25 August 2025
What is happening to the economy? Reader comment from Bryce Edwards Integrity Institute substack
A large section of the commentariat assumes that the economy is behaving differently because the government is not using its economic levers in the time-honored ways.
It may be true that the government is doing things differently. It is not necessarily true that to revert to the old ways would change the outcome.
The New Zealand economy is behaving differently. To put it another way, a structural change is taking place.
Residential property prices have slipped, and show no inclination to rise. For an economy which is "a property market with bits tacked on" in Bernard Hickey's memorable albeit rather exaggerated phrase, that is a crucial about turn. It is quite possible that this marks the end point of the rising residential property market, a development which Chris Bishop welcomes (after all it makes sense to welcome an uninvited guest who cannot be turned away from the door) while the rest of the political establishment stands aside dumbstruck.
However neither Bishop nor anyone else have a plan to deal with the structural change in the New Zealand economy which is being manifest in the property market. Military spending is being escalated at a rate which suggests either that there is no problem ("the money will be there") or that there is no solution ("everything is coming apart, so we forget about trying to maintain a coherent first world society and build an enhanced military force as the solution to everything").
Fonterra's abandonment of value added processing indicates the same state of mind, and almost overnight the commentariat which had been trained to tell us that added value was the only way forward for the New Zealand economy are now telling us that such value adding operations are like an albatross about the economy's neck.
So over the next few years look forward to a flat property market, stalling GDP, dithering politicians, investors bailing from agricultural and forestry processing operations, small and medium service industries failing, and media commentators describing every self-administered blow to the economy as well considered and a "good thing in the long run".
For a brief period of its history New Zealand seemed like it was becoming a proper nation. In 1947 it became formally responsible for its own foreign policy. Over the next 35 years there was a concerted program of industrial development. Hydro and geothermal electric power generators, pulp and paper mills, large scale sawmills, an oil refinery, petrochemical industries, a steel mill and secondary manufacturing of domestic appliances, electronics and light aircraft were added to the traditional industries based on processing of wool, meat and dairy products.
A distinctive Pakeha culture took root in the works of writers like Sargeson, Frame, Shadbolt and Gee, visual artists like McCahon, Hotere and Binney, film makers O'Shea and Hayward, and historians Airey, Oliver and Sinclair. The Maori renaissance had its beginnings in the same era. The Maori who went to primary school in the fifties and graduated from university in the seventies were not just reacting to colonialism. They were responding to the beginnings of a new nation which was still being shaped by its colonialist past but was assuming its own independent identity and which was not intrinsically hostile to Maori aspirations. At the same time, in the third quarter of the twentieth century New Zealand was becoming a more coherent and equitable society.
This process of emerging nationality had its antecedents in the first half of the twentieth century, and was continued in various forms into the later twentieth century, but by the end of the Muldoon era it had effectively run its course.
From then on New Zealand doubled down on colonialism. Everything, including the creative arts, became oriented towards global markets in commodities, capital and labour. The cinematography of O'Shea and Hayward was succeeded by the slicker but culturally empty Wellywood productions of Peter Jackson, funded by global capital and designed for global audiences. Massive indiscriminate immigration changed the character of the country. The pace of industrialization slowed, stalled, and then reversed. The idea of an independent foreign policy gradually lost currency. Maori were marginalized in a way that first seemed benign, and is only now being exposed as hostile and even contemptuous.
The end result is that New Zealand in 2025 is more thoroughly colonialist than at any other time in the past century. It depends on foreign markets for all its needs. Capital, consumer goods and even basic food items. Its own primary production, increasingly limited in range, is overwhelmingly dependent on foreign markets. It has given up any pretense of having an independent foreign policy and struggles to recognize its own culture.
But has it worked? New Zealand is now wracked with social dissent while at the same time facing an economic crisis which is structural in nature. Infrastructure in health, education, energy and transport which was world class at the end of the nineteen sixties is now unable to cope with demand and on the verge of collapse. The unconditional surrender to global capital and global culture has been a disaster. Colonialist governments can see no way out of the quandary. Their only policy is more of the same. More of the policies that have failed over the past decade or more. That means more rough times ahead.