A distinguished economist on the tensions of centralisation
Newsroom. 16 April, 2025.
It was not originally envisaged that the government of New Zealand would be highly centralised. The Colonial Secretary’s instructions to Hobson are about a minimalist state. That explains the provisions in Te Tiriti o Waitangi which allocate ‘kawantanga’ to the Crown and ‘rangatiratanga’ to Iwi and localities. Both terms can be translated as ‘sovereignty’. Hence the claim that the Crown has sovereignty under Te Tiriti while Māori claim they never seceded sovereignty.
Later, the 1852 Constitution provided Māori with considerable autonomy and created provinces. The autonomy was never pursued and the provinces were abolished in 1876. New Zealand became increasingly centralised. Today it is judged one of the most centralised of all democracies.
The centralisation reached a high point under the Muldoon government in the 1970s. The Lange-Douglas fourth Labour government rolled some back with market liberalisation although even here it used its central powers to dictate a priority for business solutions.
The preference for centralised government continues. It was a default response to a policy failure by the Ardern-Hipkins Labour Government. Examples in my just published book, In Open Seas: How the New Zealand Labour Government Went Wrong: 2017-2023, include Health NZ, Three Waters, the mega-polytechic, the RNZ-TVNZ merger and the treatment of local government.
The Luxon coalition government has wound back, or promised to wind back, some of the Labour policies, but in the case of Health NZ it has intensified central control by appointing a commissioner. Various ministers – even ACT ministers – have taken on detailed political control.
This centralisation is causing serious tensions in New Zealand’s governance. There has been some progress with rangatiratanga. The treaty settlements have established many iwi as economically viable entities. But they are not rich enough to give widespread support to their members. The government has also delegated traditional functions (with funding) to agencies such as Māori Urban Authorities, which are a modern version of (urban) Iwi.
Decentralisation to localities has been less successful with the government happy to order local authorities around. Sometimes they are fighting back. Auckland is proving particularly recalcitrant.
A couple of decades ago, Treasury concluded that New Zealand development needed a world-competitive economic hub. This led to the merging of the fragmented local authority structure into the unified Auckland Council. The Key-English National government overruled some of the Royal Commission’s recommendations – even those supported by the locals – demonstrating the centre’s willingness to use its power. A subsequent Labour minister decided that the second Waitematā crossing would be a cycleway. The locals told him to get on his bike. Central government faces that Auckland is too big and organised to be easily bullied. Other local authorities are less fortunate.
Centralisation has arisen because of the smallness of the country and the lack of independent local funding. Central funding goes with ministerial responsibility. Decentralisation of local government requires decentralisation of funding, as is happening with Māori. Without it we are going to have increasing tensions.
* Based upon a chapter in the recently published Open Seas: How the New Zealand Labour Government Went Wrong: 2017-2023 by Brian Easton (Copy Press, $45), available in selected bookstores.