observers hopeful. Insiders say that Willis is quite sincere in wanting to tackle New Zealand’s crony capitalist rot. If so, she could become the driver of an internal shift within National, proving that even a pro-business party can draw the line at unfair business practices. However, for now it’s mostly talk. And she’s up against her current boss, and potential future boss, who won’t echo her aggressive tone. What’s more, she’s also constrained by her coalition partners.
Not walking the talk
Despite Willis’ occasional tough talk, it seems unlikely that National will go much further beyond rhetoric. It’s easy to give a press conference lambasting greedy banks; it’s much harder to push through policies that the banking lobby will fiercely resist, such as forced divestments or windfall taxes.
For example, Willis promised not to just “put [the banking] report on a shelf”, yet the actual measures announced have been modest, mostly encouraging more consumer switching and gently prodding banks to support open banking initiatives. The structural reforms (like breaking up banks or capping super-profits) are conspicuously absent, just as the Commerce Commission’s mild report recommended.
In supermarkets, too, National’s initial actions have been incremental. The Government has invited foreign grocery investors and is fast-tracking approvals for new supermarket sites, hoping a third player will enter and disrupt the duopoly. These might be sensible steps to remove barriers to entry, essentially “removing road cones” instead of directly attacking the incumbent chains. But the duopoly remains intact, and National so far has shied away from using the big stick (like forcing the sale of stores or imposing strict price controls on essentials).
As Monopoly Watch spokesperson Tex Edwards has argued, meaningful competition will likely only come from forcing the incumbents to sell off a significant number of existing stores. At the moment, National is entirely shying away from such radical steps.
Even Nicola Willis’s own words signal caution: she emphasises competition over regulation, and encourages the existing duopolists to “play by the rules”. This is hardly a declaration of war on their dominance. It’s telling that Foodstuffs and Woolworths (the two giants) have publicly welcomed many of the Government’s moves, a sure sign that nothing too threatening to them is on the table.
Unwilling and unable to fix the broken markets
The upshot is that National, despite knowing dysfunctional markets are a political liability, has so far been unwilling or unable to truly confront the corporate vested interests at the heart of those problems. The party’s traditional affinity for big business (strongly reinforced by Luxon’s own inclinations) acts as a brake on any radical populist impulses.
National seems content to appear as if it’s tackling the cost-of-living crisis (with inquiries, stern warnings, and minor tweaks) without crossing the Rubicon into policies that would genuinely upend the comfortable oligopolies. In doing so, it is squandering a chance to realign New Zealand’s economy in favour of consumers.
The sad irony is that voters handed National a mandate for change, but National’s inner circle may be too embedded in the Establishment and crony capitalist circles to deliver real change. If Luxon and his team continue to tiptoe around their friends in the corporate world, New Zealand’s broken markets will remain largely unbroken. And the public’s cynicism will only deepen.
Dr Bryce Edwards
Director of The Integrity Institute
Further Reading:
Bryce Edwards (Herald): Banking competition report: The oligopoly has been saved from radical reform
Luke Malpass (Sunday Star Times): Where will Willis end up on supermarket reform (paywalled)
Nicola Willis: Speech to New Zealand Economics Forum, Feb 2024
Bryce Edwards: Integrity Briefing: The supermarket showdown
Cameron Bagrie (Herald): Poor governance is stalling NZ productivity growth (paywalled)
Danyl McLauchlan (Listener): How Aotearoa has lost its political bearings (paywalled)
Consumer NZ: Despite low confidence in government efforts, people want urgent action to lower grocery bills
The last National Government I distinctly recall was kicked out because people were fed up with their hands off do nothing, it's all too hard approach. So I agree, that this National led coalition also seems bent on a similar trajectory with no articulated economic strategy or associated change program. Begging for overseas investment is not a proper plan it's just a wishful hope that others will magically turn up and solve our problems. On the other hand, as far as bashing the banks, supermarkets, electricity gentailers, construction material suppliers etc, whilst there's undoubtedly some monopolistic price gouging, the question is how much are realistic alternatives likely to reduce consumer prices and at what risks. It's not entirely straightforward in such a tiny economy, for example if the supermarkets were broken up into smaller operations, reduced economies of scale such as for warehousing and transportation could well push up prices. So I would like to see some comparative numbers before accusing National of failing to fix oligopolies. What might be required is more drastic reform like re-nationalisation of electricity generation, and building up Kiwibank to be a real competitor for the major banks rather a cash strapped minor player.
Well written Bryce.
None of them will go anywhere near the private central bank permanent government New Zealand has endured since 1843.
A permanent government that presently resides in the private debt management within the New Zealand Treasury that funds the Reserve Bank of New Zealand via the back door.
They all posture, they all gesture, but they all stop short of admitting how captured our Parliament is by the private primary bond dealer banks behind the Private Debt Management Office within Treasury.
Private Primary Bond Dealer Banks that are non deposit taking institutions, but instead take your wealth and loan the credit value of it back to you at the time of making loans.