Integrity Briefing: The Act Party’s journey from market freedom to corporate capture

This is the fifth instalment in a series exploring a simple but uncomfortable premise: New Zealand is off the rails. As I have argued in previous columns, our economy is increasingly characterised by broken markets, our business elites have failed to steward the nation’s prosperity, and a creeping crony capitalism now poisons our politics.

After examining the major governing party, National, and its own complicated relationship with wealthy vested interests, my attention now turns to its essential coalition partners. For it is here, in the actions of the Government’s two minor parties, that the story of our broken system becomes truly perverse.

Here’s the paradox: the two political parties whose DNA should make them the most ferocious opponents of oligopolies, corporate welfare, and entrenched interests have become their most effective, if unlikely, protectors.

On one side stands the Act Party, the supposed heir to a radical free-market tradition that once sought to smash monopolies in the name of the consumer. On the other, New Zealand First, the self-proclaimed populist champion of the “little guy” against the corporate and political establishment. If any political forces were to take up arms against the comfortable cartels that dominate our banking, supermarket, and energy sectors, it should be them.

Yet, they don’t. Instead of focusing on the core economic questions facing the country, these two parties are focused on a different kind of politics. This is no accident. It is, I argue, a deliberate political strategy. Both Act and NZ First have discovered that it is far more electorally profitable and politically convenient to wage culture wars than to fight the difficult and powerful vested interests that are bleeding New Zealanders dry.

This column will dissect Act’s failure. A future column will examine NZ First.

From “Market Freedom” to “Corporate Freedom”

If any party in Parliament should intellectually hate crony capitalism, it is the Act Party. Its ideological roots run deep into the soil of laissez-faire liberalism, a philosophy that, in its purest form, views oligopolies and corporate welfare as anathema to a truly free market. The party grew out of the Association of Consumers and Taxpayers, founded by Roger Douglas, the architect of the sweeping 1980s reforms known as “Rogernomics”. Whatever one thinks of the social consequences of those reforms, their economic objective was unambiguous: to smash monopolies, destroy cosy arrangements protecting incumbent players, and unleash the forces of competition.

The intellectual heritage of this movement is not the simplistic anti-government dogma it has become today. The original neoliberalism that drove these changes was, as political theorists have noted, “constructivist”. It did not advocate for a weak state that simply got out of the way. On the contrary, it demanded a strong and impartial state that would actively intervene to dismantle monopolies, break down barriers to entry, and rigorously enforce the rules of competition for the long-term benefit of consumers.

An Act party true to these founding principles would be the most aggressive trust-busting force in Parliament. It would be at the forefront of demanding the forced breakup of the electricity gentailers, the supermarket duopoly, and the banking oligopoly, seeing these concentrations of private power as the greatest threat to a genuinely free market. Leader David Seymour and his colleagues should be constantly railing against “protected industries” and demanding the Government stop “coddling” the supermarket barons, electricity gentailers, and Aussie-owned banks.

The story of the modern Act Party, however, is one of ideological drift from principle into cynicism. The party that once quoted Milton Friedman on the evils of state-sponsored monopoly now acts as a quiet accomplice to New Zealand’s most powerful cartels.

The journey from radical market reformer to protector of the status quo is stark, and it is best articulated by the party’s own creator. In 2023, Roger Douglas finally disowned the party he founded, stating it has strayed from its original principles and now “represents only the wealthy”, having been captured by a “small libertarian element”. It is a damning verdict from the ghost in Act’s machine.

Act’s betrayal of its founding principles is not a matter of abstract theory; it is written across its contemporary policy platform, which reveals a consistent pattern of protecting incumbent corporate power. In every key sector plagued by market failure, Act has chosen inaction, misdirection, or policies that actively serve the dominant players.

Act’s supermarket surrender

There is no more textbook example of market failure in New Zealand than the grocery sector, a duopoly that extracts excess profits from every household in the country. This has been estimated at about $3-5m a day in excessive profits.

For a party literally founded to represent consumers, this should be target number one. Yet Act’s response has been strikingly timid. Beyond some minor tweaks to planning and consenting laws to supposedly make it easier for a new player to enter the market, David Seymour’s plan has essentially been to “do nothing and trust the market”. This conveniently ignores the overwhelming structural advantages the incumbents hold, from control over land and supply chains to their immense buying power, which make new entry at scale a near-impossible proposition.

The moment the mask truly slipped came in March 2025. When Finance Minister Nicola Willis (from the supposedly more moderate National Party) reportedly floated the idea of forcing a structural separation of the supermarket duopoly, it was precisely the kind of muscular, pro-competition intervention that Act’s ideology should have championed. Instead, David Seymour opposed it. His justification was not that the duopoly was efficient or competitive. It was that “threatening to restructure NZ-based businesses might scare off the overseas investors the Government was working hard to attract”.

Let that sink in. The leader of the party of consumers and taxpayers argued against a measure to increase competition and lower prices because it might upset incumbent capital. In that single statement, the party’s modern priority was laid bare: protecting established businesses now trumps the creation of competitive markets for consumers. The “consumer” in the party’s name has been forgotten entirely.

Banking on the status quo

A similar pattern of deliberate inaction is evident in the banking sector. The Commerce Commission has been unequivocal, finding that the big four Australian-owned banks “do not face strong competition” and form a “stable oligopoly” that lacks any disruptive challenger. Their profits are enormous, yet Act has been conspicuously silent on the core problem of market concentration.

Instead, the party’s priorities in the financial sector have been policies beloved by the banks themselves, such as scrapping the Deposit Guarantee scheme and pushing to loosen capital requirements.

When questioned on high bank profits, Seymour’s response is a tired refrain: the answer is “more competition”. But he offers no mechanism to achieve it, other than reducing the regulatory and compliance costs that he claims prevent new entrants.

This argument wilfully ignores that the biggest barriers to entry are scale, network effects, and customer inertia. These are issues that simply cutting red tape will not solve. By focusing exclusively on the supposed burdens of regulation, Act provides the perfect intellectual cover for the oligopoly to continue its profitable reign, undisturbed by any serious threat of state-led disruption.

Powering up profits

The same story repeats in the electricity market. New Zealand’s “gentailers” (companies that both generate and sell electricity) have posted record profits while facing accusations of market gaming. This is another concentrated market where a handful of large players hold immense power.

Once again, Act has raised no objections. The party’s primary energy policy has been to call for a “cross-party accord” to support the exploration of natural gas. While addressing energy supply is important, this focus conveniently sidesteps the more fundamental issue of market structure. Unlocking more gas does little for consumers if the market remains an oligopoly where incumbent players can capture the benefits through excessive margins.

The Culture War pivot

Act’s ideological decay is not simply a case of intellectual laziness. It is a calculated and highly successful electoral strategy. The party has discovered that it can achieve stunning growth (rising from under 1% of the party vote to 8.6%) not by pursuing the hard, thankless work of economic reform, but by “flogging issues like the Treaty and crime”. David Seymour seems far more energised by repealing co-governance arrangements or cutting taxes than by, say, devising a plan to bust the construction-supplies cartel that makes our houses so expensive. It’s as if Act has traded Milton Friedman for Fox News.

The flagship of this new strategy was the Treaty Principles Bill. This piece of legislation, which seeks to radically redefine New Zealand’s founding document, has generated enormous heat, media attention, and public protest. It is a solution in search of a problem, designed to energise a specific voter base that feels aggrieved by the perceived rise of Māori rights, while distracting from the economic grievances that affect all New Zealanders.

This pivot to identity politics has been politically brilliant. It allows Act to appear radical and change-oriented without threatening the financial interests of its core constituency. The party’s electoral base in wealthy suburbs like Epsom, and its significant support from corporate interests, benefits directly from the high returns on bank shares and power company investments generated by our oligopolistic economy.

A culture war over the Treaty costs them nothing; a genuine war on cartels would hit them in the wallet. Act has found it far more profitable to defend the interests of asset owners than to champion genuine market competition for everyone else.

Crony capitalism’s quiet accomplice

This all leads to an unavoidable conclusion. The Act Party has mutated from a champion of “market freedom” into a defender of “corporate freedom”. The distinction is crucial. True market freedom means no single player has unfair dominance, and the consumer is sovereign. Corporate freedom, as Act now interprets it, means incumbent firms should be left alone by regulators, regardless of their market power or the harm they inflict on consumers

By absolutizing the notion that any robust government action is “meddling,” Act effectively shields the current oligopolies from accountability. Their dogmatic anti-regulation stance is the perfect ideological cover for crony capitalism. In a market already dominated by powerful incumbents, deregulation without first breaking up those dominant players simply hands them more power.

It is a complete inversion of the party’s founding philosophy. The original vision of a strong state creating competition has been replaced by a vision of a weak state protecting monopolies.

The final proof of this betrayal is Seymour’s landmark Regulatory Standards Bill. Rather than targeting monopolistic behaviour, the bill seeks to enshrine protections for private property in a way that critics say would make it harder for future governments to regulate corporations at all. It is a recipe for entrenching corporate power, not challenging it. The party that should be the most vigorous opponent of New Zealand’s comfortable cartels has instead become their quiet, and most ideologically useful, accomplice.

The Act Party’s original philosophy was strongly associated with the father of economics (and, arguably, market economics). Past Act manifestos reverentially cited Smith and promised to “let markets work” for the benefit of ordinary Kiwis. However, Adam Smith actually warned about businessmen colluding against the public interest. And today that warning applies to New Zealand’s very matey version of capitalism.

Act’s choice to ignore Smith’s warning isn’t principled market liberalism. It is the cynicism of an accomplice, one that provides the perfect ideological cover for New Zealand’s corporate cartels.

Dr Bryce Edwards

Director of The Integrity Institute

Further Reading from this series:

1: New Zealand is off the rails

2: Are Business leaders to blame for the broken state of New Zealand?

3: How Crony capitalism is ruining New Zealand

4: National’s crony capitalism problem