An uncharitable view is that Prime Minister Christopher Luxon is doing his best to spike his three top performers. Willis had to deliver Luxon’s tax promises, locking in the structural fiscal deficit.
Her stocks rose this week after Adrian Orr’s sudden resignation as Reserve Bank governor. With Orr giving no explanation, the Wellington rumour mill suggests he reacted negatively to Willis’ firm line against the bank’s spending blowout since his appointment, from $62 million in 2017/18 to $158m this financial year.
Whether that’s true, Willis won back supporters in the business community, made sceptical by the Government’s red ink.
Brown was sentenced to the health portfolio, often seen as political death row, although Helen Clark, Dame Jenny Shipley, Sir Bill English and Chris Hipkins all survived to become Prime Minister.
The spike in Bishop’s road was Luxon passing him responsibility for organising his prime ministerial brainchild of a global investment summit, which opens on Thursday.
The best that can be expected is that Bishop has managed to put some lipstick on Luxon’s pig.
New Zealand has a history of ultimately embarrassing prime ministerial summits – David Lange’s 1984 Economic Summit, bearing no relation to his Government’s policy programme; Clark’s 2001 Knowledge Wave conference, preceding a seemingly permanent decline in New Zealand’s productivity growth; and Sir John Key’s 2009 Jobs Summit, at least delivering a cycleway.
Luxon’s idea was to bring to New Zealand the chief executives of investment companies with which the Superannuation Fund had arranged courtesy calls on his overseas travels. The chief executives, he thought, would then be inspired by his oratory and people skills to invest in New Zealand.
This betrayed Luxon’s background as a salesman without any real experience or knowledge of how funds allocate capital, or even who makes the decisions. In most funds, including our Superannuation Fund, the chief executive is just one cog in the wheel of investment decisions, which are made by mandated investment committees overseen by the chief investment officer.
Moreover, investors don’t put money into countries but into projects. A specialist at investing in, say, ports, doesn’t decide to invest in New Zealand and then look around for which port. They’re interested in receiving credible proposals for port projects, from anywhere, and prefer to maintain a balanced global portfolio to manage geopolitical and other risk.
Such projects must also exceed a minimum value specified in their investment mandate.
When Luxon was finally convinced of this last year, and came to understand his original idea of a rah-rah generic marketing exercise would fail, he ordered immediately investable propositions be prepared.
These remain a closely guarded secret, including from those expected to fly across the world for next week’s extravaganza. But NZME’s BusinessDesk reports the Government has so-far identified only four potential public-private partnerships (PPPs) for the short- or medium-term: redeveloping accommodation at the Linton Military Camp, redeveloping Christchurch Men’s Prison, new court rooms in Waitākere and Rotorua, and a four-lane expressway from Warkworth to Te Hana.
We’d all better hope BusinessDesk somehow has this terribly wrong because if that’s all New Zealand has to offer major allocators of global capital after 16-hour flights from New York or Dubai, our country will forever be blacklisted as a destination for their funds. Not even the 24km expressway would meet most funds’ minimum investment thresholds for construction projects and it isn’t clear these are genuine PPPs anyway, but rather slightly more elaborate construction contracts.
Perhaps revealing hitherto unobserved foresight, Luxon tried passing off his project to other ministers this year. Willis, Foreign Minister Winston Peters and Trade Minister Todd McClay successfully ducked, and the file landed on poor Bishop’s desk.
Given the lack of content, Bishop quickly recognised the event needed to be repositioned as the start of a process rather than its KPIs being about delivering actual investments and deals, even this side of the election. Luxon’s earlier chief executives-only rule was relaxed, so there will be some genuine decision-makers in the room. What was originally a “Global Investment Summit” is now a more-modest “Infrastructure Investment Summit”.
According to the Beehive, the summit – involving Bishop’s already-existing National Infrastructure Funding and Financing company rather than Luxon’s non-existent Invest New Zealand outfit – is now about explaining the details of Bishop’s $204 billion long-term pipeline of mostly unfunded infrastructure projects, his new fast-track consenting process, and Willis’ recent changes to foreign investment rules.
With this longer-term focus, it was crucial that Bishop managed to secure Luxon’s acquiescence to invite Labour finance and infrastructure spokeswoman Barbara Edmonds to speak at the summit, accompanied by senior colleagues, to demonstrate the projects on the pipeline will survive changes of Government.
Fingers are crossed that Luxon will also manage to be statesmanlike in his opening address, and not attack the previous Labour Government or a possible Labour-NZ First or Labour-Green-Te Pāti Māori coalition in the future, however much they deserve it.
The PM must try to understand that New Zealand projects are in competition for capital not only with those in OECD countries, but also with those in countries and provinces he has never heard of.
New Zealand’s small population, low GDP, geographic isolation, extreme seismic risks and increasing vulnerability to adverse weather events have always made us an improbable destination for foreign capital.
It’s worse right now, with global allocators of capital even more averse to risk than usual because of once-in-a-century uncertainties arising from the White House, including potential US tariffs on our food exports and war-scares battering tourism flows.
The last thing Bishop or New Zealand needs is for Luxon to add domestic political risk to potential investors’ calculations by accusing Labour of being closed for business.
It’s irrelevant whether or not he likes saying it or even believes it’s true: His one useful job at the summit is to apply his salesman skills to convince the investors that nothing much would change for them if Labour returned.
He’s then probably best to depart the venue and leave the experts from the New Zealand Superannuation Fund, ACC and the New Zealand private sector to work the room. If you’re a foreign investor, the best due diligence you can do is ask the locals if this is a project they’d be interested in investing in too. No true capitalist relies on a politician’s word.
