Dr Oliver Hartwich: Luxon runs NZ like a listed company – and he’s getting results

New Zealand’s Prime Minister Christopher Luxon has just issued his government’s plan for the final quarter of 2024. If that sounds more like a corporate earnings call than political leadership, you would not be far off the mark.

Luxon, who has been in office for just under a year, is running New Zealand’s government as if it were listed on the NZX. This is most visible in his penchant for action plans and key performance indicators for his ministers.

It is a stark departure from his predecessors’ styles. John Key’s ‘incremental radicalism’ and Jacinda Ardern’s ‘politics of kindness’ have given way to Luxon’s ‘management by spreadsheet’.

To understand Luxon’s unique approach, it is crucial to examine his background.

Luxon’s long corporate career is evident in every aspect of his leadership. As a former chief executive of Air New Zealand and senior executive at Unilever, he is accustomed to quarterly reports and measurable outcomes. Now, he is applying these principles to the messy world of politics.

Of course, it is not uncommon for new governments to start with 100-day plans. What sets Luxon apart, though, is his insistence on continuing this approach beyond the honeymoon period. While most governments eventually face what Harold Macmillan famously referred to as ‘events, dear boy, events’ – unforeseen crises that disrupt even the best-laid plans – Luxon seems determined to stay on track with his action plans.

In this way, Luxon’s government is the antithesis of the previous administrations under Jacinda Ardern and her successor, Chris Hipkins. Their tenure was marked by grand ambitions and sweeping rhetoric, but often fell short on delivery and implementation. Policies were frequently rushed, poorly thought through and rarely subjected to rigorous evaluation or amendment.

Luxon’s government, by contrast, is all about measurable progress. His action plans read like a corporate to-do list: ‘Introduce legislation to bring back Charter Schools by June’, ‘Legalise foreign building products’ by September, ‘Begin resource management reform by December.’ It is politics reduced to bullet points, but each point represents a concrete policy goal.

Critics might argue that this approach lacks vision or overarching narrative. Yet, as these quarterly plans accumulate, a bigger picture is emerging. Piece by piece, like a jigsaw puzzle, Luxon is reshaping New Zealand’s political and economic landscape.

The pace is notably quicker than under John Key’s government. In my 2014 essay Quiet Achievers, published after Key’s first two terms, I had argued that Key’s slow but steady approach was yielding results. However, Key’s third term then saw a significant slowdown in reform efforts, leaving many, myself included, to view it as a missed opportunity.

Luxon seems determined not to repeat that mistake. His rapid-fire approach to policy implementation suggests a leader acutely aware of the fleeting nature of political capital. In this, there are hints of the systematic overhaul of New Zealand’s economy in the 1980s under Roger Douglas, albeit with a more measured pace.

But will it work?

Luxon’s strategy raises intriguing parallels with past attempts to apply business principles to government, from Jimmy Carter’s ‘zero-based budgeting’ to Tony Blair’s ‘delivery unit’. The mixed success of these efforts suggests that while corporate techniques can sometimes enhance governance, they are not always a panacea for political challenges.

History may also caution us about the pitfalls of over-planning in politics.

Macmillan’s famous quip about ‘events’ was not merely witty; it reflected the reality that governance often requires rapid responses to unforeseen crises. As military strategists know, no battle plan survives the first contact with the enemy. With the government’s quarterly plans, it might be the same once a real crisis hits.

Moreover, not every aspect of governance can be reduced to a tick-box exercise. Some of the most significant political achievements are the result of long-term vision and patience, qualities that may be at odds with a quarterly reporting mindset.

But an even bigger question is whether Luxon can maintain this momentum. Most governments begin with big ambitions, only to sooner or later find themselves bogged down by bureaucratic inertia and the relentless demands of day-to-day governance. So how long will it take until the guardians of the status quo are back in charge? When will ‘the blob’ derail the Government’s quarterly plans?

Because that is another big difference between politics and the corporate environment: In business, a CEO’s word is often final. In politics, even with a majority, a prime minister must navigate a complex web of stakeholders, public opinion and the reality of the public service.

There is no guarantee a prime minister will be effective just because he or she holds that office. Being prime minister, in a Westminster democracy, is not the same as being CEO of a large corporation.

Luxon’s method might have a more natural home in a place like Singapore, where the machinery of government already operates more like a corporation. Indeed, there is a touch of Singapore’s Lee Kuan Yew in Luxon’s technocratic style.

In New Zealand, however, with its labyrinthine bureaucracy, myriad stakeholder groups and sacred policy cows, achieving Singaporean style policy development is a far more daunting task.

This points us to a potential focus for Luxon’s second term, should he secure one (which, at this juncture, seems likely): to reform New Zealand’s reformability. It would require a comprehensive reset of the machinery of government.

Such systematic reforms could enable not just Luxon, but also his successors, to govern more swiftly and effectively – and perhaps a bit more like a company.

Such a reform would be a significant undertaking, potentially as transformative as the sweeping changes of the 1980s. It would consist of cutting through New Zealand’s maze of ministerial portfolios, government agencies and rules of decision making. It would also recalibrate power between central and local government and revisit the boundaries between government and the private sector.

We shall wait if the first steps of such reforms will find their way onto one of Luxon’s next quarterly plans.

For the time being, however, there is something refreshing about Luxon’s approach. At a time when politicians’ lofty promises often vanish without a trace, the focus on measurable outcomes is a breath of fresh air.

Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative think tank. This article was first published HERE.