The late Bruce Jesson captured something essential about New Zealand politics when he observed in the 1980s: “The National Party governs for capitalists. The Labour Party for capitalism”.
Jesson was writing for Metro Magazine at the time, as their politics writer. What he meant was simple: National tends to hand out favours to their mates in business, cutting deals that keep the rich happy one by one. Labour, on the other hand, steps in during crises to shore up the whole system, making the tough calls that save capitalism from collapsing under its own weight.
It’s a distinction that matters more now than perhaps any time since Jesson wrote it. Because if Labour governs for capitalism – meaning the system as a whole rather than individual capitalists – then the question facing Labour leader Chris Hipkins isn’t whether he’ll upset a few bank executives or supermarket CEOs. It’s whether he’s capable of the radical intervention needed to save capitalism from itself. Again.
Labour has done this before. The First Labour Government didn’t abolish private property when it swept to power in 1935. It saved it. Michael Joseph Savage’s administration responded to the Depression’s devastation with massive state intervention: nationalising the Bank of New Zealand, guaranteeing dairy prices, building state houses, creating a comprehensive welfare state through the Social Security Act 1938. These weren’t socialist measures so much as system-saving ones. They weren’t just tinkering; they rewired the place to make capitalism work for more people.
Then in 1984 the Fourth Labour Government, for better or worse, smashed the sclerotic regulated economy and rebuilt it along market lines. Sure, it wrecked lives and widened inequality, but it kept the capitalist machine humming better than ever.
The lesson is that although National doesn’t tend to carry out big reforms, both the 1935 and 1984 Labour governments fundamentally reset how the country operated, fixing a country that was quite broken.
Is it time for more big reform?
My previous columns on “Broken New Zealand” have documented the litany of dysfunction causing genuine hardship: from the supermarket duopoly and banking cartel to failing electricity and housing markets.
The 2023 election gave the National-led coalition a clear mandate to tackle this crony capitalism. Yet, as I’ve detailed, they have proven hopelessly compromised by corporate sympathies. Prime Minister Christopher Luxon instinctively sides with big business, while his government’s measures remain timid. Act, which should ideologically oppose monopolies in the name of free markets, has instead become a defender of corporate privilege. And New Zealand First, despite Winston Peters’ populist rhetoric, has delivered precisely nothing when it comes to breaking up concentrated market power.
The current moment of 2025 does seem similar to 1935 and 1984. Markets aren’t working, and politicians seem incapable of fixing them.
So, there’s a vacuum. The governing parties won’t act. And voters are increasingly desperate for someone who will. This should be Labour’s moment to channel that anger, to become the champion of ordinary people against gouging corporations. The Zeitgeist is there for the taking. And, historically, it’s Labour’s role to smash the status quo, to take on the vested interests, and fix the rot.
So here’s the question: Is Chris Hipkins the next Michael Joseph Savage, David Lange, or is he just another manager of decline?
Hipkins tests the waters
The Guyon Espiner interview that aired today on RNZ offers the most revealing window yet into Labour’s thinking. Conducted in the immediate aftermath of “democratic socialist” Zohran Mamdani’s shock victory in the New York mayoral race, the interview caught Hipkins in an unusually candid mood. When Espiner asked if he’d be comfortable being labelled a democratic socialist, Hipkins didn’t hedge too much: “I do not have a problem with it. Social democrat, democratic socialist, a variance of the same thing. People who believe there is a more active role for the state? Yes, I do. I believe there is a more active role for the state, absolutely.”
That’s remarkable for a New Zealand Labour leader. Most spend their careers running from any whiff of socialism. But Hipkins went further, offering a wholesale rejection of the neoliberal consensus: “We’ve had four or five decades, around the world, now of an economic system that says, ‘Don’t worry about concentration of wealth, eventually that will flow down, everyone will be better off’. And a lot of people are looking at that going, that’s not us. That’s not what we’re experiencing.”
Then he got specific. On supermarkets: “We have the supermarket duopoly controlling a huge proportion of our food supply. Is that something we can sustain as a small country? No, I don’t think it is.”
On banks: “I think anyone who is making a large amount of money from monopolistic behaviour should be worried about a future Labour government.”
On the broader problem: “The profits that we are seeing from the banks, from the supermarkets, from the electricity companies, from some of the insurance companies are a sign that New Zealand doesn’t actually have what the free market is supposed to deliver us – a competitive economy. You’ve got some big players who are ultimately able to make very, very large profits, exclude competition from the market and New Zealand consumers and New Zealand citizens are ultimately the ones who pay the price.”
This is strong stuff. Hipkins named the disease: market concentration allowing dominant players to extract rents from captive consumers. He embraced an ideological framework (“democratic socialism”) that provides cover for state intervention. He issued direct threats to incumbents.
But the critical question is: Will he actually do anything about it?
The Last time Labour was in power
Because we’ve been here before. Very recently, in fact.
Labour governed from 2017 to 2023. They had nearly six years to address broken markets. They had a commanding majority from 2020 to 2023, the first under MMP. They faced no meaningful parliamentary opposition. And what did they do?
Essentially nothing.
On supermarkets, they commissioned the Commerce Commission market study in November 2020 – three years into their first term. The report arrived in March 2022, confirming the duopoly was extracting $1 million per day in excess profits. The Grocery Industry Competition Act finally passed in June 2023, six years into Labour’s government and just months before they lost power. The mandatory code of conduct didn’t come into force until March 2024 – after they’d left office. The supermarket duopoly remains entirely intact.
On banking, the record is even worse. Labour waited until June 2023 – four months before the election – to order a Commerce Commission investigation. The final report didn’t arrive until August 2024, after they’d already lost government. Open banking legislation, promised since 2020, never materialized. The four major Australian-owned banks still control 85% of the mortgage market and 90% of deposits, making those same excessive profits Hipkins now rails against.
On electricity, Labour actually made things worse. They took no action on the gentailer model or electricity market structure, despite prices remaining “unsustainably high” according to the OECD and business groups describing the market as “dysfunctional.”
And housing – the supposed centrepiece of Labour’s 2017 transformation agenda – became a catastrophic failure. KiwiBuild promised 100,000 homes in ten years. It delivered 2,389 homes. That’s 2.4% of the target. Meanwhile house prices rose more in single years than most workers earned annually, the public housing waitlist quintupled from 5,000 to 26,000, and homelessness reached levels not seen since the Depression. Labour spent $8 million buying back KiwiBuild homes no one wanted.
The pattern was consistent across every sector: promise transformation, commission reports, deliver incremental regulatory tweaks, avoid any structural reform that would challenge corporate power. As some critics have put it, Labour governed as “managers of broken markets, not fixers of them.”
Why? Because Labour’s “Budget Responsibility Rules” committed them to the same fiscal conservatism as National – keeping government spending below 30% of GDP, maintaining debt target orthodoxy, accepting neoliberal market structures even while critiquing them. They saw what was broken but wouldn’t use state power to fix it.
The Ghost of Roger Douglas
This brings us back to Jesson’s observation. Labour governs for capitalism, not capitalists. But what happens when capitalism itself is the problem?
The Fourth Labour Government offers an instructive parallel. When David Lange’s administration took power in 1984, they also promised transformation. And they delivered it. It just wasn’t the kind Labour voters expected. Roger Douglas implemented “Rogernomics”: radical financial deregulation, privatisation, subsidy removal, tax cuts for the wealthy, GST introduction. The reforms were breathtaking in scope and speed.
But as Bruce Jesson pointed out, these reforms were fundamentally in service of capitalism. Rogernomics restructured the system along neoliberal lines, and the social costs were immense: child poverty doubled, manufacturing was gutted, and unemployment tripled.
Helen Clark later called this “a ghastly period”. Yet subsequent Labour governments, including Jacinda Ardern’s, largely maintained the framework Douglas built, tinkering at the edges rather than challenging its foundations. They added some social protections, tinkered at the edges, commissioned studies. But the fundamental market structures remained unchanged.
Which raises the uncomfortable question: Is Labour institutionally capable of the radicalism required to fix broken markets? Or are they constrained by their nature as capitalism’s system-managers to perpetual tinkering?
What would real reform look like?
The OECD was remarkably blunt in its 2024 assessment of New Zealand’s broken markets: “In some sectors, market concentration can be so high that regulation will not suffice to improve competition enough, and structural solutions such as break-ups, although as a measure of last resort, could be warranted.”
Break-ups. Structural solutions. These are the words Labour has consistently avoided. Even in the Espiner interview, when asked about breaking up duopolies, Hipkins warned that this would be “a big step” and emphasised he wanted to “make sure there was more competition available” – not that he’d actually force structural separation.
Real reform would mean:
Mandatory divestiture in supermarkets, forcing Woolworths and Foodstuffs to sell stores to create actual competitors
Breaking up the gentailer model in electricity to separate generation from retail
Capitalising Kiwibank as a genuine disruptor to challenge the Australian banking cartel
Implementing open banking legislation immediately, not after endless consultation
Using state balance sheet capacity to fund housing and infrastructure, not accepting artificial debt constraints
Potentially re-nationalising natural monopolies that have proven unsuitable for private ownership
These aren’t radical socialist fantasies. They’re exactly the kinds of interventions the First Labour Government made during the Depression, and exactly the kinds of measures currently being debated in jurisdictions facing similar crises. Mamdani won in New York promising rent freezes and city-run grocery stores, not polite competition policy reviews.
Signs of life, or death rattle?
So is there any evidence Hipkins might actually deliver?
The rhetoric has certainly shifted. At Labour’s December 2024 conference, Hipkins declared: “For too long, New Zealanders have been told that if we just grow the economy everyone will be better off. It’s not true. We now have plenty of evidence that trickle-down economics is nothing but a hoax.” He explicitly rejected his “1980s views on the economy” even while embracing his 1980s musical taste. That’s about as clear a repudiation of Rogernomics as any Labour leader has offered.
Energy spokesperson Megan Woods has criticised the current government for choosing to “tinker at the edges and protect the status quo” rather than confronting “our broken energy system.” That’s promising language. But it needs to be backed by actual policy proposing structural reform rather than more regulation.
So, the gap between rhetoric and action remains enormous. Hipkins has promised policies on banking and supermarket competition are “coming”. The emphasis is still on “more competition” rather than structural intervention. And Labour’s track record suggests a vast chasm between what they say in Opposition and what they do in Government.
The cynic would note that Mamdani’s NYC victory made democratic socialist rhetoric suddenly fashionable, and Hipkins is opportunistically riding the wave. The optimist would argue Labour is genuinely responding to the “big backlash” Hipkins identified against decades of neoliberalism. The realist would say: judge them by their actions, not their words.
Can Labour surf the zeitgeist?
There’s no question a zeitgeist exists. Voters are furious about cost of living, housing unaffordability, corporate profiteering. Public approval of capitalism is dropping among younger generations. The OECD, business groups, economists across the spectrum now acknowledge market concentration is a productivity-killing problem requiring urgent action. Capitalism needs to be saved from the crony and uncompetitive actions of some of the individual capitalists. And there’s support for this across the political spectrum, including from many businesspeople.
In other words, the political space exists for Labour to become radical reformers. The question is whether they have the institutional capacity and political courage to occupy it.
Jesson’s observation cuts both ways. If Labour governs for capitalism rather than capitalists, they should be perfectly positioned to confront individual monopolists extracting rents that damage the system as a whole. Breaking up supermarket duopolies, forcing banks to face real competition, restructuring electricity markets – these serve capitalism’s long-term interests even if specific capitalists hate them.
So it was notable today in the RNZ when Espiner pressed Hipkins on whether Labour will actually break up these monopolies, the Labour leader equivocates: “When you say something like break up, you’re suggesting that maybe we go in and intervene in individual companies. That’s a big step to take.” Instead, Hipkins talks vaguely about “better regulation” and “making sure we’re opening up space for new players.”
This is because “governing for capitalism” also means preserving the system fundamentally unchanged. It means operating within constraints Labour has internalised: balanced budgets, modest debt levels, maintaining business confidence, avoiding being seen as anti-market. These constraints prevented meaningful action from 2017 to 2023.
What’s more, Labour is still surrounded by corporate lobbyists and other wealthy vested interests. Fundraising is also a major concern – Labour needs to stay onside with some the most wealthy businesses in order to wrangle donations. This all means that when it comes to policy and action, Labour is unlikely to upset corporate power.
Is Labour willing to wield state power against corporate power?
Hipkins talks a good game. He’s correctly diagnosed the problem. He’s issued warnings to incumbents. He’s embraced ideological framing that legitimises state intervention. That’s more than previous Labour leaders have offered.
But we’ve seen this movie before. We watched six years of Labour rhetoric about transformation deliver essentially nothing on market concentration and corporate power. We saw KiwiBuild collapse from 100,000 homes to 2,389. We saw banking inquiries timed to report after Labour left office. We saw the same executives making the same excessive profits while Labour commissioned the same studies recommending the same reforms they never implemented.
The brutal truth is this: until Labour demonstrates willingness to use state power to structurally challenge concentrated corporate power – not study it, not regulate around its edges, but actually break it up – they remain system-managers, not system-fixers. And in a moment that demands the radicalism of 1935, management won’t cut it.
Hipkins might prove me wrong. Labour might finally be ready to govern like the crisis demands. The rhetoric suggests they understand what’s broken.
But the last six years suggest rhetoric is all we’ll get. So New Zealand will stay broken, only now with better speeches to explain why.
Dr Bryce Edwards
Director of The Integrity Institute
Further reading, and previous columns on Broken New Zealand: