What Britain can learn from New Zealand, a pioneer in ‘post-woke' economics

Telegraph

2 days ago

It has just reversed its ban on oil and gas exploration. It has liberalised its mining laws, sparking a boom in mineral production. And it has even scrapped a planned ban on smoking to help generate tax revenues for tax cuts elsewhere.
Ever since Christopher Luxon replaced the liberal-Left hero Jacinda Ardern as prime minister of New Zealand, the country has been setting an example for what a 'post-woke' economy looks like.
It has started unwinding many of the key policies championed by the Left – and if it works it will set a powerful template for the UK and many other countries to follow.
New Zealand's economic policies have started to shift dramatically since Ardern left office. In its latest budget this month, the government confirmed plans to invest in new offshore gas fields, with subsidies on offer to attract global companies into the sector.
It reversed the ban on new developments imposed by Ardern's government, despite the discovery of huge new fields in the country's territorial waters, and maintained in the face of soaring power prices and potential blackouts as the country ran short of electricity.
'The government is not prepared to sit on the sidelines and watch our industrial and manufacturing [base] dwindle because of energy security concerns,' argued Shane Jones, New Zealand's resources minister, in a defence of the change in policy.
It does not stop there. New Zealand has announced plans to double mineral exports to NZ$3bn (£1.3bn) over the next decade, adding both gold and coal to the critical minerals list for the national economy and brushing aside many of the environmental concerns that have restricted development of natural resources over the past decade.
Likewise, Luxon's centre-Right government has scrapped the generational smoking ban, a policy copied by Rishi Sunak, which would have steadily abolished tobacco by age group.
The reason? The government agrees, as we all do, that smoking is very bad for people, but it wants to maintain all the revenue tobacco generates to allow taxes to be cut elsewhere.
Indeed, there have already been extra tax breaks for businesses in the 2025 budget and the planned digital services tax has been scrapped.
Add it all up and one point is clear: New Zealand is providing a template for what might be termed the post-woke economy.
It is not doing anything that is especially Right-wing, or libertarian, by any reasonable historical standards. Its policies would have been standard centrism during the 1990s. Tony Blair or Gordon Brown would have been quite happy with any of them.
But it is ditching a lot of the liberal baggage that prioritised virtue-signalling over economic growth. It is allowing domestic fossil fuel production to be expanded until renewables come on stream.
This is unlike the UK, which is running down its North Sea oil and gas industry even as we have to import more and more energy from abroad, and the soaring price of industrial electricity lays waste to what remains of our industrial base.
New Zealand is allowing mining to be expanded, recognising that, so long as China needs lots of raw materials, it might as well supply them rather than leaving the market to its rivals. And it is rolling back the nanny state, while steadily cutting taxes for both businesses and individuals, while at the same time not running up huge deficits or testing the patience of the bond markets.
Will it work?
Under Ardern, New Zealand's output stagnated as public spending exploded, rising by almost 50pc under her premiership, while debt as a percentage of GDP rose from 28pc in 2018 to 46pc by 2024 (admittedly still a miraculously low figure by European or American standards).
It is still early days, and the reforms will take time to work, but the early signs are encouraging. The economy is expected to expand by 1.4pc in 2025, a lot better than anything the UK is likely to manage. As extra oil and gas comes on stream and the mining industry expands, we can expect that to accelerate.
The country has been here before. In the 1980s New Zealand pushed through a series of free market reforms that became known as Rogernomics after Roger Douglas, the radical, liberal finance minister.
They included floating the NZ dollar, abolishing exchange controls, privatising industries such as airlines and the post office and abolishing farming subsidies, a far bigger deal than in most other countries given the size and importance of its agricultural sector.
That powered a decade or more of strong growth. Perhaps just as importantly, it set a template for the Thatcher and Reagan reforms on a bigger stage later in the decade. New Zealand was a laboratory for fresh ideas and when they worked other countries started to copy them.
The UK, and indeed the rest of Europe, should take a look at what is happening on the other side of the world all over again. It doesn't make any sense to run down fossil fuels until renewables are as reliable and competitively priced.
We will still need to mine for raw materials, and that can be done in a way that is compatible with preserving the environment. We can't keep banning everything we don't approve of without destroying the tax base and making the state too powerful.
If New Zealand can get to the 2 or 3pc annual growth rates that now seem completely impossible in most of the developed world, policymakers as well as voters will have to take notice.
In the 2020s perhaps New Zealand can show us all what the post-woke economy will look like. After all, the world certainly needs a very different model than the doom loop of stagnant growth and permanently rising taxes it is trapped in right now.