Going For Growth?

Mr Mojo Rising: Economic growth is possible, Christopher Luxon reassures us, but only under a government that is willing to get out of the way and let those with drive and ambition get on with it.

ABOUT TWELVE KILOMETRES from the farm on the North Otago coast where I grew up stands the Brydone Monument. Constructed atop Sebastopol Hill, the Oamaru stone monument memorialises Thomas Brydone’s pioneering role in exploiting one of the great industrial innovations of the Nineteenth Century – refrigeration.

It was the consignment of sheep and lamb carcasses from the Totara Estate’s slaughterhouse, and loaded into the SS Dunedin’s refrigerated hold at Port Chalmers, that departed Otago Harbour on 15 February 1882. Ninety-eight days later, those same, frozen carcasses were unloaded in England. In today’s money, that single Totara consignment returned Brydone’s employer, the Australian and New Zealand Land Company, a profit of $200,000.

In the absence of an innovative breakthrough as transformative as refrigeration, Christopher Luxon’s energetic promotion of economic growth rings a little hollow.

In the century that followed Brydone’s original 1882 shipment, this country’s economy expanded enormously. Refrigeration not only rendered the raising of sheep and cattle for slaughter profitable, it more-or-less created New Zealand’s dairy industry. In historian James Belich’s memorable metaphor, it created a 16,000 kilometre-long protein conveyor-belt from the farm gates of New Zealand to the ports – and, ultimately, the tables – of Great Britain.

Refrigeration not only made billions for the largely British concerns that oversaw New Zealand’s economic evolution in the Nineteenth and Twentieth Centuries (fair enough, it was their capital that made it possible) but also formed the material foundation upon which New Zealand’s colonial society and culture was built. Our national character, forged on the owner-operated family farms that refrigeration made economically viable, would have been very different without it.

Is there an equivalent industrial innovation which today presents itself to those with capital to invest as ideally suited to New Zealand?

The disruptive innovation that immediately springs to mind is Artificial Intelligence. In New Zealand, however, the potential of AI would appear to lie in the human labour it replaces. In sharp contrast to refrigeration, AI looks set to get rid of jobs – not create them. Compared to New Zealand’s flesh and blood economy, an economy evolving out of AI would be a much more ethereal affair. Certainly, it is difficult to envisage the AI equivalent of a freezing-works.

Still, the world in which AI promises to play an increasingly vital part may see in New Zealand a secure, faraway location, plentifully supplied with the cheap, climate-friendly, and renewable energy supply needed to power the colossal computing resources AI demands. From farming sheep and cattle, could New Zealand become an energy farm for the tech lords of the Northern Hemisphere?

Luxon’s forward vision fell short of confronting that possibility. Instead, the Prime Minister homed-in on two economic sectors: tourism and education. Sadly, his goals for both would appear to embrace nothing more than the restoration of the economic status quo ante.

His ambition for the tourism sector is “more”. More bums on the seats of tour busses; more budget accommodation; more huge crowds at New Zealand’s premiere attractions; more pressure on an already inadequate infrastructure. His Labour predecessors wanted fewer, but richer, tourists. Unsurprisingly, perhaps, Luxon, the former CEO of Air NZ, is looking for an increase in tourist numbers.

“Mexicans with cell-phones” was how American producers described the Kiwis who staffed New Zealand’s film industry in the 1990s. How will investors describe the workers in Luxon’s low-wage, low-skill, tourism sector of the 2020s? “Filipinos with cash-registers.”

More bums on the seats of the nation’s lecture theatres is also what Luxon is looking for in the education sector. Full-fee-paying overseas students, the golden geese of the pre-Covid era, returning to these shores in ever-increasing numbers: that is what former health minister, now universities minister, Dr Shane Reti, is being asked to deliver. Such is the fate of this unusually intelligent and thoughtful politician: to be asked to do things that are not only impossible, but stupid.

Insufficient funding, compensated for by the financial contributions of overseas students, is steadily wrecking New Zealand’s universities.

Charging students for their tertiary education may have been justifiable when universities were basically finishing-schools for the ruling classes. In modern, highly-complex, societies and economies, however, user-pays is deeply subversive of the crucial role higher education is expected to play in refreshing and reinvigorating the nation.

Supplying credentials in return for a hefty sum of money transforms students into customers. Unfortunately, when it comes to the arts and sciences, the customers are not always right. Pretending they are undermines the entire meaning and purpose of a university.

As is the case with tourism, the tertiary education sector would benefit from fewer but better students. When tertiary education is state-funded the whole of society becomes the universities’ customer, and the quality of the knowledge and skills imparted, rather than the quantity of degrees awarded, becomes the sector’s primary goal. Graduates are thus reassured that not only do their qualifications possess genuine academic value, but so, too, do they. Indeed, “the best and the brightest” will be viewed by their fellow citizens as crucial to the social and economic development of their country.

But, this is not the state of mind in which the nation finds itself. New Zealand has spent the last 40 years telling its citizens that, barring the handful of social services its political class has – so far – been unwilling to dismantle (although David Seymour and Act are up for it) they are on their own.

If you purchased your tertiary education, and are still paying off the necessary loans, then the resulting qualification is yours, and yours alone. If somebody overseas is willing to pay you more for it than a New Zealand employer, then you are perfectly entitled to take up their offer. What is New Zealand, after all, but a name on the cover of a passport?

There is nothing in Luxon’s 2025 State of the Nation address suggesting than he regards this rugged and morally unimpeded individualism as a cause for government concern. On the contrary, it is precisely the “mojo” made manifest in such clear-eyed selfishness that he is so eager for New Zealanders to recover and display. Economic growth is possible, he reassures us, but only under a government that is willing to get out of the way and let those with the drive and ambition needed to succeed get on with it.

Luxon would have loved Thomas Brydone’s mojo. By all accounts he was a burly, bruising, bully of a man who got things done and wasn’t too particular about how. The men who worked in the Totara slaughterhouse fought heat, filth, stench, flies, and exhaustion to get those carcasses to Port Chalmers on time. Their efforts may not have been deemed worthy of a monument, and the quantum of their “profit” went unrecorded, but they, too, had mojo. Except the mojo of Nineteenth Century New Zealanders was very different from the Twenty-First Century mojo that Luxon prizes.

The extraordinary expansion of Europeans across the globe in the Nineteenth Century reflected something much more profound than mere demographic pressure. It was driven by a desire to create a new home for themselves and their descendants. A home very like the home they had left, but stripped of the evils that were driving them from it. These new homes – in Canada, the United States, Australia and New Zealand – may have been built with the capital of the elites they were fleeing (and upon the bones of indigenous peoples) but they were constructed differently, and in the name of objectives that were not exclusively commercial.

To have mojo in 1882 a New Zealander had to be a strong individual, but not an individualist. The great attraction of refrigeration wasn’t just its immediate profitability, but the vista it opened up of a national home that was prosperous, and growing constantly in confidence and ambition. A nation that would be better tomorrow than it was today. To have mojo in 1882 you had to be driven by dreams a lot bigger than yourself.

When I was a boy, a stand of tall trees surrounded the elegant homestead of the Totara Estate. John Macpherson, who acquired the property in 1906, and farmed it until his retirement in 1920, would never have seen them attain their full height and splendour. He planted them anyway.

This essay was originally posted on the Interest.co.nz website on Monday, 27 January 2025.