Raising productivity remains a central challenge for New Zealand’s economic future, with government and opposition parties offering divergent strategies to address persistently low labour productivity growth. Reports from Treasury, the now-disbanded Productivity Commission, and the OECD highlight that New Zealand’s economy has expanded primarily through increased labour inputs rather than gains in output per hour worked. Treasury data shows that annual labour productivity growth has averaged a mere 0.2% over the past decade, declining further in the post-COVID period.
National proposes a policy mix centered on boosting capital investment, including encouraging foreign investment and reforming regulatory frameworks. The party favors retaining the Investment Boost tax policy, introduced in its 2025 Budget, which allows businesses to more rapidly offset investment costs against taxable income. National also supports compulsory KiwiSaver contributions with increased rates, aiming to expand domestic savings for investment purposes. Planning reforms remain a priority, with a focus on fast-tracking resource consents and overhauling the Resource Management Act. Education reforms, such as mandatory paper-based writing assessments in primary schools, are also seen as foundational to raising productivity.
Labour’s approach emphasizes institutional reforms, targeted tax measures, and boosting human capital through state intervention. It advocates for a more extensive capital gains tax on housing to redirect funds toward productive investments. Labour would discontinue Investment Boost but introduce targeted incentives to help small businesses immediately deduct investment expenses up to $10,000 annually. Its proposed Future Fund intends to recycle dividends from state-owned enterprises into infrastructure and high-growth sectors. Labour officials stress that addressing long-standing productivity challenges requires sustained, long-term effort.
The ACT Party calls for a smaller role for government, aiming to reduce bureaucratic barriers and “red tape” to allow market forces to drive productivity gains. It proposes freezing the adult minimum wage for three years and introducing a “training wage” for workers under 20, pegged at 60% of the adult rate, to encourage employment.
The Opportunity Party places significant emphasis on innovation as a productivity lever, urging increases in research and development spending to at least 2% of GDP. Its leader, Qiulae Wong, highlights the importance of sustained investment across the innovation pipeline to avoid disruption to businesses and scientists. The party also identifies weak competition policy as a factor hampering productivity and supports empowering the Commerce Commission to dismantle duopolies and uncompetitive markets. These positions show some alignment with the Greens, who focus more on sustainable economic models.
Te Pāti Māori’s policy platform, while not explicitly focused on productivity, includes measures to strengthen the Māori economy through workforce development and seed funding initiatives, which could have indirect productivity impacts. Meanwhile, NZ First blends nationalist and pragmatic elements, backing a $100 billion Future Fund to develop infrastructure and proposing a reduction of the corporate tax rate for smaller businesses from 28% to 20%, aiming to stimulate reinvestment and job creation.
Artificial intelligence is seen as a potential game changer across the political spectrum. Treasury’s Pre-election Economic and Fiscal Update noted AI’s capacity to significantly improve productivity, positioning New Zealand to capitalize on its benefits. However, parties are cautious given public concerns about job security, energy consumption, and ethical risks, with the Greens calling for a one-year moratorium on new AI data centers. Party leaders recognize the need for global cooperation to manage AI’s risks while seeking to leverage its advantages.
As contesting political visions highlight, raising New Zealand’s productivity involves a complex balance of investment, regulatory reform, innovation, and social policy, with no consensus on a singular path forward.