In 2018, the New Zealand Labour government took aim at rising petrol prices, with then-Prime Minister Dame Jacinda Ardern asserting that New Zealanders were being “fleeced” by petrol companies. Public concern over fuel costs was mounting amid a regional fuel tax in Auckland and a national fuel excise increase. In response, Labour targeted so-called importer margins—the portion of petrol prices covering transport, selling costs, and profits—seeking to regulate the industry and lower prices.

To facilitate this, the government passed the Commerce Amendment Act, empowering the Commerce Commission and ministers to conduct targeted market studies and compel companies to disclose detailed financial information. A market study into the petrol sector began in December 2018 and lasted a year. When the Commerce Commission released its final report in December 2019, Commerce Minister Kris Faafoi suggested the possibility of price reductions of between 18 and 32 cents per litre. Subsequently, the Fuel Industry Act was enacted in 2020, imposing new regulations on petrol companies over an 18-month period.

However, the intended price benefits did not materialize. Z Energy’s chief executive Mike Bennetts attributed the company’s share price decline in part to these regulatory changes, and the importer margins remained unchanged. The anticipated reductions at the pump failed to occur, raising questions about the efficacy of the policy.

This example highlights a broader issue in policymaking: the lack of a direct feedback mechanism that holds decision-makers accountable for outcomes. Unlike personal experiences that provide immediate consequences, such as a hangover after excessive drinking, policymakers and politicians often enjoy the benefits of their decisions without facing proportional negative repercussions. This imbalance, some argue, contributes to the persistence of ineffective or harmful policies.

Looking ahead to 2026, several policy proposals illustrate similar dynamics. The Green Party has suggested a moratorium on data centres to address public concerns, though the economic costs and potential investment losses remain uncertain and intangible. Labour has proposed writing off 10% of student loans for graduates who remain in New Zealand—a move intended to incentivize retention. Yet critics note that many recipients would likely stay in the country regardless, and the policy’s financial burden falls on taxpayers rather than graduates, with limited evidence it will significantly reduce emigration.

Meanwhile, the National Party plans to increase mandatory employer KiwiSaver contributions to 6%, aiming to raise retirement savings. However, some economists warn this could suppress wage growth over time, shifting costs to workers incrementally while delivering little net gain in savings.

Experts observe that much policymaking is driven by electoral incentives. Politicians respond to voter demands to “do something,” even if the actions taken may be ineffective or have unintended consequences. Compounding the challenge, ministers often lack full control over the bureaucracy and the complexities of the economy, making large-scale policy redesign difficult and prone to error.

Voters themselves sometimes support policies despite doubting their effectiveness, a phenomenon that perpetuates what some analysts describe as a cycle of well-intentioned but flawed policymaking. Without stronger accountability mechanisms or more informed public scrutiny, ineffective policies are likely to continue shaping New Zealand’s political and economic landscape.