New Zealand’s general election last month saw the New Zealand Labour Party, leaders of the previous coalition government, returned to power in a landslide and given a historic mandate to govern alone.

To fully appreciate this achievement, remember that New Zealand’s proportional system of representation, mixed member proportional (MMP), was essentially designed to prevent single-party governments. So much so that since the first MMP general election in 1996, this is the first time a single party has been able to form a government.

So, what does this seismic shift mean? Surely a sea-change in policy and political direction?

Well, despite eschewing the checks and balances of proportional government for the first time in almost a quarter of a century, Kiwis don’t expect too much to change.

Shake-up of partnerships

New Zealanders chose to reward incumbent Prime Minister Jacinda Ardern and the Labour Party for the previous coalition government’s handling of the COVID-19 crisis.

Their landslide victory is seen as providing a clear mandate for Labour’s policy, and freeing them from having to reach consensus with an often philosophically opposed coalition partner.

Labour’s previous coalition partner, New Zealand First (led by Winston Peters), was a ‘kingmaker’ during the last election, but has not been returned to Parliament. This is largely seen as being due to the party’s increasingly contrary position to an extremely popular prime minister in Jacinda Ardern.

Ardern remains Prime Minister and Grant Robertson retains his post as Finance Minister. Grant Robertson has also been elevated to Deputy Prime Minister, a position previously held by the ousted Winston Peters, with Nanaia Mahuta taking over another of Winston Peters’ other previous role, Minister of Foreign Affairs.

Although able to govern alone, Labour has signed a cooperation agreement with the Green Party of Aotearoa New Zealand. Ostensibly to demonstrate a cooperative approach to governing, this also has the benefit of keeping the Greens close and limiting their ability to oppose the government.

The two Green Party co-leaders, Marama Davidson and James Shaw, have been given the ministerial portfolios of prevention of family and sexual violence and climate change, respectively. These portfolios are outside of Cabinet, however.

What does the election result mean, on the ground and in the real world?

Despite such a significant change in the make-up of New Zealand’s Parliament, it is really a vote for ‘more of the same’.

Pre-election, opinion polls and political commentary suggested public feeling was largely that there would be no major shift in economic policy, regardless of the election’s outcome. Post-election, while we are still waiting for policy to crystallise, there are no indications to suggest we should expect otherwise.

COVID-19 border restrictions notwithstanding, signs from the new Labour government are for a continuation of New Zealand’s outward-facing economic policy, and commitment to an international rules-based system.

New Zealand will remain open for business, continuing to offer the stability and transparency needed for successful international trade and investment, as evidenced by last weekend’s signing of the Regional Comprehensive Economic Partnership trade agreement.

Known for its fairness

Placing great value on the concept of ‘fair play’ and supporting the underdog, Kiwis are immensely proud of New Zealand’s international standing as a country that fosters innovation and, to use an overused phrase, ‘punches above its weight’ internationally in both business and sport.

New Zealand’s reputation as an open, market-led economy, and as one of the world’s easiest and least corrupt trade and investment partners, is firmly entrenched in the national psyche – to the extent that over the past 25+ years, governments of different political leanings have carefully maintained this direction of travel, lest they face the ire of voters.

Stability and continuity

This, along with a three-year term, has encouraged and rewarded centrist parties, creating a stable political system where governments have built on what came before them. There is little automatic dismantling of the previous government’s legacy, unlike overseas.

People can be confident that business/investment decisions made today will still make sense tomorrow, knowing that the rules will largely remain the same.

Within the wider ‘business as usual’ messaging, an increased focus on diversity, the environment, and social issues, especially poverty, has been signalled by the government. This is congruent with the messaging of Jacinda Ardern’s first term, and demonstrated by her handling of the Christchurch mosque shooting, and the pandemic-related impacts and restrictions.

This has resonated well with the people of New Zealand, particularly when juxtaposed against the rise of extremist and populist movements overseas, and the humanitarian costs of COVID-19. The levels of compliance and cooperation during various levels of pandemic lockdown demonstrate, too, that Kiwis are highly engaged.

Social and environmental considerations and outcomes are also becoming increasingly important in business and investment decisions internationally, and Kiwis are keen to see New Zealand take the lead in this area. Having a political system congruent with this should also help New Zealand build an advantage in social enterprise businesses and technologies.

International investments, such as Microsoft’s $100m data centre, show that there is confidence in New Zealand, and people and companies who can choose to invest anywhere in the world are coming to Auckland.

Companies such as Costco, Ikea, Amazon and Netflix are voting for Auckland. International investors continue to benefit from investing in our locally grown technology, from Lanzatech to Rocket Labs and a multitude of smaller tech start-ups.

These then are the factors that are steering us through COVID-19 and have won the world’s respect, and which will help us weather any future global shocks, political or medical.

All of this makes New Zealand and particularly Auckland, as our only international city, a great place in which to live and invest, while still being able to build a global business and have a balanced family life.

 

Find out more

Contact investment specialist Paul Wilkinson to learn more about investing in Auckland, New Zealand.

 

This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Auckland Tourism Events and Economic Development. Auckland Tourism Events and Economic Development disclaims all liability in connection with any action that may be taken in reliance on this article, and for any error, deficiency, flaw or omission contained in it.