PM Luxon Trashes NZ's Passport & smears immigrants who've had to work for it. His Investor Visa is a Con: NZ already has 4th highest Net Foreign Investment in OECD.

When will the PM and his Finance Minister give up the marketing-PR-comms con-jobs they have embarked upon of late that only remind us of the Jacinda Ardern-Chris Hipkins con-jobs? Yesterday the PM told the country that NZ needs more foreign investment - that it is desperately short of these funds. So he's got into the business of selling residency and NZ passports at bargain basement prices. We've joined a bunch of poverty stricken Caribbean islands that run similar schemes. In NZ's case, applicants now don't even need to speak English. What's more, the PM made a mistake in his announcement by characterizing NZ as being short of overseas funds. Its a fact of economics that Net Foreign Investment is equal to the Balance of Trade (difference between exports & imports). When a nation like NZ runs a trade deficit, whereby imports exceed exports, then in order to raise the foreign currency to buy those imports, it must rely on overseas investors buying assets denominated in our dollars, selling their foreign currency in exchange. Out of 38 OECD countries, NZ currently has the fourth largest sized trade deficit, at 2-3% of GDP. That means NZ also has the fourth highest level of Net Foreign Investment in the OECD.

What are the foreign funds currently pouring into NZ dollars buying? Publicly listed stocks and bonds, amongst other assets. The NZ dollar is one of the world's top ten most traded currencies. However, though we already have high levels of Net Foreign Investment, the same cannot be said for Foreign Direct Investment (FDI), where NZ ranks toward bottom of the OECD. The latter is defined as the purchase of an asset in another country that gives the buyer a degree of control rights - typically over 10% of a company - making it different from a portfolio investment, like buying some shares in a big public company. There's a view FDI supports economic growth more than other forms of foreign investment, as it brings technical knowledge & management skills to the host nation.

So what's our beef with the PM, Finance Minister and Immigration Minister's Foreign Investment Visa Announcement? In short, it was (probably intentionally) misleading. It was not aimed at encouraging Foreign Direct Investment. Under both investor categories (see the link above) there's no requirement that one's investment need be FDI. Under the "Economic Growth" category it can either be in a "managed fund", or alternatively a direct investment. Has the government been corrupted by the Funds Industry in NZ? Did it lobby to connect investment in one of their funds to foreigners being gifted a Kiwi passport? Since NZ-based Managed Funds can invest in offshore equities, then foreign investors' money can come into NZ and go straight out again. In the second "Balanced Category" there's a wide range of investments foreigners can make, again with no requirement it has to be a Foreign Direct Investment. Foreigners can buy bonds (private or government), publicly listed stocks, managed funds (again), or new property developments. A "direct investment" is just one of a large range of options. But as we noted, NZ already has the OECD's 4th highest level of foreign (non direct) investments, so why now hand out passports for free to go with it?

My opinion is that lobbying has featured in this announcement. It smacks of a dirty deal whereby local Fund Managers have got around the PM to make this change - so they can slice commissions off their managed funds by telling offshore clients that now an NZ passport will be thrown into the party bag. The PM has trashed the integrity of our passport. These portfolio funds do not constitute direct investments - they bring no technology or skills, contrary to Immigration Minister Stanford's assertions - and NZ already has no problem attracting them. What will be the type of person coming under this scheme? Useless kids of rich offshore families, who can't speak English, bring no skills & expertise, don't work, yet use our health-care, education, and infrastructure for free? All they need do is throw some of Daddy's money into a managed fund run by an NZ Big Bank. Was the cash-in-managed-fund-in-exchange-for-NZ-passport a dirty backroom deal between the PM and the industry? As for the security implications, they are frightening.

Given the mess Labour left, why aren't National & ACT light years ahead in the polls? Its the religious-style libertarian beliefs of their leaders and advisers.

About 10 years ago when ACT was on 0.2% of the vote with turmoil in the party, and on the back of the departure of its leader, John Banks, who was being prosecuted over Kim Dot Com's donations, a friend who worked in ACT's office in Auckland asked me to present at their meetings and help rehabilitate it. The party was under threat of extinction. Two other folks about my age, Jamie Whyte, who became President and David Seymour, back from Canada, were amongst others of the new (non Don Brash - non John Banks) generation who the party drafted in and bet its future on. About that time Roger Partridge and Oliver Hartwich became Chair and Exec Director of the NZ Initiative, which arose from the defunct Business Round Table. I attended their meetings on behalf of a founder of the Round Table. Chris Luxon also attended, as CEO of Air NZ. I remember him presenting a proposal for a bed tax on foreign tourists. The news in 2016 read "Tourism Leader (Luxon) Calls for Bed Tax". Later, in 2023 the news read "Luxon doubles down on Bed Tax Opposition". Why is this history important? Because decisions made then underlie a gaping weakness in the new Coalition and explain why it is behind in the polls today when it should be miles ahead.

During those post-John Banks times, I got to know Jamie. He had a PhD in philosophy from Cambridge University in the UK. His interest was in applying "libertarian" and "classically liberal" philosophies to real-life politics. David Seymour also held a philosophy degree, from Auckland. He was similarly attracted to those philosophies. I was not. When Jamie gave me a lecture one day about the difference between "libertarianism" and "classical liberalism", telling me off for calling ACT libertarian, when he said it was instead classically liberal, my eyes glazed over. A rift developed between me and them. ACT was founded to provide practical economic solutions, often, but not always, using the power of competitive markets, to promote prosperity for all. It was never meant to be a party for the wealthy, who wanted the top rate of tax to be cut, and their big business interests protected. Quite the opposite, ACT began as the Association of Consumers & Taxpayers. Promoting abstract philosophies like "libertarianism" and "classical liberalism" had nothing to do with its formation.

Now here's the thing. As time wore on, a transformation occurred. David discovered taking sides on non-economic moral issues, like euthanasia, freedom to have guns, legalization of drugs, and race, all with a libertarian bent, gave ACT more publicity and attracted enough votes to push it over 5%, compared to rolling out technical economic reform plans of the type folks like me had been doing. But ACT (and National's) pre-election budgets became lame. They could be summarized in a line: cut what they labelled as "waste" and use the cuts to reduce taxes. As if 3,000 years of economics could be summarized in one sentence. Libertarianism and Classical liberalism, which mean nothing to the average Kiwi, also gained traction with National, but behind the scenes. PM Luxon's Economic Adviser, Matt Burgess, who worked at the NZ Initiative, adheres to these philosophies, as do Chris Luxon's other advisers, Initiative Exec Director Oliver Hartwich and Chair Roger Partridge.

And there you have it. National and ACT (and so now the whole NZ government, bar NZ First) acquired an empty non-economic growth policy stance which has little to do with economics and everything to do with philosophy. It is why Finance Minister Willis is lost, with no answers to the nation's stagnation. It is why she has no plan. It is why she ran to Business NZ last week asking them what to do. It is why she runs to the NZ Initiative asking them what to do. It is why the PM runs to his economic adviser Burgess asking what to do. It is why they get no practical answers. National and ACT rejected the proposed, fully costed, shift to mandatory savings that I handed them a decade ago. As libertarians, they had nervous allergic reactions to the blasphemous word, "mandatory". Consequently today nearly a quarter of Kiwis will have no private savings when they retire. Of the one's that do, their Kiwi Saver balances average just $30,000. Meanwhile all Australians have retirement savings accounts, with an average balance of $300,000. National and ACT blew up building wealth for low income New Zealanders. Today the PM and Willis have no idea how to raise funds to pay for the health-care and retirement of Kiwis over the age of 65. They did so in the name of libertarianism and classical liberalism, terms that I still don't know the meaning of, along with 5 million other Kiwis.

Adopting a religious-style philosophy with born-again zeal has cost National and ACT the chance to be 10 percentage points ahead in the polls today, after Labour nearly destroyed NZ. The reason is that few people relate to libertarianism. It gets few votes. In the US, those kinds of parties failed. Why? Because Americans who support smaller government & lower taxes (that is, who tend to vote Republican) don't support libertarian causes like being pro-abortion, legalization of drugs, politicians who are anti-family values and support freedom to do whatever you like in your personal life, as well as the right of a human to choose when to end life (or euthanasia). Many Republican voters find such policy stances offensive. So we're left with a National-ACT coalition that is giving free, competitive markets a bad name; which sides with big business and wants to give it freedom to do what it likes; which doesn't support sensible savings policies that necessarily require some compulsion, since a market failure exists around setting aside funds rather than consuming them now. On health-care, the Coalition is also lost, since the solution involves a mix of government funding - redistribution being a requirement to help those who cannot afford to pay themselves - but combined with public and private provision of services in competition with one another.

This current group of National-ACT politicians lack imagination. They're devotees of taking an impractical pre-reformation, philosophical, religious, doctrinal approach to economics - one nobody who studies the modern subject relates to. They won't be the ones to solve our burgeoning economic problems, despite the PM's pep-talks aimed at raising staff (sorry, "voter") morale, and Willis' determined use of her First Class MA English & debating skills.