Economic Growth Minister Nicola Willis (inset) recognises Wellington has faced a difficult economic period and thinks better local leadership is needed to bring back the capital's buzz.
Economic Growth Minister Nicola Willis (inset) recognises Wellington has faced a difficult economic period and thinks better local leadership is needed to bring back the capital's buzz.
Economic Growth Minister Nicola Willis appears to have conceded some responsibility for Wellington’s grim economic picture as those in the capital spend less, businesses go bust and more people join the jobless queue.
The financial fiasco in the city equates to 177 businesses closing down, Infometrics said in its latestQuarterly Economic Monitor.
Infometrics principal economist Nick Brunsdon said the capital’s struggles “in large part stems from the cuts in the public sector”.
Willis, a lifelong Wellingtonian who was Public Service Minister during the first round of job cuts, told the Herald: “I fully acknowledge that having that restraint in the public sector has impacts in Wellington, there’s just no doubt about that.”
The Public Service Association forecasts approximately 9500 jobs have been lost in the sector due to Government-ordered savings since the end of 2023.
Stats NZ data, meanwhile, show the capital lost 5961 jobs in the year to June.
Capital hits rock bottom?
The old adage goes that it’s always darkest before the dawn, and Brunsdon told the Herald things appear to have hit rock bottom in the city.
“We are starting to grow off that bottom, just at a fairly slow rate,” Brunsdon said, pointing to a 0.2% Gross Domestic Product (GDP) increase for the city’s economy from the previous quarter.
“The June 2025 quarter marks the start of New Zealand’s economic recovery, with economic activity higher than a year ago across nearly all regions.”
Pubic servants on The Terrace in Wellington CBD. Photo / Mark Mitchell
GDP is down -1.5% for the year to the June quarter, compared with -0.8% for the country as a whole.
The number of people on the Jobseeker benefit in Wellington was up 16% in Wellington on last year, compared with 11.7% nationally.
Business counts, meaning the number of business units in an area, is down -2.3% in the capital, a greater drop than the country’s average of 0.9%.
Tourism expenditure was also down in Wellington 0.7%, but did not move from 0.0% growth nationally.
Brunsdon said job losses in the public sector are the key driver of the capital’s economic woes.
Infometrics senior economist Nick Brunsdon.
“Following that, it’s been that sort of halo of private sector that surrounds Wellington’s public sector, it’s professional services, it’s the recruitment agencies that place people, those are the next hits, and then beyond that, we’re seeing those knockbacks through hospitality and retail, which is sort of a bit more peripheral but reflects that broader economic uncertainty from the public sector.”
Willis points the finger at ‘local leadership’
Willis told the Herald it is obvious Wellington is “going through a difficult economic recovery”.
While Infometrics pins the city’s downturn largely on public sector cuts, Willis argued local government leadership is also to blame.
Asked why Wellington appears to be faring the worst, Willis said the city has gone through a difficult period “both in terms of its local leadership and a sense that it hasn’t had a focus of where growth is going to come from”.
“There is some awesome stuff going on in Wellington, world-class tech businesses, financial tech businesses, entrepreneurs, creative people, but what we’re going to need to see is those sectors growing into the future and that’s a bit of a change from the way that things have been.”
Willis said economic growth must come from Wellington’s businesses, not the public service.
She said the Government was elected on a mandate to reduce the amount of money being “ploughed into consulting and contracting, and there’s no doubt that much of that activity was happening in Wellington”.
Nicola Willis at a post-Cabinet press conference at Parliament. Photo / Mark Mitchell
“I think we’re going to need great leadership from the local council, it’s going to need to be an unashamedly pro-business council because to get that buzz back in Wellington, we don’t need such ongoing roadworks and removal of car parks. Even our most successful, long-standing retailers are struggling.
“We need to actually be on their side when it comes to the commercial businesses that pay rates in Wellington, they need to have a sense that they’re getting good value so they don’t choose to move their business elsewhere.”
Wellington’s commercial rates are the highest in the country, with businesses in the city paying an average of $20,000 more than other cities.
As for what can be done, Willis said the city should play to its strengths, pointing to the capital’s world-class film and gaming industry and the tertiary education and research sector.
Luxon hinted at a “total rethink” coming for major events, to draw people into the cities and stimulate economic activity.
Ethan Manera is a New Zealand Herald journalist based in Wellington. He joined NZME in 2023 as a broadcast journalist with Newstalk ZB and is interested in local issues, politics, and property in the capital. He can be emailed at ethan.manera@nzme.co.nz.
