MBIE ‒ success, failure or something in between?
Saturday, 11 July 2026
With the newly merged Ministry for Cities, Environment, Regions and Transport (MCERT) up and running, Julie Jacobson looks back at mega-ministry MBIE to see if it provides a road map or a warning.
There was no mucking about. Asked whether the country’s first mega-ministry had been a success, subtlety went out the window.
No, said the former Government minister, who shall remain nameless.
“MBIE was so f…ing big it was never going to work.”
Its unwieldy size, extra layers of bureaucracy, fragmented management layers and accumulation of disparate regulatory functions left it managing rules rather than shaping strategy. Instead of becoming a powerful economic counterweight to Treasury, it evolved into a competent administrator of regulation but with weak, unfocused influence over major economic debates, they said.
Read more:
Wellington Water, Wellington City Council and the weeping home owner
The man who’s investigating Wellington’s $600k library website fiasco ‒ for free
In their time as a minister, they could recall only one significant policy win.
“I know [then minister Steven] Joyce wanted it to be a ministry that could drive the economy forward, but that never happened.”
That each arm of MBIE (Ministry of Business, Innovation and Employment) didn’t share certain systems was another failure. The efficiency gains of sharing back‑office systems ‒ especially IT ‒ across departments was obvious, though shouldn’t be used as a pretext for centralising power.
“I’m no fan of the big ministries.”
They are not alone in highlighting the flaws of the agency known in some circles as the “death star“. As this year’s model ‒ the Ministry for Cities, Environment, Regions and Transport (MCERT) ‒ kicks into life and the ruckus over Immigration’s $33 million border security system kicks off, commentary has once again turned to the value, or otherwise, of the so-called super agency.
Launched in 2012, MBIE brought together the existing functions of the Ministry of Economic Development, Ministry of Science and Innovation, Department of Labour and Department of Building and Housing, the latter now part of MCERT.
As its website notes, it is the Government’s lead agency for microeconomic policy, responsible for driving economic success through innovation, investment, science and technology, energy security, and regulatory systems.
With a staff of more than 6000, reporting to about 20 ministers it is, literally, New Zealand’s Ministry of Everything. As such it has a hand in many pies ‒ from fire safety in boarding houses to asbestos-tainted play sand, from space to science to tourism, hospitality, regional development and the screen sector.
And that, says The New Zealand Initiative’s Oliver Hartwich, equals a recipe for disaster.
Hartwich argues the most damaging structural flaw lies in the ministry's governance and the fact it reports to so many different ministers simultaneously.
“I think David Seymour actually joked on that when he gave a speech last week. He said he was a rarity in Cabinet in that he was only one of [a tiny handful] of ministers who don't actually have anything to do with MBIE.”
That fragmented leadership created an accountability void, he said, similar to merging a number of companies into one but keeping all of the CEOs ‒ nobody can properly steer it, no-one can make the big decisions, and the entire organisation becomes paralysed.
Inefficient processes saw projects dragging on for years, decisions taking months to reach ministers, and the same work being redone instead of real progress being made.
Staff numbers were well out of whack. As an example, he said, the Education Ministry in North Rhine-Westphalia (a German state of 18 million people, where education is handled at state level) employed about 360 people versus roughly 4000 in New Zealand’s equivalent.
Transparency was another issue, Hartwich said, noting that in Germany each ministry provided an organisational chart on its website, listing ranks and direct dials down to executive assistant level. Here, basic details about organisational structure, departmental responsibilities and employee distribution remain unavailable to the public, creating an environment where institutional problems go undetected and uncorrected.
Despite the many criticisms, however, Hartwich saw some positives in merging functions, but at lesser scale than MBIE, and as long as there was also consolidation of ministerial oversight, so a dedicated minister who could give it their undivided attention.
“I can see the logic behind MCERT, that kind of makes sense, but at least then also merge the ministerial portfolios, and say, OK, and here’s a minister now in charge of that ministry, and there’s a direct line.”
Tears and strong man politics
A former staffer, who worked at MBIE for four years, has described days loaded with meetings ‒ so many that they were lucky if they managed two hours of work ‒ and colleagues in tears, “utterly overwhelmed” by a toxic work culture and poor management.
“I had to do a lot of like massaging and hand holding, and the problem was it didn’t stop … there was a real turnover of people who were leaving very unhappy. We lost a lot of institutional knowledge and capability.”
Unlike other areas they had worked in, such as Treasury which had a relatively flat structure, MBIE operated with five to six management layers, making decisions on even simple matters difficult. There were multiple directors, deputy chief executives, and general managers, all frequently disagreeing.
The lack of clear governance created a vacuum that leadership filled with what the insider calls “strong man politics”. Rogue directors began running their own programmes without accountability, competing with one another rather than co-ordinating.
There had been three restructures in the time they were there, with frustration around clear roles and accountability becoming so heightened that at one stage teams had “pushed up to the leadership that they needed to solve the governance issues around the policy work”.
Nothing happened. “For me it was the most dysfunctional [agency] in terms of governance I’ve ever seen. It was impossible to get decisions made. There was a lot of talking.
“It was very difficult to get a piece of work signed out or actually finished. Something that would take me a few weeks to get done, and then maybe a month to get it out, took six months to longer, simply because it was going up sideways, coming back down, going back up, coming back down.”
They described tribal, in‑group/out‑group behaviour both between and within agencies. Different teams treated each other as opposing factions rather than colleagues. When one policy analyst pushed to have the science team actually meet and collaborate with the economics team for the first time since both units were established, they were reprimanded for stepping on someone else’s turf.
“Because it’s so big, one team talking to another team is really difficult, talking to another part of the same floor is even more difficult, and it’s even more difficult to talk to a team two floors away.“
Their advice for the new “mega” ministry? Firstly, pick a CEO that has subject matter expertise, not just generic “people skills”.
“The CEO will need to work with at least three divergent cultures with self-selected population groups that are at odds with each other and not aligned. [They] will need a lot of subject matter expertise and vision to benefit NZ Inc to align it all, which will likely occur with a lot of friction.”
It should establish a flat structure to avoid the governance mess and poor authorising environments seen in line/sector agencies.
“It needs a devolved culture that attracts and empowers experts to join, collaborate and advise with a mandate. Avoid generic managers engaging in dilution of advice and protective culture.”
Another former staffer was considerably less hostile towards his former employer, saying that while there were definitely some problem areas, “overall” MBIE worked.
Larger ministries often got more bang for their buck due to having more resources and purchasing power when it came to third party providers.
He agreed that getting the culture right early was critical.
“MBIE is similar to MSD [Ministry of Social Development] in that it has several different branches inside it, but they don't have the same profile as a Work and Income or a Study Link. Some of those branches are dysfunctional (Immigration), some work incredibly well (Labour, Science and Enterprise).
“I think where MBIE works best is that it groups what would be very small policy agencies together, and provides admin oversight and support. Where it doesn't work well is with the larger units that are probably big enough for their own department. They have to have a bit of an identity and culture; for MBIE to reach its full potential those areas need to be a bit more open to change.”
The Cunliffe report card
David Cunliffe was the Labour Party’s economic development spokesperson at the time MBIE was launched. He offered both bouquets and brickbats when it came to analysing its performance.
Highlighting the challenges MBIE faced ‒ including inefficiencies, lack of cohesion, and the failure to meet productivity growth targets ‒ Cunliffe also pointed to MBIE's contributions to infrastructure development and regional growth.
That said, he was critical of successive governments for not tackling New Zealand’s structural problems, arguing that on productivity and long‑term reform both Labour and National had “tinkered while Rome burns” and there had been no serious policy from either of the main parties.
Despite some very capable, high-calibre senior leaders over its 14 years in existence MBIE’s success had been varied, Cunliffe said.
“MBIE was supposed to power up economic productivity and labour productivity. Right now I’m looking at a graph [which shows] New Zealand has continued to lag further, and further and further behind the small, advanced economies … in relative terms we’ve gone backwards.”
The country was also 48% below the OECD average for capital intensity, so NZ Inc gets 1/5 for productivity, with MBIE having to “take a share of the score”, Cunliffe said.
On the other hand the ministry had done a “sterling job” on implementing Shane Jones’ Provincial Growth Fund initiative, while regional growth, though a “little patchy and probably not through any fault of theirs”, had enormous untapped potential.
“Because place matters, and an economy is like a matrix where sectors and places collide ‒ dairy, Waikato; forestry, Rotorua; seafood, Nelson. MBIE has, under Kānoa [the regional economic development and investment unit] been a good champion of that, so I’d probably give them three out of five for that.“
Infrastructure also received the thumbs up, with the success of the Infrastructure Commission and the bi-partisan 30‑year infrastructure strategy both positive signs for the future, according to Cunliffe who awarded a 3/5.
Innovation was a “partial success story”; inputs were up, but outcomes and productivity impact lagged, so he gave that a 2.5 to 3/5.
Ultimately, he said, MBIE had been led by some “individually excellent” public servants, but its performance was “patchy” and lacked cohesion. “I don’t think it’s saved anything much by being brought together.”
Mr Fix-it
Steven Joyce, the then National Government’s “Mr Fix-it”, was the chief architect of MBIE.
Its formation, he explains, was the result of the Government’s frustration at its inability to get traction in the macroeconomic space. Consolidating four small, individually struggling entities ‒ MED, the science ministry, the Department of Labour and the Ministry of Housing and Development ‒ hopefully allowed the Government to create better-resourced, more cohesive departments that could work collaboratively while saving money and maintaining distinct expertise in their areas.
“It wasn’t just a merger for the sake of it. There was a clear need to do something, and we had to act on it.”
In its early years, the ministry did deliver some meaningful achievements, vindicating in part the merger. Those wins, says Joyce, were in science funding improvements and in ICT/broadband.
Another significant success was creating the regulatory environment that allowed New Zealand's space industry to develop, a small but strategically important initiative that demonstrated the ministry's ability to focus resources across departmental boundaries.
The structural advantage of amalgamation became clear when a particular issue required extra attention, he said. The ministry was able to mobilise staff from across its divisions to provide surge capacity, then redeploy them elsewhere as priorities shifted.
Examples included the Pike River disaster response and the development of health and safety law policy.
Conversely, as successive governments assigned the ministry a growing array of responsibilities it lost the flexibility that had made it effective, Joyce says.
“From about 2018 it was just asked to do too many things and grew too rapidly without strong enough oversight. It grew like Topsy. During Covid particularly there was a rapid expansion of its mandate and responsibilities ‒ running MIQ for example ‒ so it was given a whole bunch of things it was never designed to do.
“As a result it ended up quite bloated in size, and I think quite confused as to what its mandate was … the number of ministers increased, which frankly just meant that it grew beyond what was sensible.”
When MBIE was set up, staff numbers were cut to save money while building capability, Joyce said. Over time headcount had expanded well beyond what was necessary.
That’s backed up by Treasury figures that show Treasury MBIE full-time equivalent numbers had grown by 87% and expenditure by 90% since 2017.
“We didn't have a shortage of staff in any government department when we left office in 2017. That’s a good benchmark and if I was the minister in charge of MBIE, before or after the election, I would be saying, OK, what functions are we doing that we weren't doing 10 years ago? Do we need to do those functions? Are there any others we can stop doing?”
Joyce’s tenure was not without controversy, though the necessary public berating of the CEO following an excessive office fitout that included a $140,000 reception screen and hair straighteners in the bathrooms pales into insignificance when set against the immigration scandal.
Like Cunliffe, he pushes back on the idea that the ministry itself is the problem, instead pointing a not so gentle finger at political decisions and policy choices ‒ “there’s a tendency to blame the agency rather than on who's directing the agency” ‒ and on immigration notes it’s “a regular football … but most of the immigration decisions [are] political ones”.
As for MCERT, Joyce downplays how transformative it might be, but says it’s “a smart move”.
“It won't change the world, and I think it's important to realise that these things don't change the world, but it should make, if it's done well, those parts of government work a bit better.”