The chart deck calling bullshit on Luxon’s ‘just drive faster & work longer’ economic growth talk

Our low-investment, low-wage, migration-led and housing-market-driven political economy has delivered poorer productivity growth than the rest of the OECD, and our performance since Covid has been particularly poor. Photo: Lynn Grieveson / The Kākā

Long stories short, the top six things in our political economy around housing, climate and poverty this week were:

1. PM Christopher Luxon and Transport Minister Chris Bishop announced the immediate reversal of the previous Labour Government’s 100 km/hr to 80 km/hr speed limit reductions on 38 sections of state highway, saying it would save around 3 minutes per trip on average;

2. Luxon trumpeted the news as another sign the Government was speeding up the economy, saying “we're really pleased that we are literally literally accelerating New Zealand's economic growth with this announcement today.”;

3. However, an analysis via Stuff showed the main 11km-long road section in question between Carterton and Masterton would save a motorist 90 seconds if they were able to drive 100 km/hr vs 80 km/hr, and transport economics experts such as Simon Kingham and the PHCC have challenged the assumed economic benefits of faster trips, saying most workers use the time saved at home, rather than at work;

4. The Government’s talk of economic benefits also ignored the extra health, fuel and carbon emissions costs of faster driving, more accidents and more lethal accidents, with a 2023 analysis by EY of speed limit reductions for the Napier-Taupo highway, for example, showing a net benefit of $92.6 million a year, after reduced accident costs and lower fuel costs of $94 million overwhelmed the $1.3 million of benefits from time saved;

5. Meanwhile, the Reserve Bank’s Chief Economist Paul Conway delivered a quietly devastating speech on Wednesday that showed New Zealand’s low-investment, low-wage, migration-led and housing-market-driven political economy had delivered poorer productivity growth than the rest of the OECD and meant total economic growth in the last decade in particular had come from more people working longer hours, rather than investing and training to get more from each hour of work.

6. New Health Minister Simeon Brown announced on Friday a new hospital would be built in Dunedin with fewer beds than the current one, which nurses, doctors and other locals in the South Island meant the Government was repeating the mistakes of predecessors of encouraging population growth without building the infrastructure before people arrive.

(There is more detail, analysis and links to documents below the paywall fold and in the Saturday soliloquy podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing.)

Luxon ‘going for growth’ by encouraging faster driving