If one word could sum up 2024, “sobering” might be it. This week’s final economic data for the year – from Treasury’s half-year update to yesterday’s GDP numbers – reads like the opposite of a Christmas wish list.
 
New Zealanders would be forgiven for feeling worn out. Another severe recession, worsening government books and a current account gap stuck above 6% of GDP – 2024 concludes on some harsh facts.
 
Yet, oddly enough, this year’s straight talk feels refreshing. After years of political slogans and wishful thinking, 2024 gave us a much-needed reality check. Recognising reality is essential to solving problems.
 
The new government has remade the landscape. It has moved fast on some of its plans.
 
That said, as a think tank keen on bold reforms, we would have liked to see even more nerve in some key areas – above all in reshaping the public service, cutting spending and managing the economy.
 
Bizarrely, despite all the talk of austerity and public service cuts, the numbers tell a different story – down from the 2023 December peak but still showing a slight annual increase. There is no sign of harsh public service cuts.
 
Public finance dynamics are also deeply worrying. Earlier in the year, we warned that tax cuts in the face of a large structural deficit were an irresponsible political gimmick.
 
Unfortunately, this week’s HYEFU confirmed our fiscal concerns. Tax cuts without corresponding spending cuts are pointless. Future taxpayers will foot the bill – plus interest.
 
For many years, we have also warned that the Reserve Bank’s macroeconomic mismanagement is costing the New Zealand economy dearly. If it needed any further proof, the shocking GDP figures on Thursday delivered it.
 
Despite this, there is still no accountability. On the contrary, no-one at No. 2 The Terrace seems willing to accept at least partial responsibility for the macroeconomic mess we are in.
 
Beyond these systemic economic challenges, the list of pressing (and long-standing) policy problems is long: crumbling infrastructure from roads to power, backed-up health systems, falling school results, rising crime rates, dysfunctional local governance, and thousands of New Zealanders trapped in welfare dependency.
 
The reforms now happening in these areas are not coming a day too soon.
 
But 2024 was not all bad news – and certainly not for us at the Initiative.
 
Our Health Summit drew doctors and lawmakers together to help reshape healthcare.
 
Our Universities Symposium sparked key talks about free speech and better teaching.
 
Our webinars on issues like local government reform, education and law reform are regularly attended by hundreds of viewers.
 
Best of all, our policy ideas have found open ears.
 
Our years of work on opening New Zealand to overseas investment has paved the way for a broad liberalisation. This will help the economy attract capital and lift our productivity.
 
Our push for property rights in planning are being considered by ministers and will make housing more affordable over time.
 
In education, our prescription for curriculum reform is already being implemented. It will make future generations of students much better equipped for life.
 
All these steps show a shift toward policy built on evidence, not wishes.
 
As we look to 2025, we can clearly see the size of the reform tasks ahead. But sharp sight gives strength. We know what needs fixing. We know what must be done.
 
Now comes the real work. It will take economic understanding, political courage and resolute leadership to deliver it.
 
Our members and supporters have stood with us as we mapped these challenges. Your input keeps our work tied to real needs and opportunities.
 
From all of us at the Initiative, may summer and Christmas bring some much-needed rest and relaxation.
 
The reforms ahead will ask much of us all, but they will build a better, stronger New Zealand.
 
That is worth working for. We will continue doing so in the New Year.

Podcast: A year of hard truths, Dr Oliver Hartwich, Dr Eric Crampton and Dr Michael Johnston provide a roundup of the year.