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RNZ News
5 days ago
- Business
- RNZ News
'No upside and very considerable downside' in annoying China: Helen Clark and Don Brash warn
Helen Clark and Don Brash. Photo: RNZ Two former prime ministers and an ex-governor of the Reserve Bank have put their names to a letter questioning the coalition government's foreign policy - in particular "positioning New Zealand alongside the United States as an adversary of China". Helen Clark, Sir Sir Geoffrey Palmer and Dr Don Brash say they are "deeply concerned" about statements made by Foreign Minister Winston Peters and Prime Minister Christopher Luxon, and actions taken by the government, when it comes to our relationship with the two superpowers. "Our country has for many years enjoyed a cordial relationship with both the United States and China. Both countries were comfortable with that in the past," they said. "But more recently, the United States has described China not only as a competitor, but also as an adversary, and has been putting pressure on other countries to take sides." They said while the US had made a valuable contribution to trade and development in the Pacific, and "good relations… must be maintained", they held concerns about initiatives such as AUKUS Pillar 2, which New Zealand is keeping an open mind about. An update provided to ministers in February said Pillar 2 had the "potential to support New Zealand's national security, defence, and foreign policy settings in the Indo-Pacific" through technology sharing and development. China has [ warned New Zealand against joining it. New Zealand did not consider Pillar 1, as it involved nuclear-powered submarines. The group cited a number of decisions as potentially souring New Zealand's relationship with China, including: They also cited Peters' recent criticism of the 2008 free-trade deal New Zealand made with China (signed during one of his former stints as foreign minister). "It would not be surprising if China were to come to the conclusion that the special relationship which New Zealand has had with it since becoming the first developed country to have a free trade agreement with it in 2008 is no longer so valued by New Zealand. "Yet China is already by far our largest export market, and is almost certain to become an even more important market as the country continues to develop. We see no upside and very considerable downside in the situation which has developed." The group said while New Zealand shared more "political values" with the US, and a longer relationship, a "military relationship with the United States directed against China has many risks for New Zealand". "That is especially true in a situation where the United States itself has recently become more ambivalent about its defence relationships with traditional partners." They urged Luxon to "make it clear at the highest level that New Zealand retains its bipartisan commitment to its strategic partnership with China in the interests of a peaceful and prosperous region and world" when made it to Beijing, expected to be sometime this year. Luxon first met Chinese President Xi Jinping at last year's APEC meeting. He was yet to visit China as prime minister. The other signatories to the statement were former Speaker of the House Sir David Carter, former New Zealand Ambassador to China Carl Worker, and David Mahon, a New Zealand businessman resident in Beijing since 1984. In response, a spokesperson for Peters told RNZ he saw "no value in indulging the tired arguments of various former politicians". "The AUKUS II process was commenced by the Labour government in 2021. New Zealand has yet to be invited to join. "The government stands by its independent foreign policy approach which has been transparent about its focus on advancing New Zealand's security and prosperity after the years of inaction by the previous administration." Clark and Brash, once political foes, last year teamed up to criticise the government's foreign policy, in paticular its refusal to rule out joining AUKUS Pillar 2 . Labour has promised it would not sign New Zealand up to the US-UK-Australia defence agreement . Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Yahoo
09-04-2025
- Business
- Yahoo
New Zealand had a plan to be as rich as Australia. Here's how it failed
New Zealand's government set out a plan 16 years ago to 'match Australia by 2025'. But instead of fostering a booming economy to rival that of its neighbour, the country faces rising unemployment, anaemic economic growth and a mass exodus of Kiwis across the Tasman Sea. The outlook is so bleak that some in Wellington now joke that the government's next tagline should instead be to 'beat Fiji by 2050'. For Don Brash, New Zealand's failed ambitions to match Australian incomes are especially frustrating. He was appointed in 2009 to lead a high-profile, bipartisan task force charged with developing a strategy to close the income gap. None of its 35 recommendations were adopted and the gap in GDP per capita has now grown, from a chasm of roughly $8,000 to $10,700. 'It was a case of missed opportunities,' said Dr Brash, who was governor of the Reserve Bank for 14 years and spent three years as leader of the opposition, for the New Zealand National Party, from 2003 to 2006. 'I think because we made some recommendations the government of the day did not like very much, they used the first opportunity they could to wind [the task force] up in 2011. 'I would've been relaxed about it if they had other plans to catch Australia. But they didn't… it just hasn't been a priority,' he told The Telegraph. But reality is now hitting hard. Adjusting for purchasing power, GDP per person is about a third higher in Australia than in New Zealand – where the cost of living is high, unemployment has risen to a four-year high of 4.7 per cent and homelessness is rising. New Zealand's economy, currently in recession, was the worst performing in the developed world last year, according to HSBC. And so, despite New Zealand's reputation as an idyllic place to live and bring up a family, the net result is a mass exodus. In 2024, 128,700 people left the Pacific nation of 5.3 million people, according to preliminary data, a figure roughly 40 per cent higher than the pre-pandemic average for this century. While net migration was still 27,100 last year, it was a significant fall from 126,800 in 2023. 'Rather than seeing a brain exchange, we're seeing a brain drain,' said Paul Spoonley, a sociologist and emeritus professor at Massey University of New Zealand. He added that it was no longer 'simply the 20-somethings going to live in Sydney or London for a few years to get work experiences, travel, and get away from Mum and Dad'. Now, skilled workers in their 30s, often with young families, are also leaving. Stats NZ estimates that 56 per cent of Kiwis who left last year went 'across the ditch', enticed by better paid jobs, more generous pensions and an economy not in recession. In the last few years, Australia has made it even easier for New Zealanders to get passports and benefits. 'We have a soft labour market, so in the short term we're exporting some of our unemployment,' said Prof Spoonley. 'But the major impact is that we're losing our well-educated, skilled people. As the labour market begins to firm up in a few years, we're going to have a generational shortage [of workers].' But he does not think the government is taking the situation seriously enough. 'We have adult children in their 30s, and when you look at their circle of friends, it's very obvious to see that a lot more have moved to Australia,' Prof Spoonley said. He added: 'It seems to me we have a degree of complacency – I don't think we are seeing much of a debate about how we can improve our competitiveness with Australia. I think that's partly because the gap is so large, what could the government do to match it?' So how did New Zealand lose pace compared to Australia in the first place? In Dr Brash's mind, there are three key factors: Australia's mining boom, New Zealand's economic missteps and a level of economic productivity well below most of its peers. 'Australia has avoided a recession for the best part of 20 to 30 years, so in that sense, it has done well,' he said. 'There are various factors, mining being the most obvious – Australia has a very large amount of valuable mining assets, which have helped.' But he added that New Zealand had failed to develop an ambitious strategy to boost its economy – ignoring a range of proposals included in the 'close the gap' taskforce's final report. 'We were recommending a more open policy to foreign investment and to reform the Resource Management Act – a cumbersome planning act which means if you want to build anything, there are substantial hoops,' Dr Brash said. 'But successful governments have kept that handbrake on development.' He said this had contributed to a 'ridiculous' situation where, despite no lack of land, house prices were 'absolutely nuts'. 'Even a tent is unaffordable,' he joked. 'This is the result of serious policy failings.' More broadly, Dr Brash bemoaned that recommendations to make New Zealand more attractive to foreign investment were sidelined. 'The corporate tax break is also no longer competitive – 28 per cent, which by Asian standards is high,' he said. 'We haven't made ourselves an attractive place for investment, so even when bright ideas do occur, people start businesses here [and] then sell them offshore.' But the current situation has also been made worse by monetary policy in the last two or three years. When New Zealand closed borders and provided an economic stimulus to protect against the coronavirus pandemic, this fanned inflationary pressures and pushed already high house prices to historic levels. In response, and unlike Australia, the central bank increased interest rates and the government rapidly halted the fiscal spigots – triggering a recession. This approach was dropped in August – partly when updated figures showed the economy had been growing more quickly than first thought in 2023 – but the bank's previously hawkish warnings had already hit households and businesses hard. Now the government has given up on achieving a budget surplus in the next five years. 'If we had perfect knowledge, perfect, accurate real-time data, then it would affect how we communicate,' Paul Conway, chief economist at the Reserve Bank of New Zealand, told Reuters. 'Unfortunately, it's not physics.' But Dr Brash said it was never too late to turn the situation around – and he 'is more optimistic than most of my contemporaries' about the current outlook. 'The government ignored our recommendations in 2010/2011, and look where we are now. But that said, we still have an opportunity, there's always an opportunity in the present to do something about it. 'There are some moves afoot, [a] resource management act, foreign investment regime, some measures that make me optimistic that we are serious about improving productivity,' he said. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
09-04-2025
- Business
- Telegraph
New Zealand had a plan to be as rich as Australia. Here's how it failed
New Zealand's government set out a plan 16 years ago to 'match Australia by 2025'. But instead of fostering a booming economy to rival that of its neighbour, the country faces rising unemployment, anaemic economic growth and an exodus of Kiwis across the Tasman Sea. The outlook is so bleak that some in Wellington now joke that the government's next tagline should instead be to 'beat Fiji by 2050'. For Don Brash, New Zealand's failed ambitions to match Australian incomes are especially frustrating. He was appointed in 2009 to lead a high-profile, bipartisan task force charged with developing a strategy to close the income gap. None of its 35 recommendations were adopted and the gap in GDP per capita has now grown, from a chasm of roughly $8,000 to $10,700. 'It was a case of missed opportunities,' said Dr Brash, who was governor of the Reserve Bank for 14 years and spent three years as leader of the opposition, for the New Zealand National Party, from 2003 to 2006. 'I think because we made some recommendations the government of the day did not like very much, they used the first opportunity they could to wind [the task force] up in 2011. 'I would've been relaxed about it if they had other plans to catch Australia. But they didn't… it just hasn't been a priority,' he told The Telegraph. But reality is now hitting hard. Adjusting for purchasing power, GDP per person is about a third higher in Australia than in New Zealand – where the cost of living is high, unemployment has risen to a four-year high of 4.7 per cent and homelessness is rising. New Zealand's economy, currently in recession, was the worst performing in the developed world last year, according to HSBC. And so, despite New Zealand's reputation as an idyllic place to live and bring up a family, the net result is an exodus. In 2024, 128,700 people left the Pacific nation of 5.3 million people, according to preliminary data, a figure roughly 40 per cent higher than the pre-pandemic average for this century. While net migration was still 27,100 last year, it was a significant fall from 128,278 in 2023. 'Rather than seeing a brain exchange, we're seeing a brain drain,' said Paul Spoonley, a sociologist and emeritus professor at Massey University of New Zealand. He added that it was no longer 'simply the 20-somethings going to live in Sydney or London for a few years to get work experiences, travel, and get away from Mum and Dad'. Now, skilled workers in their 30s, often with young families, are also leaving. Stats NZ estimates that 56 per cent of Kiwis who left last year went 'across the ditch', enticed by better paid jobs, more generous pensions and an economy not in recession. In the last few years, Australia has made it even easier for New Zealanders to get passports and benefits. 'We have a soft labour market, so in the short term we're exporting some of our unemployment,' said Prof Spoonley. 'But the major impact is that we're losing our well-educated, skilled people. As the labour market begins to firm up in a few years, we're going to have a generational shortage [of workers].' But he does not think the government is taking the situation seriously enough. 'We have adult children in their 30s, and when you look at their circle of friends, it's very obvious to see that a lot more have moved to Australia,' Prof Spoonley said. He added: 'It seems to me we have a degree of complacency – I don't think we are seeing much of a debate about how we can improve our competitiveness with Australia. I think that's partly because the gap is so large, what could the government do to match it?' So how did New Zealand lose pace compared with Australia in the first place? In Dr Brash's mind, there are three key factors: Australia's mining boom, New Zealand's economic missteps and a level of economic productivity well below most of its peers. 'Australia has avoided a recession for the best part of 20 to 30 years, so in that sense, it has done well,' he said. 'There are various factors, mining being the most obvious – Australia has a very large amount of valuable mining assets, which have helped.' But he added that New Zealand had failed to develop an ambitious strategy to boost its economy – ignoring a range of proposals included in the 'close the gap' task force's final report. 'We were recommending a more open policy to foreign investment and to reform the Resource Management Act – a cumbersome planning act which means if you want to build anything, there are substantial hoops,' Dr Brash said. 'But successful governments have kept that handbrake on development.' He said this had contributed to a 'ridiculous' situation where, despite no lack of land, house prices were 'absolutely nuts'. 'Even a tent is unaffordable,' he joked. 'This is the result of serious policy failings.' More broadly, Dr Brash bemoaned that recommendations to make New Zealand more attractive to foreign investment were sidelined. 'The corporate tax break is also no longer competitive – 28 per cent, which by Asian standards is high,' he said. 'We haven't made ourselves an attractive place for investment, so even when bright ideas do occur, people start businesses here [and] then sell them offshore.' But the current situation has also been made worse by monetary policy in the last two or three years. When New Zealand closed borders and provided an economic stimulus to protect against the coronavirus pandemic, this fanned inflationary pressures and pushed already high house prices to historic levels. In response, and unlike Australia, the central bank increased interest rates and the government rapidly halted the fiscal spigots – triggering a recession. This approach was dropped in August – partly when updated figures showed the economy had been growing more quickly than first thought in 2023 – but the bank's previously hawkish warnings had already hit households and businesses hard. Now the government has given up on achieving a budget surplus in the next five years. 'If we had perfect knowledge, perfect, accurate real-time data, then it would affect how we communicate,' Paul Conway, chief economist at the Reserve Bank of New Zealand, told Reuters. 'Unfortunately, it's not physics.' But Dr Brash said it was never too late to turn the situation around – and he 'is more optimistic than most of my contemporaries' about the current outlook. 'The government ignored our recommendations in 2010/2011, and look where we are now. But that said, we still have an opportunity, there's always an opportunity in the present to do something about it. 'There are some moves afoot, [a] resource management act, foreign investment regime, some measures that make me optimistic that we are serious about improving productivity,' he said.
