Each of the government’s various economic growth policy announcements asks something, in some way, of Queenstown. But it may not have the answer the government – and the rest of the country – wants, writes Victoria Crockford.

I love it when my choices are validated. 

So, I’m delighted that a pretty whimsical decision to return from overseas, drive from Hawke’s Bay to Otago in a Nissan Lucino, and take my post-grad international relations qualification to Queenstown has proved sound. 

Look at the big-picture news stories right now and you don’t have to read very far in to find a mention of Tāhuna or its environs either directly or by implication. 

It’s a place where gondolas are being fast-tracked, entire landscapes are being regenerated, golf courses now outnumber sheep, and – crucially – a buzzy, cosmopolitan mix of people is increasingly relied upon to be the panacea for the country’s economic ills. 

There seems to be a complete lack of any dot connection going on in relation to the various economic growth policy announcements in the past 10 days but all of them, in some way, ask something of Queenstown. And Queenstown may not have the answer the government – and the rest of the country – wants. 

Tourists – come on down, just don’t use the loos! 

Tourism currently sits at about 6.2% of national GDP and was worth, at its peak just before Covid, 38.6% of GDP for the Queenstown-Lakes District (it now sits closer to 28%).

In dollar terms, this is just over $1 billion. So, a decent chunk of change. But still an industry largely predicated on the constant churn of a lower-wage economy. 

Even so, Nicola Willis made it clear last week that “more tourists” was a key plank of her new economic growth portfolio. 

As someone who has had the privilege of being in discussions for over a decade about economic diversification, the minister’s words felt like that moment when my kids brought me a dessert they’d made with lemon-flavoured jelly at Christmas. On paper, sure. In practice, eugh. 

As our mayor, Glyn Lewers, pointed out in various media outlets last week, we’re a community that is already under significant infrastructure strain. It’s easy to imagine that, with all this space and all the cashed-up locals, we wouldn’t suffer from the same woes as Auckland or Wellington. But as a member of the council’s Climate and Biodiversity Reference Group and a lover of the local rivers and lakes, I can tell you that our infrastructure strain is increasingly mirrored in the health of our waterways and (lucrative) natural environment as well in our traffic and sewage ponds. 

Ultimately, it’s a matter of strategy versus tactics. Getting more and more people down here is not a strategy for economic growth for our region or the country. It’s a tactic for this, in the short term, and would definitely help out a lot of people I know with living in one of the most expensive places in the country. 

But in the long term, it only undermines local efforts to form a collaborative view on what sustainable tourism is and how it can be achieved. We want people to come here and have a wonderful experience and leave in awe. This means considering carefully what optimal means in terms of numbers of tourists, how we get them around, and what they pay for. And how often they’re going to need to evacuate their bowels. 

With no current indication of change to the distribution of the visitor levy to offer more funding to Queenstown, we are left holding the baby of economic growth with no way to feed or clothe her. 

Digital nomads – come on down, just not sure where you’ll live! 

As part of the same suite of announcements last week, Willis outlined the launch of a new digital nomad visa. 

This policy is suited very well to Queenstown’s reputation and energy, and overall, it will present a welcome opportunity to continue to pivot from tourism toward some diversification that has genuine productivity co-benefits. Just recently, a well-supported new initiative, Tech QT, appointed a high-flying CEO to lead the nascent organisation to become “a hub for innovation [that creates] high-value employment opportunities and fosters tech-based economic growth”. This type of visa may serve to attract the very capabilities that the Tech QT team is keen to bring down. 

Like all things, however, the devil is in the detail – and the detail that requires further investigation is the 90-day scope of the visa. A three-month stay to test the waters for Americans or East Asians earning offshore dollars could mean even more pressure on our already near-impossible rental dynamic. 

Housing is a well-documented concern here, with families, key workers and visitors competing with holiday rental platforms for the same limited stock. Short-term rental is a legitimate business that supports many households to afford a mortgage, but with the market functioning poorly as it is, throwing in more people staying on a short-term basis should be monitored closely lest we experience the same kind of outrage as Barcelona.

Even better, our 90-day nomads should be considered as a market segment that we need to specifically plan for. This hasn’t been our collective forte to date. Recent analysis from local economist Benje Patterson shows that the region currently builds enough houses in theory, with new building consents equalling 1,396, which totals 1,081 houses more than the population growth of 315 new households. In practice, we cannot keep up with houses of the type and affordability we need, nor have we got on top of the quarter of all houses that are vacant most of the time. 

Invest NZ rolls out the welcome mat… to Queenstown? 

The third leg of the economic stool announced last week was Invest NZ. One of the mandates of this new “one-stop shop for foreign investment” is to attract skilled professionals to “enhance domestic capabilities and global connections”.

How much the digital nomad visa and Invest NZ have been considered in tandem is unclear, but it is clear that they serve a similar purpose (at different levels of net worth) and that they both could impact Queenstown. 

It’s no secret that money loves Queenstown and if Invest NZ is running a campaign to attract serious foreign investors, it’s odds on they will have a presence here. 

Creating a long-term “welcome mat” for such people requires community buy-in to the vision. These are small towns and in some locales, there are well-known campaigns against the very people this policy is designed to attract. To ensure the mat is truly welcoming means asking ourselves: how might foreign investment and global connections contribute to realising the needs and aspirations of the local community? 

With the various policies being thrust upon us, this line of questioning doesn’t seem to be on the government’s radar, but it should be. It sounds as if the whole country is relying on Queenstown to get it right. 

As New Zealand’s Crown-owned innovation agency is disestablished, it’s time to ask what the real constraints holding back New Zealand’s economic transformation are, writes Rowan Simpson.

In 2011 the physicist Sir Paul Callaghan, one of New Zealand’s most distinguished scientists and a passionate advocate for economic transformation, gave a landmark speech he called “Sustainable economic growth for New Zealand: An optimistic myth-busting approach”. Many of his observations have become often-repeated mantras of New Zealand’s technology sector, including “be the place where talent wants to live”, “we better be prepared to be good at some pretty weird stuff” (anticipating correctly that the most successful companies would operate in obscure and difficult-to-predict niches) and that “just 100 inspired entrepreneurs could turn this country around”. 

Tragically, Callaghan died of cancer just months later. However, his legacy lived on in a new Crown entity called Callaghan Innovation, established in 2013 with the vague responsibility for “making New Zealand business more innovative” through grants, technical services and business support. The intention was noble – to help transform New Zealand from a country dependent on primary industries to one driven by technology and innovation.

Fast forward to last week: prime minister Christopher Luxon’s state of the nation speech echoed many of those same ideas. At the end, he announced that Callaghan Innovation would be disestablished, with its “most important functions” reassigned elsewhere in the public sector.

For those of us who have built and invested in successful technology companies in New Zealand, this decision is overdue. Despite good intentions, the agency became bogged down in administering grants and subsidies rather than driving real innovation. Under pressure to demonstrate value, it spread its resources thinly across a huge range of activities – from managing R&D tax credits to funding startup accelerator programmes. But there was never any clear evidence that any of these initiatives actually helped create more successful companies.

There’s no question that improving our productivity and growing the economy beyond agriculture and tourism is key to our future prosperity. We’ve understood this for a long time. However, the ambition to be more innovative has never been our problem. The challenge we’ve struggled with all these years is actually doing it in any measurable way. Perhaps we missed a trick? Rather than Callaghan Innovation we should have called it Callaghan Execution.

Having worked with and invested in companies like Trade Me, Xero, Vend and Timely over the past two decades, I’ve seen firsthand what drives growth. The key question is always: What’s the constraint? What’s actually holding us back? As we consider the legacy of Callaghan Innovation, and more importantly think about what will replace it, let’s ask the same question of our economy as a whole.

Here’s an obvious answer: our national obsession with investing in real estate, rather than investing in much more uncertain but ultimately more rewarding productive businesses. Spending more and more borrowed money to buy little bits of our country off each other is a zero-sum game. We might think it’s how we “get ahead”, but it’s actually dragging us down.

Luxon himself exemplifies this – he’s often described as a “businessman”, but his investments after achieving financial success were rental properties, sold for profit years later. What kind of business is that? What value does it create?

Here’s another: our expectation that the government will underwrite business risk, while private shareholders capture the rewards. Founders and executives at early-stage companies spend countless hours pursuing grants, subsidies, R&D credits and development loans – many of which end up written off rather than repaid. Venture funds and “angel investors” expect government co-investment without hard questions. The government venture fund has been tilting at windmills for more than 20 years, with little to show for hundreds of millions invested.

Ask not what you can do for your country, but what your country can do for you, I suppose?

Here’s a third: our dismal savings record, which leaves us constantly looking overseas for investment. In the same speech last week the prime minister announced the creation of Invest New Zealand to “roll out the welcome mat” for foreign investors. But lack of a welcome mat hasn’t constrained our best startups from attracting international investment – companies like Xero, Vend and Rocket Lab have all raised millions offshore. Many of the most promising companies in the next wave of startups are already backed by Australian-based venture capital funds – including Tracksuit, Halter and OpenStar.

The big difference between New Zealand and Australia in this respect is that in recent years large superannuation funds in Australia have become significant investors in their venture capital sector, helping them to scale. In New Zealand we’re at least a generation behind because we’ve been so tentative on compulsory superannuation. If we had to pick one policy prescription to help us close the gap with Australia, matching their settings on this would be a great first step. Is there any politician here brave enough to propose that?

I applaud the prime minister for turning our attention back to these fundamental questions about New Zealand’s economic future. But aspiration alone is insufficient. What are we actually going to do differently?

Rather than simply targeting “more startups, more IPOs, more inbound foreign investment” – which are inputs – we should understand and measure how startup companies contribute to the broader economy. This means tracking metrics like how much they pay their employees and how much of the capital they raise is spent locally. After all, we don’t tax capital gains in New Zealand, but we do tax operating expenses through PAYE and GST. The only companies that will drive our future prosperity are those that create high-paying local jobs and sustainable growth.

The end of Callaghan Innovation is a necessary reset. While it’s difficult news for those affected, hopefully many of them can find roles working directly for our fastest-growing companies, which are constantly seeking skilled workers, rather than supporting them indirectly. That’s one of our biggest constraints – we need more New Zealanders choosing to work on and invest directly in these businesses. Perhaps then we can move beyond talking about the theoretical benefits of innovation to actually delivering it.

Rowan Simpson is the author of How To Be Wrong: A crash course in startup success. Pre-sales are available now.