The New Future of Kiwi Capitalism – The Post

The Post

New Zealand’s two major political parties, National and Labour, are losing popular support. The latest 1News Verian poll had a combined total for both parties of only 61 percent, among the lowest since the introduction of our MMP electoral system.

Their polling weakness reflects a deeper failure: neither party has provided compelling economic answers to the country’s long-term challenges.

People are frustrated with NZ’s left for confusing more government spending with the delivery of quality public goods, for pretending that redistribution can provide abundance for all, and for equating centralisation with state capacity.

There is equal frustration with NZ’s right for confusing fiscal austerity with economic growth, deregulation with productivity, and small government with better government.

Neither approach has worked. Successive National and Labour governments have left us with a high cost of living, sluggish economic growth, shallow capital markets, fiscal pressures from population ageing, and low savings.

That is why National’s recent announcement on compulsory KiwiSaver matters. It is a courageous admission, from our largest centre-right party, that market forces and voluntary savings alone cannot solve our problems.

The political revival of our major parties requires them to think beyond their own conventional wisdom. A distinctly new reformist agenda is needed, building on the best of competitive markets and personal responsibility, while using strong institutions to support universal savings, productive investment and broader ownership.

Compulsory KiwiSaver is not merely a retirement policy. It comes with other implications. It points to a more fundamental question that neither party has answered: “what kind of capitalism should NZ build for the next generation?” The answer is influenced by our economic inheritance, which both parties still operate under.

During the eighties and nineties, Finance Ministers Roger Douglas and Ruth Richardson, under Labour and National governments, oversaw the dismantling of an exhausted protected economy. They achieved successes – averting a currency crisis, lowering inflation, restoring fiscal discipline and opening the economy.

But their reform style also caused serious damage. Welfare spending was cut during a recession. State-owned assets were sold, which caused greater market concentration. The cost of living rose. A third of the population with no savings were locked out of high-asset markets and left to their own devices.

The historical mistake was to turn a necessary period of liberalisation, designed for a specific crisis, into a permanent “catch-all” neoliberal prescription for every problem.

Even though our country performed reasonably well in the OECD afterwards, we failed to match Australia’s economic growth – let alone economies like Singapore and South Korea.

Unlike New Zealand, Australia never treated market liberalisation as the whole economic project. Instead, it only marked the start of a broad national development strategy.

By combining gradual market reform with compulsory superannuation in 1992, Australia successfully turned wages into a savings pool for investment. The result is now AU $4.5 trillion under management.

New Zealand liberalised. Australia capitalised.

That is the missing element of our reform story. We never built an equivalent national savings architecture to create a deep pool of domestic capital to support productive investment and broaden wealth to include those left behind. Without deeper domestic capital markets, it is harder for new firms to scale, challenge incumbents, and place pressure on concentrated sectors.

As presciently analysed by former Reserve Bank Governor Graeme Wheeler, New Zealand relied too heavily on housing, foreign capital, immigration, construction, tourism and primary exports as the engines of growth. That model is no longer enough.

Compulsory KiwiSaver will not solve every problem, but it marks a departure from the old economic reflexes that have dominated National and Labour thinking. It is neither old-fashioned socialist nostalgia nor libertarian fantasy, but the beginning of an asset-owning capitalism in which everyone shares.

For younger New Zealanders, this matters enormously. Generation Z and young Millennials are inheriting unaffordable housing and scant savings, whilst being asked to fund an ever-larger number of elderly with higher taxes. They are being asked to pay more of the future bill without being given the tools to own part of that future.

Universal KiwiSaver does not fit neatly under either old-fashioned ideology. It may not be the end of the debate, but it does symbolically mark a new future for Kiwi capitalism.

Leonard Hong is an economist based in Auckland who has a Master’s degree in International Political Economy from the Nanyang Technological University, Singapore (2024). He is a leadership network member of the Asia NZ Foundation, an executive member of the Korea-New Zealand Business Council and a former adviser to former Minister of Commerce Hon. Andrew Bayly

Why Singapore matters to New Zealand right now

For many New Zealanders, Singapore may still feel like a stopover city or a gleaming business hub. But as global tensions expose just how vulnerable small economies can be, the relationship is taking on much greater significance. Drawing on his own experience studying in Singapore, Leonard Hong explores why this city-state has become one of New Zealand’s most important strategic partners, and what Prime Minister Christopher Luxon’s recent visit reveals about trade, trust and resilience in an increasingly uncertain world.

When I was a postgraduate student at Nanyang Technological University in 2023, I had an interesting realisation. My Singaporean friends, when they learned I was a Kiwi, would often recall their time in Matamata visiting Hobbiton or talk about following the All Blacks from Singapore. Some also reminisced about past trips to Queenstown and Milford Sound.

What stuck with me, however, was how many Singaporeans described Kiwis as “very friendly.”

Leonard with his friends in Singapore. Image credits – Leonard Hong/AMC

In a more uncertain world, the relationship between our two countries is becoming increasingly important to our economic security and resilience. Singapore is one of New Zealand’s closest and most trusted partners outside our Trans-Tasman relationship with Australia.

Recent tensions in the Middle East and pressure on global energy routes have reminded New Zealand how exposed we are to disruptions far from our shores. In an increasingly fragile and unstable global economy, New Zealand needs strong international partners that share our values and can support one another in times of crisis. Both countries believe strongly in a credible multilateral system that upholds the rule of international law.

Singapore matters to New Zealand not only because it is wealthy, well governed, and strategically located, but because it is a partner we can rely on in a world where shocks are becoming more frequent. Fuel, food, shipping routes, supply chain resilience, defence cooperation, and diplomatic trust all underpin this bilateral relationship.

What’s Actually at Stake in This Visit

It is a special relationship, not only at the government-to-government level, but also through business, education, tourism, and people-to-people ties. We saw this directly in the warm rapport between Prime Ministers Christopher Luxon and Lawrence Wong at the Singapore-New Zealand Leadership Forum last week.

Closer ties at all levels, including through Track II diplomacy, will only benefit both countries in the years ahead.

In trade, the two countries complement each other well. New Zealand’s abundant natural resources allow us to provide daily essentials, including dairy, meat, and even water. Singapore, by contrast, has developed world-leading industries such as advanced manufacturing, logistics, and petrochemicals, built on human capital and innovation.

Crucially, New Zealand imports 33 per cent of its refined fuel from Singapore, and Singapore is our fourth-largest trading partner. Meanwhile, 28 per cent of Singapore’s dairy imports and 14 per cent of its food imports come from New Zealand.

We are a critical partner for a city-state that relies almost entirely on international trade for its survival. Both countries depend on one another for economic security and essential supplies, as recent concerns over the Strait of Hormuz have demonstrated.

The Agreement on Trade in Essential Supplies (AOTES), announced by the New Zealand and Singapore governments, may seem like a technical arrangement, but it matters. It gives legal weight to a simple idea: in a crisis, trusted partners should keep essential goods moving.

The agreement creates a binding framework to help keep supply chains open between the two countries. More importantly, it builds on the trust we have developed over decades and provides legal assurances that our two small, open economies can continue to thrive in an increasingly uncertain world.

Many New Zealanders admire Singapore’s infrastructure, public administration, savings system, and long-term planning. Image credits – Leonard Hong/AMC

How Singapore Might Be Viewing New Zealand

From my observations, Singaporeans see New Zealand as a close and trusted partner with whom they have maintained diplomatic relations for more than 60 years.

As Singapore’s Prime Minister Lawrence Wong put it: “Singapore and New Zealand share many strategic perspectives. We have long seen the world in similar ways. We believe in openness and cooperation. Over the years, we have built a deep reservoir of trust. And we do not just speak about principles; we act on them.”

Both countries also have qualities from which the other can learn.

Many Singaporeans see New Zealand as a society that places greater emphasis on wellbeing, life satisfaction, and quality of life. Our natural beauty, lakes and mountains, and rich indigenous heritage through Te Ao Māori are often viewed as culturally dynamic and inclusive.

New Zealand’s open spaces, slower pace of life, and strong education system appeal to Singaporean families seeking a different lifestyle balance. Singapore, in turn, offers world-class institutions such as the National University of Singapore, a highly regarded civil service, and leading financial institutions like DBS Bank.

At the same time, many New Zealanders admire Singapore’s infrastructure, public administration, savings system, and long-term planning.

The relationship works partly because each country sees something in the other that it can learn from.

Leonard with Professor Kishore Mahbubani,  Distinguished Fellow, Asia Research Institute at National University of Singapore

What This Could Mean for the Relationship Going Forward

In recent years, Singapore’s economy and society have attracted growing attention in New Zealand. I have often advocated for compulsory KiwiSaver by pointing to Singapore’s highly successful Central Provident Fund savings system.

Following his visit, Prime Minister Christopher Luxon noted that New Zealand could learn from the Singapore Story, particularly in areas such as infrastructure and urban development.

Any lessons, of course, would need to be adapted to New Zealand’s own democratic, social, and institutional context.

The relationship between the two countries is likely to evolve on two fronts.

First, governments, both current and future, will continue identifying policy lessons that can help New Zealand remain economically competitive and strengthen ties with one of our most important partners.

Second, the partnership will deepen through trade agreements and closer alignment on foreign policy.

And Importantly, Why People Here Should Care

New Zealanders should care about Singapore because it is one of Asia’s most successful economies and one of our most important strategic partners.

Last year, the two countries celebrated 60 years of diplomatic relations, and the partnership is likely to grow stronger as both small, open economies navigate major geopolitical headwinds.

For many New Zealanders, Singapore may still feel like a stopover, a business hub, or a place admired for its efficiency. But it is much more than that.

It is one of our most important partners in Asia, a country that understands the vulnerabilities of small, open economies and a reminder that prosperity depends not only on markets, but also on trust, preparation, and resilient institutions.

Singapore and New Zealand are not just friendly countries. We are two small, open economies trying to remain secure and prosperous in a more uncertain world.

In an era of greater geopolitical risk and increasingly fragile supply chains, Singapore is no longer just a useful partner for New Zealand. It is a strategic one.

Leonard Hong is an experienced political economist with a focus on macroeconomics, international economics, urban development and public policy. He has a Master’s degree in International Political Economy from Nanyang Technological University in Singapore. He is a Leadership Network Member of the Asia NZ Foundation and NZ Prime Minister’s Scholar for Asia.