The Bullshit Economy
- Grant McLachlan
- 3 hours ago
- 25 min read
New Zealand has constructed an elaborate economy out of its own inefficiencies. Airports that profit more from parking than planes. Ferries that charge more when they break down. A rail network that was sold for a dollar and bought back for seven hundred million. Plastic that travels to Southeast Asia, burns in a field, and returns as microplastics in your food. A sharemarket where the most valuable companies are monopolies, oligopolies, and government-adjacent rent-seekers. This is the Bullshit Economy — and we built it ourselves.
Airports: They had one job
Airports used to be a runway and a departure lounge. Someone parked, someone flew. The job was unremarkable and that was fine. Then someone noticed the land, the captive consumers, and the complete absence of competition. Since then, New Zealand’s airports have become masterclasses in extracting value from inconvenience — and nowhere is this more visible than Auckland.
Auckland Airport earned NZ$895.5 million in total revenue for the financial year ending June 2024. A growing share of that comes not from helping aircraft take off and land, but from parking buildings, retail concessions, food and beverage, property leases, and the new Manawa Bay shopping centre — opened in September 2024 and maintaining 99 percent occupancy while serving as a daily shopping destination for some 75,000 people. Car parking income alone grew 14 percent in the first half of FY2026, fuelled by a 35 percent surge in Transport Hub revenue. The airport carries an annualised commercial rent roll of NZ$195.4 million.
It also has one runway. One. It is the busiest single-runway airport in Oceania, handling 18.9 million passengers in 2025. A second runway was planned for completion in 2028. It has now been pushed out to 2038 — a ten-year delay — while the airport forges ahead with a NZ$3.9 billion terminal integration programme. The message is clear: better to have passengers trapped in a glass retail palace than to give them more runways to escape on.
There is also no rail connection. This is not for want of opportunity. Auckland Airport sits just eight kilometres from the North Island Main Trunk railway. A designation was once held for a railway branch line to the airport — the corridor was protected precisely so that a direct connection could eventually be built. That designation was built on. The land set aside for a railway loop at the airport precinct was instead developed into a shopping centre and retail facilities. In its place, the “connection” that now exists requires a passenger to wait 15–20 minutes for an airport bus, take that bus through the congestion of the shopping centre that displaced the rail loop, carry their luggage off at Puhinui train station, and wait another 15–20 minutes for a train. A connection that should take minutes takes the better part of an hour — and earns the airport nothing, which may explain why it has not been upgraded.
There was, more recently, a plan for light rail from the airport through Mangere and Mount Roskill to central Auckland. The National government cancelled it in January 2024. Auckland Airport is among the most significant international airports in the world without a proper rail link to its city, handling 90 percent of New Zealand’s international arrivals with no practical alternative to driving — which, conveniently, means parking.
The logic of Auckland Airport’s business model is to sell you a terminal experience while deferring the infrastructure that would make you less dependent on it.
The numbers are worth sitting with. In the financial year to June 2024, Auckland Airport generated NZ$895.5 million in total revenue. Of that, NZX analysis suggests roughly 52 percent flows from retail, parking, and commercial property — the captured economy built around passengers who cannot leave. Retail income surged 41 percent, car park income rose 15 percent. Auckland Airport’s commercial property rent roll sits at NZ$195.4 million annualised. That is a rent roll almost as large as the $200 million the government had to commit to deferred maintenance on the entire national rail network after Toll Holdings ran it into the ground.
Wellington Airport is a smaller operation but follows the same model. For the year to March 2024, it generated total revenue of NZ$159.2 million. Aeronautical charges — the actual business of operating an airport — accounted for $86 million, or 54 percent. Retail, trading, and car parking contributed $54.3 million, or 34 percent. Property rents added $18.9 million more. Nearly half of Wellington Airport’s revenue derives from people waiting, parking, and consuming, not from aircraft using its runway.
The captive customer model works best when passengers are forced to spend more time in the terminal than they planned. Delays are, therefore, convenient. Air New Zealand’s on-time arrival rate in 2024 was 77.3 percent — meaning roughly one in five flights arrived late, improving only marginally to 79.3 percent in 2025. Specific trans-Cook Strait routes see delay rates of 30 to 40 percent of all flights, with some averaging delays of up to 38 minutes. International passengers are advised to arrive two to three hours before departure; domestic passengers 45 to 90 minutes. Add one runway, add delays, add the bus-to-Puhinui detour, and a short domestic trip can occupy most of a morning. Every one of those minutes is spent in a terminal where every food and beverage outlet, every car park, and every shop is owned or concession-licensed by the airport.
I once tried to avoid Wellington Airport entirely. I was driving around it when roadworks funnelled me through cones past an area where no one was working, into a queue of traffic with only one of three parking attendant booths operating. When the attendant tried to charge me a toll for the time I had spent waiting in that queue, I asked what period the charge covered, then suggested that I pay the charge and hold up the queue until that period ended. I was let through.
That experience, in miniature, is how airport economics work. You did not choose to be there. You cannot go anywhere else. The meter is running.
Cook Strait Ferries: Ditto
The Cook Strait crossing is the only surface route between New Zealand’s two main islands. Interislander carries more than 620,000 passengers, 230,000 cars, and over 70,000 commercial vehicles annually, with an estimated $14 billion worth of freight traversing the strait each year. There is no competition worth speaking of. And Interislander’s operator, KiwiRail, has confirmed that the service uses dynamic pricing — meaning fares rise when demand is high.
Demand is highest, naturally, when sailings are cancelled. Which they frequently are.
In 2023, the Kaitaki lost engine power mid-crossing with 800 passengers and 80 crew aboard. The same year, there was a gearbox issue and a heat exchanger fault on two other vessels. In June 2024, the Aratere ran aground near Picton after an autopilot system the crew couldn’t override put it on the wrong course. A single cancellation, tourism researchers estimate, costs operators an average of $21,000.
The previous government’s attempt to address this — the iRex project for two large new ferries — was cancelled in December 2023 after costs blew out toward $3 billion. New ferries have since been ordered for delivery in 2029, costing NZ$1.86 billion plus the half-billion already spent on iRex. That is approximately $2.4 billion to solve a problem that has been worsening for two decades.
In the meantime, the Aratere — the only rail-enabled ferry — was retired in August 2025. The service ran on two vessels. With passengers scrambling for alternatives and prices responding to scarcity, the Cook Strait continues to perform exactly as a dynamic pricing model on a captive market would predict: the system fails, the price rises, and the operator technically profits.
A business model that makes more money when the service breaks down is not a business model — it is a toll gate with a recurring malfunction.
It is difficult to calculate the exact premium Interislander and Bluebridge collect from cancellation-driven demand, because neither operator publicly reports price uplift data. What is documented is that both operators use tiered dynamic pricing — saver fares, flexible fares, and refundable fares at successively higher prices — and that when a sailing is cancelled, passengers forced to rebook generally find only the more expensive tiers available. The gap between a cheapest-advance saver fare and a last-minute flexible fare on a single vehicle crossing can run to $80–$150 or more. Multiply that across the hundreds of passengers stranded by each cancellation and the revenue effect is not trivial. With Interislander alone recording around 150 cancellations in recent years, and each cancellation costing tourism operators an average of $21,000, the national cost of Cook Strait unreliability is systematic and recurring. The operators face no commercial incentive to resolve it.
Railways: The pump and dump
New Zealand’s experiment with rail privatisation is one of the great asset-stripping episodes in this country’s economic history. In 1993, a consortium led by New Zealand merchant bank Fay Richwhite and United States regional railroad Wisconsin Central acquired New Zealand Rail for $328.3 million — though the actual equity contribution was only $105 million, $100 million of which was returned to the buyers within two years. The consortium then floated the company in 1996, selling shares at $6.19 each. Original investors realised $370 million from share sales while the track renewals that had briefly surged declined precipitously from 1998 onwards.
In 2003, Australian transport company Toll Holdings acquired control of what had by then been renamed Tranz Rail. The deal was unusual: Toll took the operating company; the government bought back the rail network infrastructure for $1. Toll was granted exclusive access to that network for 66 years in exchange for minimum freight volumes and track access charges. It also retained its trucking depots at railway yards throughout the country — prime real estate at strategic freight nodes, by any measure.
The government committed $200 million for deferred maintenance immediately after taking back the track. Toll and the Crown never agreed on track access charges. In 2008 — after 15 years of private ownership that the Finance Minister described as asset stripping — the government purchased Toll’s rail and ferry operations for $690 million, branding the new entity KiwiRail. Toll kept the trucking fleet.
To summarise: the network was sold for $328 million, stripped of maintenance investment, the track sold back for $1, and the operating business re-purchased for $690 million. The government has since poured billions more into deferred maintenance and rolling stock. The private sector extracted value during the prosperous phase and left the public with the infrastructure debt and operational losses.
The lesson of New Zealand’s rail privatisation is not that the private sector is efficient. It is that some infrastructure cannot be run down without consequences that outlast the profit-takers by decades.
The waste that is recycling
Every New Zealand household receives at least two bins: one for general waste destined for landfill, and one for recycling. The recycling bin is, partly, a performance. Since 2014, New Zealand has exported over 300,000 tonnes of plastic waste overseas — mostly to developing countries. Government officials have admitted they have no idea what has happened to it, whether recycled or burnt.
In 2024, around 15,000 tonnes went to Malaysia and 6,000 tonnes to Indonesia. A 2019 study found New Zealand plastic exported to Indonesia for recycling was being burned as fuel in open sites, with dioxin levels in eggs from nearby chickens exceeding the European Food Safety Authority’s safe intake by up to 70 times per egg. Meanwhile, on a per-capita basis, New Zealand is one of the most wasteful nations in the world, with each New Zealander sending nearly 60 kilograms of plastic to landfill every year — and a further six kilograms offshore.
The recycling industry exists. It just exists to the benefit of waste collectors and processors, not the environment. The bins provide psychological absolution. The system is not designed to reduce waste — it is designed to make the problem invisible until it reappears in someone else’s river.
Rorting the taxpayer: Government procurement
The government used to build things directly: standard classroom designs, template hospital wards, functional police stations. The procurement was centralised, the designs replicable, and the costs defensible. That model, dismantled progressively since the 1980s, has been replaced by something considerably more expensive and considerably more architecturally ambitious.
The 2024 Ministerial Inquiry into School Property found that the average cost of a new classroom had reached $1.2 million per teaching space — and was projected to hit $1.8 million for projects started between October 2023 and June 2026. Schools that went directly to local housing companies for similar structures reported costs of $400,000. The current procurement approach, involving a small panel of approved suppliers, creates no competitive tension and no incentive for efficiency.
Hospital infrastructure is worse. Existing plans for some 300 hospital infrastructure projects are forecast to cost $46.9 billion over the next decade, rising from a $15 billion estimate in 2020 to $34 billion by 2023 — more than a doubling in three years, largely driven by consultants, redesigns, and deferred decisions. The average age of New Zealand’s health estate buildings is 45 years, and many are approaching end of life with 82 very high-priority risks identified across 32 hospital campuses.
New police stations, meanwhile, bear no resemblance to the functional box the previous era produced. They are bespoke. They are expensive. And they are commissioned through the same consultant-heavy process that has made New Zealand’s public infrastructure among the most costly per-square-metre in the developed world.
We have outsourced institutional knowledge to consultants and design firms, who have been handsomely rewarded for making the simple complicated.
Roads are the same story. The Ministry of Works and Development — the former Public Works Department, first established in 1870 — was abolished in 1988. For over a century it had designed, consented, and built most of New Zealand’s major roads. It carried institutional knowledge: surveyors, engineers, designers, construction crews, standards, and procurement muscle. When it was abolished and road construction contracted out through a competitive tendering process, that knowledge dispersed into the private sector. The result was predictable. In the 1970s and 1980s, motorways were built at costs that, even inflation-adjusted, would look modest beside what the private sector now charges.
Today, the Roads of National Significance programme averaged around NZ$35 million per kilometre across its projects. That average obscures the extremes: Transmission Gully, 27 kilometres, was originally estimated at $1.25 billion — $46 million per km — and ended up costing closer to $2.5 billion, around $92 million per km once cost overruns and PPP financing are included. Puhoi to Warkworth, 18.5 kilometres, cost $1.05 billion — $57 million per km. The proposed Northland Expressway from Warkworth to Whangārei carries a current estimate of around $22 billion for 95 kilometres — $232 million per km. A Cabinet paper noted that a direct Crown loan would cost less than a Public Private Partnership because the government has a lower cost of capital. The Cabinet paper recommended a PPP anyway.
And then there is the road cone industry. The lollipop person — one person with a stop/go sign, standing at a worksite — has been replaced by a certified system requiring a Site Traffic Management Supervisor, Traffic Management Officers, an approved Traffic Management Plan, a Corridor Access Request, a Site-Specific Safety Plan, accredited designers, and a fleet of cones, barriers, signs, and vehicles. Waka Kotahi spent three-quarters of a billion dollars on road cones and temporary traffic management over just three years — on state highway maintenance alone, before council and contractor spending is counted. Auckland Mayor Wayne Brown commissioned an Ernst & Young report that found the industry was commercially incentivised to maximise disruption and that virtually every comparable jurisdiction charges more, enforces more vigorously, and penalises time and disruption rather than rewarding it.
New Zealand used to joke that the Ministry of Works was inefficient — a man leaning on a shovel while one person dug. The joke misunderstood the economics. Institutional capacity, even when not visibly busy, retains knowledge, standards, and the leverage to resist contractor inflation. What replaced it is a team of consultants in high-visibility vests watching one person work — and writing reports about it.
We used to have one person holding a lollipop sign. Now we have a Traffic Management Plan, a Corridor Access Request, an accredited supervisor, a fleet of barriers, and a consultant to write it up. The cone count went up. The productivity went down.
Bridges tell the same story in concrete and steel. New Zealand was built on prefabricated, template-designed infrastructure — the Ministry of Works produced standard bridge designs that were replicated efficiently across hundreds of rural and regional sites. They were functional, durable, and cheap. Many of them are still standing a century later. The original Māngere Bridge, opened in 1915, cost approximately £22,000 — around $500,000 in today’s terms. It lasted more than 100 years. Its replacement, Ngā Hau Māngere, opened in 2022, is an architecturally designed landmark with a 60-metre structural steel central arch, bespoke landscaping, fishing bays, bench seating for harbour views, salvaged heritage elements incorporated as decorative features, international architecture awards, a landscape architecture prize, and a structural engineering sustainability award. It is, by any measure, an extraordinary piece of public infrastructure. It is also a pedestrian and cycling bridge, replacing a pedestrian and cycling bridge, in a country that cannot afford to repair its hospitals.
Across New Zealand, prefabricated concrete bridges built a century ago by the Ministry of Works are being gradually replaced by bespoke designs, each requiring its own engineers, architects, landscape consultants, cultural advisors, stakeholder engagement processes, and award submissions. The template bridge is gone. The consultant who designs the replacement is not.
The original bridge cost £22,000 and lasted a hundred years. The replacement won an international architecture award. Neither fact is the problem — the problem is that we now consider the award a measure of value and the original a measure of failure.
The same logic applies to bridges. New Zealand’s bridge-building heritage is one of understated engineering efficiency: prefabricated, template-designed structures, many over a century old, that crossed rivers and gullies without fuss, without ceremony, and without a landscape architect. The Ministry of Works produced standard designs. A bridge that worked in the Manawatū worked in the Waitaki. The components were interchangeable. Maintenance was predictable. Cost was defensible.
Today, aging standard bridges are being replaced with bespoke designs featuring architectural detailing, commissioned artworks, cultural motifs, interpretive signage, native planting programmes, lighting installations, and what planners call “gateway treatments” — the notion that a state highway bridge is also an opportunity to signal arrival in a place. NZTA’s replacement of the Ōpaoa River Bridge near Blenheim carried a $21 million budget, covering not just the structure but professional services, landscaping, and the creation of what the agency described as “an attractive gateway to Blenheim.” The bridge’s function — to carry State Highway 1 traffic across a river — was unchanged. The cost of performing that function, with its attendant gateway treatment, bore no resemblance to what the Ministry of Works would have spent.
A bridge used to cross a river. Now it announces the town, honours the iwi, plants the natives, and lights the path — and costs four times as much to do the same job it always did.
The same logic has reached bridge replacement. New Zealand’s road and rail network was built with prefabricated, standardised bridge designs — functional, replicable, and constructed at low marginal cost once the design was proven. A century later, those bridges are reaching end of life. Their replacements are rarely standard. A new state highway bridge over the Ōpaoa River in Blenheim carried a $21 million budget covering bridge construction, professional services, landscaping, and telecommunications cable relocation. The project brief specified “beautifying the area” and creating “an attractive gateway to Blenheim.” Native plants, harakeke/flax plantings, and lighting were designed in consultation with mana whenua, Marlborough District Council, and Heritage New Zealand. The functional span — concrete beams craned over a river — was joined by an aesthetic programme that would have been unrecognisable to the Ministry of Works engineers who built the original.
NZTA’s own cost estimation manual lists standard bridge rates ranging from $3,600 to $17,000 per square metre of deck before on-costs and brownfield uplifts are applied — a range wide enough to accommodate almost any outcome. The upper end of that range, plus consultants, plus landscaping, plus the full procurement and consenting process, means that a bridge which once cost a predictable amount now costs whatever the process demands. A standardised design prevents this. A bespoke design, with its artworks, native plantings, and gateway aesthetics, does not.
Recycling exports: The log-cardboard circuit
New Zealand exports logs to China. China processes them into timber, cardboard, and packaging. That packaging returns to New Zealand encasing consumer goods. The cardboard is then collected for recycling, exported back to China to be reprocessed, and the cycle resumes. In 2024, New Zealand exported 259,000 tonnes of wastepaper, mostly to Indonesia — where contamination levels regularly exceed import limits, and much of it ends up being sorted by hand in conditions that would not be tolerated in New Zealand.
The absurdity runs deeper. Chinese log buyers — backed by subsidies that allow them to outbid local sawmills — effectively set the market price for New Zealand’s domestic timber industry. A 2019 MBIE report found that forest owners were selling logs to local sawmills at the same price they could achieve by exporting. Local processors cannot compete. Carter Holt Harvey closed its Whangarei sawmill. Norske Skog closed its Kawerau mill. Several more mills closed in 2024. Thousands of jobs in the regions have disappeared, and the industrial capacity to process New Zealand’s own timber is being methodically hollowed out.
The consequence is visible in housing construction. Building products in New Zealand are among the most expensive in the developed world in part because China sets the export price for our logs, pricing domestic processors out of the market and forcing builders to pay international commodity prices for timber grown in their own backyard. Bernard Hickey has described the New Zealand economy as the property market with a few add-ons. The timber circuit shows why: even the inputs to housing construction are being sacrificed on the altar of export earnings, making the housing we desperately need both rarer and more expensive.
New Zealand grows trees. It exports them. It imports the products. It pays international prices for both. Somewhere in that circuit, someone is doing very well — and it is not the people trying to build a house.
The supermarket republic
New Zealand’s grocery market is a duopoly so concentrated it has few parallels in the developed world. Foodstuffs and Woolworths together control roughly 90 percent of the country’s $25 billion grocery sector. By comparison, the top four supermarkets in the United Kingdom control 61 percent of that market; in the United States, 58 percent. The Commerce Commission found the two chains were earning $430 million per year in excess profits between 2015 and 2019, with estimates rising toward $800 million to $1 billion annually above competitive levels between 2017 and 2021.
The most visible symptom of this structure is the private label. Both chains operate large own-brand businesses — Pam’s, Woolworths, and associated labels — that now dominate shelf space across most food categories. Much of this product is not locally made. It is imported from Australia and China and sold under a New Zealand-branded label, crowding out domestic producers who lack the bargaining power to negotiate shelf space with the only two buyers that matter.
Consider salmon. In early 2026, a South Island shopper found New Zealand king salmon selling at $157 per kilogram at a Queenstown supermarket, while the Pams own-brand smoked salmon — raised in Norway, processed in Germany — was on the same shelf for $11.05 per 100 grams. The Norwegian fish had crossed the world and still undercut the product raised in the Marlborough Sounds thirty minutes away. The duopoly buys whatever is cheapest because it sells to a captive market. New Zealand’s premium king salmon, unable to compete on commodity pricing, is largely exported instead — leaving imported product on the domestic shelf.
Meanwhile, the food processing industry that once converted New Zealand’s agricultural output into domestic products is collapsing. In March 2026, Heinz Wattie’s confirmed the closure of its Auckland, Christchurch, and Dunedin manufacturing facilities, along with frozen packing lines in Hastings — some 300 jobs, its entire frozen vegetables business, and the end of Gregg’s coffee and its dips range. McCain simultaneously announced the closure of its Hastings vegetable processing plant by January 2027, ending contracts with growers supplying 50,000 tonnes annually of peas, beans, sweetcorn, and carrots. In Canterbury alone, around 220 growers producing 36,000 tonnes of peas annually lost their processing outlet. The Marr family of Methven has grown peas for Wattie’s for thirty years.
Canterbury produces more than half of the world’s supply of hybrid radish seed and 40 percent of the global carrot seed supply, exporting to more than 60 countries. It is not an agricultural backwater. It is a world-class food production region being hollowed out because a vertically integrated supermarket duopoly can source frozen vegetables from anywhere in the world at commodity prices. The Cook Strait freight premium that adds cost to every South Island product heading north does not help.
Norwegian salmon is cheaper in South Island supermarkets than South Island salmon. New Zealand peas are being replaced on the shelf by imported frozen vegetables. This is not a market. It is a managed extraction.
Unaffordability: The productive soil clause nobody enforces
The Resource Management Act was supposed to protect productive agricultural soil from unreasonable development. It did not. Instead, New Zealand’s most fertile peri-urban land — the market gardens of Pukekohe, the horticultural belts around Hastings and Blenheim, the truck farming land on the fringes of Auckland — has been progressively rezoned for urban development as city boundaries sprawl outward. The same land that grew vegetables for New Zealand’s supermarkets now grows townhouses for New Zealand’s property investors.
The consequences compound each other. When productive land is rezoned, its market value increases sharply — and that increased land value flows through to the cost base of every grower who remains. A market gardener cannot outbid a developer for the same parcel, but the rezoning of neighbouring land drives up rates, lease costs, and the price of any land they might want to expand onto. Higher operating costs on expensive land mean higher production costs — which make local growers uncompetitive against imported food produced on cheaper land offshore. The loss of one market garden does not merely remove that garden from the food supply; it makes every remaining garden harder to operate profitably.
Meanwhile, the planning process that enables this sprawl adds its own cost layer to the housing that replaces the gardens. Resource consents, plan changes, engineering reports, ecological assessments, heritage studies, traffic impact assessments, and the professional fees that attend each of them are now baked into the cost of every new dwelling. Developers price the consenting process into sections before a single house is built. The planning system has become an industry in its own right — one whose participants have every incentive to prolong and complicate the process they are paid to navigate.
The perversity is systemic. If the RMA’s protections for productive soil were strictly enforced — if plan changes that converted high-quality agricultural land to residential use were genuinely blocked — then development pressure would redirect to less productive land that could be developed at lower cost. A clear hierarchy, consistently applied, would cheapen the land component of new housing, reduce the consenting burden, and keep productive soil in production. Instead, the most valuable rural land is perpetually available for rezoning at a price premium. Productive soil is lost. Food prices rise. Growers cannot compete with offshore imports. Houses stay expensive. Consultants thrive.
The RMA was designed to protect the land we grow food on. Instead it became the mechanism by which that land is converted into the housing we cannot afford, at a cost inflated by the process used to convert it.
NZX-asperating: A sharemarket built on inefficiency
If the economy described above sounds like it belongs in a business textbook under the chapter heading “market failure,” then the S&P/NZX 50 is the investment vehicle that turns market failure into shareholder returns. Run your eye down the companies that collectively make up more than 60 percent of the index by market capitalisation. You will find that most of them hold their value not because they produce something uniquely useful or competitive, but because they occupy a structural position that insulates them from competition — or because they depend on the same inefficiencies described above.
The power oligopoly
Meridian Energy (MEL), Mercury NZ (MCY), Contact Energy (CEN), and Genesis Energy (GNE) collectively represent a significant share of the index. They operate in what is nominally a competitive electricity market — the NZ Electricity Authority notwithstanding — but in practice benefit from a market structure where price signals are routinely distorted by oligopolistic coordination, hydrology risk hedging, and the absence of meaningful new entry. The Commerce Commission has investigated the electricity market repeatedly. Prices have continued to rise. The generators have continued to pay dividends. The structure of the market is not an accident; it is an asset.
The monopoly airport
Auckland International Airport (AIA), as described above, is a textbook regulated monopoly that has learned to maximise its unregulated revenues while managing its aeronautical obligations. Its $10 billion-plus market capitalisation is supported in large part by retail, car parking, and commercial property revenues that depend on the same captive passenger base that the lack of a second runway keeps captive.
The regulated network monopoly
Chorus (CNU) owns and operates the last-mile copper and fibre telecommunications network that connects most New Zealand households and businesses to the internet. It is a regulated monopoly — regulated by the Commerce Commission under Part 4 of the Commerce Act — whose shareholder value rests almost entirely on the regulated asset base and the Commission’s periodic determinations of a fair return on that investment. Own the pipes, collect the tolls, argue about the regulated rate of return.
The retirement village land bank
Ryman Healthcare (RYM), Summerset Group (SUM), and Oceania Healthcare (OCA) are, at their core, property companies that provide a care service. Their business model depends on the occupational right agreement (ORA), under which residents pay a large capital sum to occupy a unit, the company retains a deferred management fee (typically 20–30 percent of the entry price), and the capital gain on the underlying land accrues to the company. Their profitability is structurally linked to land prices — which means their sharemarket value is partly a derivative of the same RMA-driven land scarcity that makes housing unaffordable for younger New Zealanders.
The port duopoly
Port of Tauranga (POT) and Napier Port (NPH) are regional infrastructure monopolies. There is no other port in the Bay of Plenty. There is no other port in Napier. Their market power is geographic and permanent. Their profitability depends not on innovation or competition but on the absence of both. Port of Tauranga has earned premium infrastructure multiples for years on the back of freight growth that is itself a function of New Zealand’s failure to develop its rail network as a meaningful alternative to road and port logistics.
The property trusts
Goodman Property Trust (GMT), Precinct Properties NZ (PCT), Kiwi Property Group (KPW), and Property for Industry (PFI) are the index’s explicit rentiers. They own land and buildings and collect income from them. Their value is, by definition, a function of land scarcity and the RMA-enforced constraints on the supply of competing properties. They do not build the economy. They sit on top of it.
The freight beneficiary
Mainfreight (MFT), New Zealand’s largest listed freight company, is an excellent business built by excellent people. It is also, structurally, one of the principal beneficiaries of New Zealand’s failure to develop rail as a viable freight alternative. Every tonne that should travel by rail, travels by Mainfreight. The company did not create the policy failure that keeps freight on the road. But it profits from it, and it is not in the company’s financial interest to advocate loudly for its reversal.
The government procurement economy
Fletcher Building (FBU) is New Zealand’s largest construction and building products company — the dominant supplier of many of the materials that go into the government-procured classrooms costing $1.2 million each, sitting on the approved supplier panels the Ministerial Inquiry identified as lacking competitive tension. EBOS Group (EBO), the largest pharmaceutical and healthcare products distributor in Australasia, operates in a procurement environment where the Ministry of Health’s buying power is exercised through long-term supply agreements that effectively lock in market position.
The gambling monopoly
SkyCity Entertainment Group (SKC) holds exclusive casino licences in Auckland, Hamilton, and Queenstown. It does not profit from skill or efficiency. It profits from the mathematical certainty that gamblers lose money over time and the regulatory barrier to entry that prevents anyone else from operating casinos in its territories. This is the most honest business model on the index: the house always wins, and the government decided there would only be one house.
The NZX50 is not a measure of New Zealand’s productive capacity. It is a measure of New Zealand’s tolerance for monopoly, regulatory capture, and the financialisation of its own infrastructure failures.
Utilities, infrastructure, and property collectively represent well over 60 percent of the index. Healthcare — itself heavily dependent on government procurement and aged-care property values — adds another quarter. The NZX, in aggregate, is a portfolio of land, pipes, wires, runways, regulated returns, and occupational right agreements. It reflects an economy that earns roughly 73 percent of its GDP from services while exporting raw commodities and importing the value-added products those commodities could have generated domestically.
The Commerce Commission is too slow, too cautious, and too often years behind the industries it regulates. The Financial Markets Authority has been criticised for light-touch enforcement. The Electricity Authority operates within a market structure that has never produced the competitive outcomes its architects promised. And the NZX, sitting above all of it, reflects the accumulated consequence of three decades of regulatory hesitation.
New Zealand has not failed to build a productive economy by accident. It has built a Bullshit Economy through a consistent series of choices: to protect existing asset values over new entrants, to privatise public infrastructure without retaining regulatory teeth, to export raw materials rather than process them, and to treat the sharemarket as a reliable proxy for economic health rather than what it actually is — a ledger of who is collecting rent from whom.
The problem is not that these companies are listed. The problem is that so many of them have no productive alternative to the inefficiency that sustains them.
Fix the rail network properly and Mainfreight’s pricing power softens. Build the second runway and Auckland Airport’s retail captivity weakens. Reform the electricity market and the generator dividends moderate. Zone more land and the retirement village land banks deflate. The economy would be more competitive, more productive, and considerably less profitable for the companies currently renting it out.
That is why nothing changes.
The productive illusion
There is a number that sits behind everything described in this feature, and it is this: New Zealand ranks 27th out of 41 OECD countries by GDP per hour worked. Our labour productivity gap relative to the top half of the OECD has widened from 34 percent in 1996 to around 40 percent today. In the 1950s, New Zealand had the third-highest GDP per capita in the world; it now sits 37th. Our GDP per hour worked in 2020 was US$42, against an OECD average of US$64. In The Economist’s 2024 comparison of OECD economies, New Zealand ranked 33rd out of 37, ahead of only Finland, Latvia, Turkey, and Estonia.
The Productivity Commission described New Zealand as one of a small number of OECD countries with both a low level of labour productivity and low productivity growth, in company with Mexico, Greece, Portugal, Israel, and Japan. We are also capital shallow, ranking 26th out of 37 OECD countries in research and development spending. Forty years of economic reforms have not closed the gap. If anything, independent economist Cameron Bagrie has described New Zealand’s productivity as simply “awful.”
This is the context in which New Zealand’s two largest investment funds — the NZ Superannuation Fund and the Accident Compensation Corporation — allocate their capital. The Super Fund held NZ$76.6 billion as of June 2024. It invests 75 percent in global equities and only 5 percent in domestic New Zealand equities — roughly $3.8 billion in the economy it was created to benefit. North America alone receives 53 percent of the fund. ACC manages a further $40 billion, with the majority of its portfolio in listed companies in New Zealand and overseas, weighted heavily toward international markets where returns are higher.
Between them, these two funds manage over $116 billion in assets — roughly half of New Zealand’s entire annual GDP. They collectively invest more in North American equities than in the entirety of the New Zealand sharemarket. The reason is not ideological; it is rational. The NZX offers a portfolio of regulated monopolies, rent-seekers, and government-adjacent businesses with limited growth prospects. The Super Fund’s mandate is to maximise returns. Investing the majority of New Zealand’s national savings overseas is not a policy failure — it is a logical consequence of every policy failure described in this feature.
New Zealand’s government funds have looked at the New Zealand economy and concluded, quietly and professionally, that they can do better elsewhere. That is the most honest assessment of the Bullshit Economy that exists, and it is produced annually by the government’s own accountants.
The New Zealand Super Fund manages half of national GDP and invests the majority of it overseas — not out of disloyalty, but because the domestic economy built on inefficiency cannot compete for its own national savings.
