Luxon doubles down on failing strategy

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Luxon doubles down on failing strategy

Luxon defends budget-cutting approach to growing economy that isn't working, either to grow jobs or reduce inflation; He says NZ must 'double down' on these 'immutable laws of economics'

Bernard Hickey

Jul 28, 2025

Briefly for all subscribers, the key things to know from Aotearoa-NZ’s political economy around housing, poverty and climate on Tuesday, July 29 are:

Speaking on the first anniversary of tax cuts mostly received by owners of multiple homes, PM Christopher Luxon spent half an hour defending his Government’s record on cost of living, economic growth and homelessness at his post-cabinet news conference last night. He was asked if he was being defensive after fresh figures yesterday showed 27,850 jobs were lost in the last year, including 12,169 construction jobs and 12,140 jobs held by 15-19 year olds. See more below the paywall fold in The Lead, Chart of the Day and Docs of the Day.
Luxon again blamed Labour and slowing overseas growth for the economy’s failure to grow in the second quarter, as recent indicators are showing. He said it was time to ‘double down’ on the the Government’s strategy of cutting spending and debt in order to lower interest rates, which he described as ‘immutable laws of economics.’ Finance Minister Nicola Willis compared the economy to an oil tanker that couldn’t ‘turn on a dime,’ saying she wouldn’t spend and borrow more, although long-time fiscally conservative German Government adopted just such a strategy overnight. See more below in Geopolitics Pick ‘n Mix.
The Salvation Army and housing charities launched their half-yearly update of their National Homelessness Data Project this morning, which showed the Ministry of Social Development’s (MSD) rejections of applications for emergency housing rose 386% in the last year, 14 in every 1,000 people lived in uninhabitable situations and 1 in a 1,000 was living without shelter. See more in Docs of the Day.
Youth homelessness campaigner Aaron Hendry describes in the Quote of the day below how he was seeing tamariki and kuia living freezing on campsites in Taranaki. “If this is the track we’re on – we need to derail it,” he said.
Today’s must-read is Claudette Hauiti’s piece for Waatea News on homelessness, which includes Christopher Luxon’s responses to her questions in last night’s news conference. See more in The Lead below, Quote of the day and Docs of the Day below.
Today’s must-read is from Bella Craig for RNZ: Kiwi workers wanted: 'The north of Australia is a really good option' See more in my Top Pick ‘n Mix below.

Paying subscribers can hear more detail, analysis and commentary in the podcast and video above and get the links and sourcing below the paywall first, along with my full Picks ‘n’ Mixes for this morning. If paying subscribers give it more than 100 likes I’ll open it up for full public listening, sharing and reading later in the day.

The Lead: PM booed and press gallery challenges strategy

Last night’s post-Cabinet news conference appeared to be some sort of turning point in the publicly expressed mood of the nation about the failure of his Government’s economic strategy to improve living costs and deal with homelessness.

He spent the first 10 minutes before questions defending his Government’s policies and blaming the previous Government, which raised questions later about whether he was protesting too much. He was asked about being booed at the netball final over the weekend. His announcement of the banning of retailers from charging fees for using credit and debit cards was lost in the combined blow-back about job losses, cost of living inflation and homelessness.

He then went on to say he was doubling down on budget cuts to lower mortgage rates.

“The most important thing we can do to make you better off is to double down on our long-term economic plan. While our economy grew four times as fast as Australia's in first three months of this year, global uncertainty continues to pose a risk. And that makes it even more crucial to continue pushing ahead with our economic plan.” PM Christopher Luxon in his post-cabinet news conference.

His response to be challenged about the opening monologue is below in full (bolding mine):

Thomas Coughlan: So you're opening remarks for about 10 minutes on the cost of living. Are you feeling defensive on that issue?
Christopher Luxon: No, not at all. No. More just acknowledging for New Zealanders that we have just gone through three years of a recession that's probably been nothing like we've seen since the early 1990s. How did we get here? As I keep saying - we've had to come back to the immutable laws of economics. If you lose control of spending, you lose control of inflation, you lose control on interest rates, put an economy into recession and people start losing their jobs.
It's a known economic prescription that we know how that works and the previous government stuffed that, they crashed that and as a result people are feeling that pain and suffering now.

He was also challenged by Waatea News reporter and former National MP Claudette Hauiti about homelessness. Here’s the exchange:

Claudette Hauiti: Prime Minister, In Ngāmotu, Taranaki and New Plymouth, we found a kuia and her mokopuna in a freedom camping site and advocates in Te Tai Tokarau have counted 6,000 tamariki living beneath the breadline in freezing conditions. How is it that you can allow that to happen?
Luxon: Sure, we understand we've got some real challenges in our housing market. That's why we're trying to make it easier to build more houses so that more people can be accommodated in safe, dry, affordable homes. That's why you're seeing us actually do everything we can to make sure that rents are not going up. We've got stable rents in New Zealand for the first time in a long time. That's why you've seen us take 6,000 people off the State House wait list. That's how we've moved 2,100 kids out of emergency housing into proper homes because we've prioritised them above others to get them to state houses and community houses. We know it's still challenging. Sorry.
We know we've got real challenges in homelessness and no New Zealander wants to see people being homeless. That's why we spend half a billion dollars with other organisations that actually can provide the wraparound support with people who have often got very complex and challenging needs.
MSD is constantly available there for people who need any housing assistance, but we have made progress on getting kids out of emergency motel accommodation, making sure we get the state house wait list down, keep rent stable, and hopefully open up new land so we can get more houses built.

For the record:

The Government announced last month it had abandoned plans to build 3,780 new Kainga Ora homes;
Ministry of Housing and Urban Development (HUD) officials reported to the Government in June (the report was released publicly last week) that homelessness had risen between 25% and 225% in our major cities in the last year after the Government tripled its emergency housing rejection rate;
The Government removed 2,826 or 84.5% of homeless people from emergency housing in motels between November 2024 and May of this year, hitting its target of cutting the numbers by 75% five years earlier than originally planned, although it acknowledged it didn’t know where about 15% of them went; and,
The Salvation Army called this morning on the Government to increase housing supply and funding for homelessness NGOs.

PM Christopher Luxon. Photo for RNZ by Mark Papalii

Quote of the day: ‘Back on track? No. Derail it.’

“We’ve met tamariki sleeping outside in the rain. No shelter. No protection. No one to help them. Some are as young as 11. There’s no safe place for them. The system’s left them behind.
“There is no youth homelessness strategy. No ring-fenced funding. No urgency. This government is playing politics while our kids sleep in doorways.”
“I found a kuia sleeping in a carpark. That broke me. A kuia and her moko in the cold, wrapped in duvets. That’s not just poverty, that’s a national disgrace.
“The government’s spin about tax cuts and GDP growth ignores the basic truth: our tamariki are freezing. Our whānau are freezing. And the people with power are warm, paid, and comfortable.
“If this is the track we’re on – we need to derail it.” Youth homelessness campaigner Aaron Hendry via Claudette Hauiti for Waatea News.

Chart of the day: Hurting the young the most

MusicalChairs via BlueSky: “Recessions throw young people out of the labour market - exhibit one. If we want to avoid another lost decade for young people (and a continued exodus), we need a youth training, education, job guarantee programme. Remember: we keep youth unemployment high to 'prevent inflation'. It's ridiculous.”

My Pick ’n’ Mix Sixes for Tuesday, July 29

My Top Pick ‘n Mix Six

Amy Williams for RNZ: 'We're vulnerable': More women living without shelter in Aotearoa
Bella Craig for RNZ: Kiwi workers wanted: 'The north of Australia is a really good option'
Jess Roden for 1News: 'You've had long enough': Cataract surgery still not equally accessible.
NZ Herald: 'Unparalleled disruption': One in 1000 Kiwis homeless as housing crisis worsens
Claudette Hauiti for Waatea News: Warm in the Beehive, Frozen on the Streets
Ruby Shaw for ODT-$: MP ‘ill-informed’ on seesaw National MP Sam Uffindell has been accused of getting his facts wrong after slamming council spending on a central Dunedin seesaw

The Best of the Rest

Scoops & news breaking this morning

Guyon Espiner for RNZ: Tobacco product tax break extended
Thomas Coughlan for NZ Herald-$: Health NZ considering sending cancer patients to Oz, citing gynaecologist shortage
RNZ: Nurses call strike after latest failed pay negotiations
Matthew Littlewood for ODT: ‘Flaws’ in Waikato med school business case
Charlie Mitchell for The Press-$: No coherent strategy behind freshwater ‘tinkering’, watchdog saysThe fifth overhaul of freshwater policy in 14 years will only cause confusion and delay, Commissioner says.
Cate Macintosh for The Press-$: Lunch orders down as school students reject mealsSchools are ordering almost 10,000 fewer lunches than when the $3 meal regime started. Why? The children don’t like them. And offal is on the way.

Politics

Docs of the Day

The Salvation Army, Community Housing Aotearoa, and Housing First Auckland Backbone, Kāhui Tū Kaha, Christchurch Methodist Mission, DCM and Wellington City Mission released their National Homelessness Data Project half-yearly update this morning.
Stats NZ reported yesterday there were 2.34 million filled jobs in June, up 0.1 percent (3,487 jobs) from May and down 27,850 jobs (1.2 percent) from June 2024.
The Department of Prime Minister & Cabinet (DPMC) announced yesterday 30-80% fees increases for directors of Crown Agents, Autonomous Crown Entities (ACEs) and tertiary education institutions), trust boards, advisory bodies and committees, Royal Commissions, Public Inquiries, Government Inquiries and Ministerial Inquiries, and statutory tribunals: Cabinet Fees Framework for members appointed to bodies in which the Crown has an interest
Full video of PM’s Post-Cab News Conference yesterday : Watch: Luxon faces questions after Cabinet meets
MBIE: Supplementary Analysis Report: Amendments to the Crown Minerals Act 1991 decommissioning regime
Video via RNZ: Watch: Luxon booed by crowd at netball finals