Dunne's Weekly: While We're Breaking Up Monoliths, What About MBIE?

While the government is in the mood for breaking up failing conglomerates like the supermarket duopoly, it should consider doing the same to one of its own largest agencies – the ubiquitous Ministry of Business, Innovation and Employment. MBIE was supposed to be the government’s go-to department, but nearly everything it gets involved in ends up turning to dust at some stage.

It was MBIE that devised and managed the cumbersome, draconian MIQ scheme during the Covid19 lockdowns. It was MBIE, rather than the expert drug buying agency PHARMAC, that oversaw the Covid19 vaccine procurement process which left New Zealand one of the last countries in the world to get the vaccines, despite then Minister Megan Woods’ promise that New Zealand would be “at the head of the queue”. Apparently, although the orders may have been placed early enough, MBIE failed to ensure payment in advance to ensure stocks were supplied, a mistake PHARMAC would never have made.

Now, MBIE’s influence appears to have expanded to include judging the value of international events. Its unwillingness to support Auckland Council’s proposal for a bed tax to fund the next America’s Cup defence in Auckland in 2027 seems to have been a major influence on the government deciding not to get involved, and the Cup defence being forced offshore again.

But this is not an isolated case. In recent years, New Zealand has lost the hosting rights for other international sporting events, from the Netball World Cup to the Wellington Rugby Sevens. It is now hard to imagine New Zealand ever hosting a Commonwealth Games or Rugby World Cup series again.

In March 2024, Deputy Prime Minister Winston Peters blamed what he called “overly influential bureaucratic processes, power-drunk government departments, and some decision makers who care more about their fiefdoms than our country’s economic development and international reputation” for these decisions. Auckland Mayor Wayne Brown has suggested the government’s failure to support a visitor bed levy for Auckland to help fund an America’s Cup defence could cost it the next election.

Meanwhile, the government’s political defence of the decision not to provide the estimated $75 million necessary to support a Cup defence in Auckland has been predictable. “There is no magic money tree” says Finance Minister Nicola Willis. “Our priority is New Zealanders’ needs”, she adds, citing schools, hospitals and the cost-of-living. And, drawing on unspecified MBIE advice, she “doubts” the projected $2 billion economic boost that a Cup defence in Auckland was projected to provide. But the $75 million that was sought for the projected America’s Cup defence is a small drop in the government’s bucket, around 0.5% of its annual expenditure, before any economic gains are considered.

The decision also likely sounds the death knell for the Eden Park upgrade. The Prime Minister has already made it clear that the government is unlikely to fund the estimated $110 million needed to upgrade Eden Park. That will further detrimentally impact our capacity to host international sporting events. Yet taken together, the economic benefits over time from the America’s Cup and upgrading Eden Park would have far outweighed the one-off costs.

All this comes barely a couple of weeks after the government’s vaunted infrastructure summit where the Prime Minister and the Minister of Finance boldly asserted that New Zealand was open for business again and was actively seeking international investment partners for infrastructure development and significant events.

Both the failure to fund the America’s Cup defence and the upgrading of Eden Park send unwelcome signals about how receptive the government is to be doing the types of deals necessary to bring projects to fruition. Both are good examples where the collaborative investment approach the Prime Minister was so earnestly preaching at the summit could have been applied to overall national benefit. Moreover, the apparent failure to embrace these opportunities does not bode well for possible future infrastructure investment partnerships getting off the ground.

All of which comes back to the “bureaucratic processes” and “power-drunk government departments” Peters was complaining about a year ago. Implicit in those comments was a criticism of the monolithic power of MBIE to stifle development opportunities. There may have been logic at the time of MBIE’s formation in bringing together a key range of government functions as a type of one-stop shop to facilitate progress, but MBIE’s consistently cumbersome and myopic approach, on a range of issues over time, has had the opposite effect. It is not up to the task and needs to be broken up.

To ensure New Zealand does not become a backwater for international sporting and related events, the government ought to establish a stand-alone independent specialist agency to work on both securing such events for New Zealand and the public and private funding required for them to proceed. After all, our country continues to produce the best sports performers in the world across a vast range of sports and cultural activities. We ought to be able to see them compete here, rather than watching their overseas performances in the middle of the night.

But so long as MBIE’s narrow-minded influence holds sway, that will remain the best New Zealanders can look forward to.

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