Published in The Australian (Sydney), 5 May 2026
In October 2023, New Zealanders were in a foul mood. Three years earlier they had handed Labour an outright majority with 50.1 per cent of the vote. But in 2023, they cut that vote nearly in half. They elected a National-led coalition that had promised to get the country back on track.
The two coalition agreements, National with ACT and National with New Zealand First, set out an unusually ambitious reform programme.
But two and a half years later, the polls have turned against the government. New Zealanders once again say the country is on the wrong track. And parts of the reform agenda have stalled or look oddly diluted from what the coalition agreed.
What happened?
Behind every elected government stands a permanent, unelected one. Ministers introduce Bills and fight political battles. Then the public service has its turn.
The coalition’s reforms threatened to reduce, constrain or bypass a series of powerful regulators. The establishment pushed back.
New Zealand’s medicines regulator, Medsafe, is an example. Under the coalition’s plan, Medsafe would have had much less to do. Both coalition agreements promised that medicines approved by two trusted overseas regulators would be approved in New Zealand within 30 days. That would have avoided second reviews of clinical data already examined in the United States, Europe or Australia.
It is no wonder the establishment fought back. Bit by bit, the promise was watered down.
The law passed last November. Under the draft rules, Medsafe has 30 working days, not calendar days. The clock only starts once it accepts the application, and it pauses whenever it asks for more information. That is not the near-automatic approval the coalition agreements promised.
But medicines were easy compared with planning. That would have required an entire ministry to abandon its worldview.
The Resource Management Act, New Zealand’s main planning law, was to be replaced by a regime centred on the enjoyment of property rights. The default for applications for land use would have been approval rather than denial.
Yet the Ministry for the Environment was wedded to its old worldview: control first, property rights second, with the law an elaborate tool for keeping things from happening.
The reform was thus watered down. The property-rights framing appears nowhere in the primary text of the Planning Bill introduced to parliament in December. The operative substance has been pushed into “national direction”, regulations the Ministry will write. The cost-benefit test that required officials to justify new rules has been dropped without replacement.
Where the Ministry for the Environment defended a philosophy, the Commerce Commission defended its territory.
According to the coalition agreement, the Commerce Commission’s intrusive market-study powers were to be narrowed to regulatory barriers to new entrants. However, the Commission’s remit had grown steadily over the past decade, and it was unlikely to surrender it without a fight.
And so, somehow, the reform produced the opposite of what was intended. The Commerce Amendment Bill now before parliament widens the Commission’s powers, authorising it to demand forecasts and business plans in whatever formats it specifies.
In other words, the government wanted to constrain the Commission, but the Commission has persuaded the government to expand its powers instead.
Three reforms, and three ways the bureaucracy got their way. It all fits a pattern. After enough years of watching Wellington, one learns that solemn coalition promises are not always delivered. That is rarely because ministers were insincere. It is often because they cannot get their way.
In the three cases above, the promised reforms reached parliament watered down. But there is a fourth case of the bureaucracy prevailing which is even more telling.
The new government thought the Reserve Bank had grown too large, too activist and had strayed too far from its core mission. It scrapped the Bank’s dual inflation-and-employment mandate for price stability alone. It cut the Bank’s bid for more than $1 billion over five years to $776 million. Governor Adrian Orr resigned in March last year over the funding settlement.
The political signal to rein in the Reserve Bank could not have been clearer. And yet the Bank pressed on with an imperial agenda of its own.
The Reserve Bank proposes a cash services standard requiring private banks to operate at least 1,200 sites, so urban residents are within three kilometres of a free service and rural residents within 15 to 30. The $104 million annual cost would fall on banks, and ultimately their customers.
Asked for the legal basis, the Bank cited its “stewardship” of cash and the “social licence” of banks. Social licence is not a legal power. Stewardship is, but it covers issuing notes, not compelling private banks to fund a national network. A paper released this week now points to the Deposit Takers Act. The Bank claims to believe this provides a sufficient legal basis.
The Bank now claims a route to that power through secondary legislation – the very route parliament could have provided in primary legislation and did not.
What unites the four cases is quiet defiance of an elected government by a permanent, unelected one. Voters worry about politicians who break their promises. They should worry more about politicians who cannot get their promises past the bureaucracy.
Officials, of course, would not call this defiance. They will say medicines need local safeguards, planning law needs technical detail, competition studies need information and cash access matters for those who cannot easily go digital.
But ultimately, these are political questions. And in a democracy, we elect parliaments and governments to decide such questions, not the bureaucracy.
Incidentally, there is an exception to this story of bureaucratic power. The government’s most striking achievement of this term, in education, came when the minister brought in an external advisory group to drive structured-literacy and numeracy reform. Where outside expertise was the route, the reform proceeded at speed. Where the bureaucracy was the route, the reform was steadily reshaped.
In October 2023, New Zealanders voted for change. They got a new government. But they also kept the permanent government of the public service which is still quietly running the show in the background.
