The Nation of No? Welcome to New Zealand in 2025, says the PM

Friday, 31 January 2025

PM Luxon caused a brouhaha by claiming we are - but does he have a point? Are Kiwis and Kiwi companies too risk averse when it comes to economic growth? Explainer Editor Lloyd Burr looks for some answers.

New Zealand’s long been self conscious about its national identity and how it’s viewed by the world. ‘What did you think of New Zealand?’ is a question often asked of visitors. We take pride in our image of punching above our weight, winning on the world stage, and being a friendly, welcoming nation.

Our ‘she’ll be right’ and number-eight-wire mentalities are the cornerstone of what it means to be Kiwi. So is our zest for adrenaline-fuelled sports like bungy-jumping, luging, or black-water rafting. We innovate and come up with foiling sail boats, rockets, film workshops, and collars that control dairy cows.

So when Prime Minister Christopher Luxon used his state of the nation speech to say New Zealand has slipped into a culture of saying ‘no’ to economic growth, some Kiwis were understandably riled. Here’s some of what he said:

“There’s always a reason to say no but if we keep saying no, we’ll keep going nowhere,” he said. “We need larger ports. We need more concerts. We need more jobs, more investment, more innovation, exports, and talent.”

“The bottom line is we need a lot less no and a lot more yes,” said Luxon.

So does he have a point? Are we saying ‘no’ more than ever before when it comes to growing the economy and generating wealth? Why do we say ‘no’ to unlimited concerts at Eden Park? Or to the Port of Tauranga’s wharf extension? Will we go nowhere if we keep saying ‘no’? Let’s talk to some experts.

Cameron Bagrie, independent economist

Cameron Bagrie worked at Treasury and was ANZ’s chief economist for more than a decade before setting up his own consultancy ‘Bagrie Economics’. He’s well-versed in every aspect of the economy, is regularly used as an economic commentator and has a knack for making the complex stuff understandable.

He’s known to speak his mind and he certainly did when I spoke to him on the phone - telling me the question needs to be turned on its head.

“The question we should be asking is: Are we really a country that’s up for taking risk?”

“I don’t think we are. We’ve just become more and more risk averse and we just want to wrap everything in cotton wool. There’s a correlation between risk and return - if you want a big return, you have to take a big risk,” says Bagrie.

“How do we become a nation that just wants to give it a crack? The mindset needs to change. How do we get some risk appetite into this economy?,” he says with passionate gusto.

The banks come next in his analysis. Bagrie says they have a big role to play and need to move away from just backing low-risk property by backing riskier investments - although he adds the current mindset is driven by Reserve Bank policy.

“NZ capital markets are under-developed and our equity market tends to be all about dividend stocks and they just give money back to people. Whereas the Americans, they take your money, keep it and make you way more in the long run,” he says.

“People need to be incentivised to go out and give it a crack. We just don’t push the boundaries. We get into a safe mode. If you want to push an innovative economy, you need a 1 + 1 = 11 approach, not a 1+1 = 2 approach,” he says.

When asked about whether the Kiwi psyche had changed from ‘yes’ to ‘no’, Bagrie uses this explanation: “If a kid falls out of the tree, we’ll say ‘let’s chop down the tree’”.

He also says tall poppy syndrome has had a role to play and there’s a bit of NIMBYism (Not In My Back Yard Syndrome) on the side too.

The political system needs to take some blame as well - he says - with MMP seeing a splintering of the political spectrum with “rampant populism” making it “bloody hard to drive through reform”.

“We need unity to drive reform. First Past the Post (FPP) had some benefits. Look at the shambles of the debate over asset sales,” he says.

Professor Rod McNaughton

He is the Academic Director of the Centre of Innovation and Entrepreneurship at the University of Auckland. He consults on corporate innovation as well as start-up launch and growth, among a big list of other specialisations.

“New Zealand’s tendency to say 'no' too often stems from deeply ingrained cultural traits like risk aversion and a preference for consensus - shaped by metaphors like ‘Tall Poppy Syndrome’, the ‘Number 8 Wire’ mentality and ‘She’ll be Right’ attitude,” he says.

“While these values have served us well in promoting fairness and resilience, they can also stifle bold economic moves. This makes it crucial to find a balance between protecting what we have and seizing new opportunities,” says McNaughton.

“For example, the Number 8 Wire Mentality is often seen as a symbol of Kiwi ingenuity, but it also reflects a deep-seated preference for self-reliance and incremental fixes - reinforcing a tendency to say ‘no’ to bold economic shifts in favour of good enough solutions,” he says.

Professor Nathan Berg

Dr Berg is based at University of Otago’s Department of Economics and specialises in behavioural economics and economic psychology. He also teaches microeconomics, financial economics, business statistics and econometrics.

“I’m pleased the Prime Minister is talking about saying yes and focusing on upside potential when facing uncertain prospects. Of course, the devil is in the details concerning what, specifically, we are being encouraged to say ‘yes’ to,” he says.

In a typically dense, academic response to written questions about the Kiwi psyche, Dr Berg says this:

“I think the research literature and large volumes of anecdotal experience would suggest there is truth to the claim: ‘saying yes’ to uncertain prospects that are believed to hold the possibility of great upside potential is a hallmark of entrepreneurial behaviour that nearly everyone is capable of in varying degrees, big and small.”

He says those prospects include productivity-enhancing technology, new products, new investments, new export markets, new relationships, and new ways of thinking.

However, Dr Berg says saying ‘no’ can also be beneficial in what behavioural economists call ‘attention budgeting’.

“There’s literature I’ve contributed to suggesting that saying ‘no and choosing what to ignore, focusing one’s attention on a few things that matter most, may be equally, if not more, important in predicting entrepreneurial success and wellbeing more generally,” he says.

Hannah McQueen, Enable.Me founder/financial coach

Hannah McQueen has one heck of a list of qualifications: Chartered Accountant Fellow, Master of Tax, financial advisor, author, patent-holder, and business founder/owner/director. That business is Enable.Me which helps Kiwis manage their money and grow their wealth.

Her background makes her an ideal bellwether on whether there’s been a change in mindset from her clients regarding risk, economic growth, and investments.

“Conditions are harder now than what they have been. Households feel bruised, there is less optimism than there has been before, and that means you do tend to hunker down and think ‘what do I need to do for me and my house’,” she says.

Investment housing has been a safe, low-risk way for many Kiwis to invest savings or extra money - and it’s how many of McQueen’s clients have grown their wealth. I ask her if New Zealand’s obsession with housing has come at the expense of other, riskier forms of investment.

“If we think the problem is people investing in property and that's why the country is not getting ahead, I probably would say we're focusing on the wrong problem. The problem is that we don't know how to execute on innovation,” says McQueen.

“When you are trying to grow a business or get a business to an IPO or something exciting, you need a lot of capital to do that and there isn't much capital in this country.”

Couldn’t a lot of that capital have come from the money locked up in housing, I ask.

“I don't think feeling optimistic about the country is going to suddenly release capital from middle-class New Zealand. It might release or shake down capital from wealthier people but we haven't seen much innovation that feels accessible for a lot of families.”

“Most of us don't have extra wealth anyway, we're just trying to hold it together and trying to survive. We're keen to thrive, but most of us are trying to survive so I think the impact of all of those things is that you do have more of a poverty mindset,” says McQueen.

She likes the gist of Luxon’s speech, even if he was light on detail on how he plans to implement his vision.

“There needs to be a little more coloring in behind the statements, but I'm all up for a change because we can't keep going the way that we are going at the moment. We have got to do things differently. So if this is the start of different, then I am all for it,” she says.

McQueen points to two things that could be changed to help make us more of a ‘yes’ nation. The first is the same as Bagrie’s identified: bank lending, but she adds in bank ownership too.

“Banks could be incentivised to lend to businesses. They're currently incentivised to lend against buildings. That's tilting the banks’ investments towards basic infrastructure, which doesn't create businesses or help businesses grow.”

“Nothing's worse than our big banks making so much money and it going back to another country. They made it here and we don't even get to clip it,” she says infuriatingly.

Changes to KiwiSaver is her next suggestion.

“What about we move to the Australian settings where you can release your KiwiSaver and invest it in other investments. They allow people to release their superannuation to invest in superannuation-approved investments.”

“It's more of a DIY, but you certainly take an interest in what your money is doing and you don't sit and forget it, which again is kind of this Kiwi mantra for everything,” she says.

I ask McQueen about the Kiwi psyche and if she’s noticed the traffic light change from green to red over the years.

“New Zealanders are nervous about investments they can't touch. That hasn't changed. What I think has changed is people's margin of error has reduced. Things are so tight now, you can't really afford to misstep.”

Craig Rennie, NZCTU economist

Craig Rennie used to work for former Finance Minister Grant Robertson and he’s now at the Council of Trade Unions (which is closely aligned with the Labour Party). He helped develop policies like Fair Pay Agreements and tax reforms under the last government.

“I don't think we're saying no to stuff more than we ever have,” he says. “It's not just a case of saying yes to more stuff. If it was as simple as that, we would have done that 30 years ago.”

New Zealand’s stagnating productivity and basic economy is more likely to blame for the lack of economic growth, he says.

“Housing is one part but our dairy sector is another. It's really hard to get an extra 1 litre of milk out of a cow. And forestry - it's really hard to get a tree to grow an extra 1 metre of timber.”

“We can invest heavily in those sectors but they don't respond in terms of output really well to investments. Whereas if you look at financial services, if you look at advanced manufacturing, if you look at IT - they respond really well to investments in terms of productivity,” says Rennie.

When it comes to wealth creation, Rennie says the incentives are all wrong.

“If you've got a dollar and you want to invest it and get the returns tax free, you invest it in housing.”

Superannuation is another touchstone for Rennie and he’s quick to point out it was former National leader Robert Muldoon who said ‘no’ to a national super fund in 1975, which could have been a huge pot of domestic capital available for domestic investment.

“New Zealand is very capital-shallow. I think around 80% of all KiwiSaver funds are invested overseas. And we don’t have huge pools of venture capital in New Zealand, which is the super high risk stuff.

“But even if we did, we haven't been growing the other sectors of the economy in order to actually then create the investable propositions for people to get into,” he says.

Does he agree with Bagrie that our proportional electoral system is partially to blame?

“MMP is adopted from the West German system and Germany hasn't been a slacker when it comes to economic development over the past 40 years,” he says with a chuckle.

“Whereas if you look at countries like the UK which have FPP systems, they haven't necessarily grown more quickly so I don't believe the political system is at fault.”

More likely at fault is the length of Parliamentary terms. They’re three years in New Zealand, compared to five years in the UK, although Rennie says there are cons to longer terms too.

Dr Antje Fiedler

Dr Fiedler is a senior lecturer at the University of Auckland’s Business School, specialising in entrepreneurship and international business. Originally from Germany, she is also a director on the board of the Small Enterprise Association of Australia and New Zealand (SEAANZ).

“When I came to New Zealand, it used to be a ‘yes’ country and I think the sentiment certainly has kind of changed. The confidence at the moment is probably not as strong as it used to be,” she says.

“Why we have become more negative about our future and as a result say ‘no’, is because our economic conditions have fundamentally changed. On a societal level, we really have lost a little bit of confidence, and it's related to economic factors.”

Those factors have been the COVID lockdowns and associated economic headwinds that have seen personal and business costs skyrocket. The subsequent exodus of skilled workers to Australia hasn’t helped either, she says.

“The language the government is using also affects perceptions. We don't really have strong aspirations or a vision where we would see ourselves in five or 10 years - but that would change if we could shift the mood on a societal level and have a strong narrative that gives us confidence,” says Dr Fiedler.

As an example, she points to the previous government’s ‘back to basics’ and ‘bread and butter’ narrative that failed to set high aspirations. However, she says it can be changed because in the eyes of the world, New Zealand has a lot to offer.

“We have a very strong education system, we do have very strong institutions and we also have a lifestyle that people from other countries aspire to have; a lot of people have a desire to live here” she says.

Those people could be lured to New Zealand if there was a vision and a focussed story from central government, she added.

Sophie McLernon

She is the director of growth capital at Snowball and used to work at NZTE. She has a background in the wine and spirits industry.

“New Zealanders have traditionally favoured property as an investment because it's tangible, right? We're familiar with it and it's seen as safe.”

“But the interesting thing is at Snowball, we are seeing a growing group of investors who understand what we're doing and they want to allocate capital into more innovative companies and start-up companies.”

“They are obviously comfortable with the risk because there's inherently risk in start-ups but it's better for wealth creation and with that comes more jobs and more capital return to New Zealand.

“Snowball has been around for 10 years and every year we've been seeing more interest and more growth. We've got 55,000 investors on our database now and that's growing every day but that's still a fraction of New Zealanders,” she says.

“There is this moving of Kiwis away from property and what they think is safe and ‘hey, you know, there is more risk but there is an opportunity for greater returns here’,” says McLernon.

“There are more types of investment vehicles coming into New Zealand now but there is less capital around right now as well, so maybe that's just the market and the economy but I think there are still glimmers of hope,” she says.

Have your say below.