Business leaders sour on Luxon government, but fear lack of clear successor

Sunday, 17 August 2025

This story was first published in the Sunday Star-Times

A winter of economic discontent has brought flashing warning signs and mounting pressure on the PM, with boardroom concerns now spilling into public view. Amelia Wade reports.

Christopher Luxon was elected in large part on a promise to fix the economy, yet 18 months later business leaders increasingly suspect the National-led coalition has no grand plan.

And, they fear, the prime minister and the Government are coasting on the hope that things will improve on their own, while being distracted by culture wars and issues that don’t matter.

This winter of discontent has brought flashing warning signs and mounting pressure on Luxon, with a one-two punch of bad polls confirming the public’s grumpy mood; in TVNZ’s 1News/Verian poll this week Luxon sank to just 20% as preferred prime minister - a two-year low.

“I'm not focused on polls or talking about myself,” Luxon told reporters on his way into a caucus meeting on Tuesday. “What I'm focused on is New Zealanders and making sure we've got the right long-term economic plan in place.”

But many business leaders and political insiders, including those from traditional centre-right bases of support for National, are beginning to doubt whether that right long-term economic plan actually exists. In more than a dozen conversations with the Sunday Star-Times, they offered a less-than-rosy assessment of Luxon, and his performance and leadership.

“I look at some of the things [the Government is focusing on] and think, ‘Rome is burning for some of our small businesses. Why are we talking about that?’,” said Viv Beck, chief executive at Heart of the City, Auckland’s city-centre business association.

Her counterpart at the Newmarket Business Association, Mark Knoff-Thomas, was equally bewildered, pointing to the recently-announced redesign of passports so English words sit above Māori.

“I think it’s just ludicrous,” he told the Star-Times.

“I haven’t heard a single person say to me, ‘Oh gosh the passports need to be changed’.”

Auckland Business Chamber head Simon Bridges - a former National leader, and Luxon’s first pick to be finance spokesperson - has also come out swinging, calling for more government action to give the city a defibrillator shock to get its economy going again.

“We don’t want to leave it to chance. A few more bad months after a few bad years isn’t good enough,” he told the Star-Times.

“I think there should be an urgency in government around intervention.”

Business leaders spoken to by the Star-Times also acknowledged the positives. The Government had made it easier to do business, they said, and there was now a police station back in Auckland’s CBD, with beat cops making the streets feel safer. They also pointed to an increased understanding of the importance of tourism.

Ministers were also accessible and receptive in a way their Labour predecessors weren’t, some said.

But previously unreported data from the Taxpayers’ Union poll reveals significantly more respondents continue to say the country is headed in the wrong direction (58.7%) than in the right direction (28.3%).

Pessimism about the country’s direction is seen by pollsters and commentators as one of the ‘warning signs’ for a government, and is particularly unusual in a first term in office.

It was clear, said many business leaders, there was no real plan on what to do about the economy.

Brad Olsen, the chief executive and principal economist at Infometrics, a Wellington-based economic consultancy, said businesses he spoke with were looking for more aspiration and a realistic time-frame for when change might be coming.

“There is always a challenge in politics around expectation versus reality, and sort of saying too much. Under-delivering on those expectations can be dangerous.”

Right-leaning political commentator Trish Sherson, of Auckland public relations firm Sherson Willis, said the Government was struggling to present a coherent set of solutions, and lacked the political courage to deliver them.

“A strategy of waiting and hoping for things to get better in time for the election year… That is not a strategy.”

Boardroom concerns spilled publicly into headlines and airwaves again following Monday’s back-to-back bad polls.

That morning, a poll from Curia/Taxpayers’ Union showed Labour edging ahead in the party vote, rising two points to 33.6%, with National slipping to 31.8% (–2.1). That would deliver a hung Parliament.

In the preferred prime minister stakes, Luxon and Hipkins were tied on 20.2%, marking a fall of almost 15 points from Luxon’s high of 34.5% in July last year.

The 1News/Verian poll on Monday evening was slightly more positive for National’s party vote (steady on 34% to Labour’s 33%), but Luxon’s preferred PM rating slid three points to 20% - his lowest since becoming prime minister - putting Hipkins within one point at 19%.

In an analysis piece for The Post following the polls, Andrea Vance described how Luxon was running out of oxygen, with his grip on National’s leadership becoming increasingly uncertain.

If the polls translated to election results, it could spell devastation for National, even if it cobbled together a government and clung to power. The party could lose up to eight seats, and depending on which electorates remained blue, many top-talent list MPs would be nervously counting seats, including Finance Minister Nicola Willis, Justice Minister Paul Goldsmith and Speaker Gerry Brownlee.

A shrunken caucus would further weaken the party’s negotiating position with coalition partners, allowing the minor parties to have an even greater influence.

New Zealand First’s Winston Peters and ACT’s David Seymour have already had outsized influence on the Government’s direction and narrative, stoking the fires of fury to fuel their own popularity.

The polls show a clear grumpiness that things haven’t substantially improved.

Luxon’s caucus colleagues used to promise that once people got to know him, his popularity would rise. Instead, the opposite has happened. The more Kiwis get to know Luxon, the less they seem to like him, and a number of insiders and commentators have assessed that the prime minister’s unpopularity is a drag on National’s support base.

To get into power, Luxon and National made big promises to get New Zealand “back on track”, and touted a “rock solid” plan. Luxon even personally pledged to lower interest rates and grow the economy.

Since then, interest rates have fallen, with the Official Cash Rate coming down from 5.5% to 3.25%, but New Zealand has struggled to shake the recession.

Unemployment is biting and thousands are struggling to find work, power prices are high, homelessness is on the rise, business liquidations have increased 1000% since 2020, mortgage misery has hit a nine-year high with about 24,000 households behind on their home loan repayments, and the price of butter has become a national flash point.

Auckland is doing it tougher than most, which is a big problem both for the country, because it’s the economic engine room, and for the Government - because with a third of the population, the supercity plays a big role in deciding who governs.

The city’s unemployment rate of 6.1% in the three months to the end of June was notably higher than the national rate (5.2%), and its real GDP growth was 1.3% lower than the year prior - a greater decline than the rest of New Zealand, down 0.9%.

Auckland’s business leaders have subsequently begun piling on the pressure publicly for more attention and more action from the Government, including a much-debated proposal for a visitor bed levy.

Auckland Mayor Wayne Brown said the introduction of a levy would allow the city to fund major events, which would deliver immediate stimulus by boosting tourism. But the city’s pleas have been met with a hard no from Luxon.

“I'm just saying to you, at this part of the economic cycle, what this country doesn't need is more bed taxes,” the prime minister said, though no bed taxes are in effect in New Zealand.

“It certainly doesn't need a capital gains tax on the family home, as we've heard from Chris Hipkins.”

That response has frustrated the mayor and the city’s business leaders, who are tiring of the Beehive’s inertia when something clearly needs to be done to revive the city.

Beck put it bluntly: “There’s a frustration for businesses there’s no big-picture plan. We can’t expect the economy to turn around by itself.”

“I think leadership is a key part of this, I really do, because they’re not unsolvable problems.”

So were Auckland’s blues a problem of Luxon’s making?

“I don’t want to be personal about it. I mean, in the end I guess he’s the leader,” said Beck.

Asked whether he was worried whether he was losing the business community's confidence, Luxon said right from day one the Government had been focused on fixing the economy.

He told the Star-Times there was more policy on the way for Auckland, but wouldn’t say what it was.

“You've heard me say it time and time again. We were elected to fix the economy, and that's what we are doing each and every day.”

National Party president Sylvia Wood said she spoke to business leaders every week who “understand the challenges Kiwis were left with by the previous government and the fact National is getting on with the job of fixing the economy”.

Their economic plan had helped ease inflation so interest rates had fallen which helped businesses have the confidence to invest, she said.

Dropping the ball in Auckland is a dangerous fumble; elections are won and lost there. The city turned on Labour in the wake of extended Covid lockdowns and rising crime, giving the party to a historic drudging.

One business leader, who didn’t want to get political, but agreed to speak on background, said the Beehive hadn’t grasped how serious the situation was in Auckland.

“You cannot assume that you open a convention centre and a rail line and some of the issues we’ve got will go away.”

Much of that frustration is aimed at Luxon. It’s now common to criticise the prime minister or question his leadership behind boardroom doors, the Star-Times was told.

A well-connected insider said business leaders held their tongues publicly because Luxon had a reputation for shifting blame, but many agreed there did not appear to be any real plan.

“There’s no doubt the chatter is there,” another business leader said, asking not to be named because they didn’t want to fall foul of Luxon and the Government.

“There’s dissatisfaction with the prime minister.”

Luxon’s fortunes are not helped by the fact that Willis is also struggling for wins, the business leader pointed out.

Willis has come under pressure on the cost of living with butter-gate stealing headlines thanks to her strategy of questioning dairy co-operative Fonterra over its role in pricing.

And her flagship policy to refund families part of the cost of early childcare has not delivered what was promised. Just a tiny fraction of the eligible families have claimed the FamilyBoost subsidy, forcing Willis to expand the scheme so wide that households earning nearly $4,500 a week are partly eligible.

“I think if one of them was firing, that might be enough,” the leader said. “The issue is when both seem to be under-performing.”

The business insider said there were now “a lot of senior business leaders” asking if not Luxon, then who? Though it was tough to tell how serious the gossip was, they said.

“A lot are talking up Erica Stanford.”

Stanford, who holds the education and immigration portfolios, has proven an effective and efficient minister, driving transformational change with minimal pushback, including scrapping the national NCEA qualification.

Despite the chatter, Stanford hasn’t appeared as a serious contender in preferred prime minister ratings. No one has - and the lack of a clear successor has likely kept the circling wagons in their stables.

The scattering of National MPs mentioned in the latest 1News/Verian poll were miles behind Luxon with Stanford on 0.6%, Police Minister Mark Mitchell on 0.6%, Infrastructure Minister Chris Bishop on 0.4% and Willis on 0.2%.

The other point of contention is that there are no solutions from across the aisle either, with Labour deliberately not releasing any policy to starve National of attack lines. Labour, which lost significant trust with business leaders while in power, has not done much to rebuild that trust, they said.

“No one is going, ‘Geez I think the Opposition would be doing a better job,” said a business insider, who spoke on the condition of anonymity so they could be frank in their views.

Another insider, who also asked not to be named, noted Labour leader and former prime minister Chris Hipkins had the audacity to snipe despite it being much of the previous government’s doing that had landed New Zealand in this current mess. A Treasury report last week estimated the Covid response cost $66 billion, and the Labour government ignored warnings from officials to put on the brakes.

Economist Brad Olsen explained that people often didn’t realise the country was still in a post-Covid position, and trying to unwind from those interventions.

We are still trying to recondition ourselves about what was an appropriate amount of money to spend, he said. Kiwis needed to get used to seeing figures starting with an ‘M’ instead of a ‘B’.

A lot of the pain in Auckland had to do with the city right-sizing itself and shifting its major earners towards technology and innovation, Olsen said.

“I really don’t think that Auckland should wait for the Government to be its saviour.”

Many business leaders did say they felt for Luxon, even those who were critical of him, and said people didn’t appreciate just how tough his job was - and that it wasn’t necessarily him who was the problem. He was governing in a very difficult period and many ills were out of his control, they acknowledged.

One major factor, they described, is that he’s the first prime minister of a real power-sharing coalition government, which has meant the Government’s successes have many parents, whereas its failings seem to have just one: Luxon.

The wins have to be shared, and the glory is spread thin between the three parties.

“I think people haven’t really clicked to that,” said one finance insider, who didn’t want to be named.

“I think it’s unfair to lay criticism on a single individual, even though they may be the prime minister, because it’s a coalition government.”

The finance insider had also noticed increasing frustration towards Luxon and his government, but urged those who were annoyed to taihoa - wait - because there wasn’t a quick answer.

“People’s tolerance for big-picture stuff, including in the business community, is extremely limited these days. People want things to happen yesterday. They’re sick of the grind.”

A lot of what businesses had wanted for the past six years had happened in the first 100 days the Government took office, and people had short memories, the insider said, questioning those calling for more government intervention.

“We’ve just had a government that liked to intervene, and that cost a lot of money.”

The news isn’t all bad for Luxon. Donations are still flowing in despite his and National’s polling challenges; a key challenge for previous National leader Bill English before he was rolled by Don Brash was his ability to raise cash.

The party’s haul last year came in at about $4.8 million, roughly half of the previous election year when National managed to net an impressive and unprecedented $10m. Every party saw a drop following the election year spike.

Wood said, as National president, their 2026 fundraising campaign was on track to deliver a strong war chest with which to fight and win the election.

The grumpy mood and poor polling, suspected commentator Trish Sherson, was likely a protest signal rather than the result we’ll see at the next election; a warning to the Government - and National - to do better.

“What is interesting and different about the time we’re in right now is that for most business people in New Zealand, they have never been through a recession this long and deep. We’re into year six of six very hard years.”

But there was too much reactive tinkering, not enough of a coherent set of solutions, no legacy focus, and the Government wasn’t showing political courage, said Sherson.

Like many other democracies, she added, we are currently at the mercy of the “isms” in politics - populism and short-termism.

“There’s a great old saying, ‘You see in others your own worst traits’.

“So, as voters, a lot of the stuff we blame politicians for, for being short-term, for being populist, are actually the things that as voters we are guilty of.

“We are literally thinking moment-to-moment and that drives political behaviour.”

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