Reports that the American billionaire and Trump loyalist insider Peter Thiel is winding down his business interests in New Zealand call to mind one of the more controversial issues relating to New Zealand citizenship in recent years.

Peter Thiel is an entrepreneur and venture capitalist who co-founded PayPal in 1998 and the major data analysis company Palantir Technologies in 2003, amongst other global technology businesses. He has been a substantial contributor to the United States Republican Party over the years, supporting many right-wing causes, and was on the executive of Donald Trump’s transition team when he was first elected President in 2016.

In 2011, Thiel was granted New Zealand citizenship, despite having spent only 12 non-consecutive days in the country, compared to the normal residency requirement of 1,350 days. At that time, there were many wealthy Americans seeking to relocate in New Zealand as a bolthole and promising in return to invest substantially in the New Zealand economy.

Most of these applications were unsuccessful, but Thiel’s application was approved under the “exceptional circumstances” provisions of the Citizenship Act because it was considered to be in the “public interest”. Ministers argued he would be a “great ambassador and salesperson” for New Zealand.

But it was not until 2017 that Thiel’s New Zealand citizenship and the details surrounding it became known publicly. At that time, I was the Minister of Internal Affairs, responsible for citizenship matters. However, I had not taken up that role until 2014, three years after Thiel had become a citizen.

Nevertheless, because of the public controversy the revelation of the circumstances of Thiel’s citizenship caused, I carried out my own informal review of the case. Following a recommendation from the Ombudsman I agreed to release previously withheld official information about Thiel’s citizenship application. This showed that Thiel had actively lobbied Ministers to become a New Zealand citizen but had rarely been seen in New Zealand since being awarded citizenship.

Based on the information available to me at time, I concluded that were no reasonable grounds for granting Thiel citizenship. I told both Parliament and the media that had the original decision been mine to make I would not have approved the application.  At the same time, I acknowledged that I had no legal authority to overturn the decision, except in the most unusual of circumstances where Thiel had been proven by a Court to have acted deliberately against New Zealand’s interests or threatened our security. Neither of these were ever likely to happen, so Thiel remains a New Zealand citizenship to this day, even if his interest in this country appears to be diminishing.

In the wake of the Thiel affair, Internal Affairs officials proposed to me ways of making the citizenship process more transparent to “help address possible perceptions of undue influence and better ensure public confidence”. These included an "open citizenship register”; writing into law which factors could be used when considering "exceptional circumstances"; and even setting out a specific exception for activities such as vast financial investment.  Another option would be a periodic independent assessment of all these decisions, which are relatively rare, by the Auditor General.

I agreed with most of these proposals (although I preferred the Ombudsman instead of the Auditor General as the review authority) and directed they should all be considered as part of the wider review of citizenship law I had planned for 2018. However, I left my role as Minister in late 2017, and the review I had planned appears to have never taken place.

The government’s recent announcement of a new visa scheme to make it easier for foreign investors to come to New Zealand reopens many of the questions raised by the Thiel citizenship affair. While visa schemes making it easier for foreign investors to invest here and create jobs to grow the New Zealand economy should be welcomed, they must not be allowed to circumvent the rules by which New Zealand residents become citizens, in the flagrant way the Thiel case did.

Citizenship should always be granted only in accordance with the provisions of the Citizenship Act. Where there are exceptional circumstances requiring the exercise of the Minister’s discretion, these should be fully documented and be reviewable by the Ombudsman. Indeed, when I was Minister and made citizenship decisions either against the recommendation of officials, or exercising the exceptional circumstances discretion, I always set out my reasons in full in a memorandum attached to the case file.

Citizenship is a precious privilege accorded to those born here, qualifying New Zealand residents, and those with a special association with this country. The Thiel case is a salutary reminder that citizenship can never be allowed to become just one more commodity to be casually traded as part of a putative investment deal. 

MMP was expected to break the old Parliamentary duopoly of National and Labour and lead to far more inclusive and diverse political debate. Certainly, the increase in the number of parties in Parliament has spread the range of views being heard in the House, but it is doubtful that this has led to a greater level of debate about those views.

Contrary to what some might imagine, Parliamentary debates are not free-ranging expressions of opinion, where differing ideas and policies are contested. They are extremely regimented. Most debates are time limited, with speaking times (ten minutes per speaker) and speaking order pre-determined evenly between the government and Opposition sides of the House. A typical debate comprises twelve speeches, with each of the six parties currently in the House getting at least one call.

Debates have therefore become occasions to state party positions, rather to contest differing ideas. Consequently, MPs often appear to be no more than the delegates of their respective party when speaking in the House, rather than legislators debating the merits of specific legislation. In short, contemporary political debate has become all about political parties rehearsing established political opinions to their respective political audiences, rather than debating new ideas and seeking to reach consensus about the best way forward.

The same tactic also applies to the wider approach most parties take to promoting their interests. In this respect, it is worth recalling Hillary Clinton’s observation that good political stories always contain a “goodie” and a “baddie”.  So, when the parties tell their stories to their supporters, they are always the
“goodie” identifying the “baddie” they are fighting to protect the country from, as the reason why people should vote for them.

The current spat between New Zealand First leader Winston Peters and Green MP Ricardo Menéndez March is a case in point. The row is less about Menéndez March’s use of Aotearoa to describe New Zealand than it is about asserting the respective brands of New Zealand First and the Green Party.

To traditionalist, anti-multicultural New Zealand First, the very presence in Parliament of Mexican immigrant Menéndez March is bad enough, but his reference to Aotearoa instead of New Zealand was wokeness in the extreme. Peters’ comments were therefore a dog-whistle to those voters who hold similar views, that New Zealand First is in their corner.

The obverse applies in the case of the Green Party. To them, Menéndez March was showing proper respect to tangata whenua by referring to New Zealand by its original name and acknowledging their traditional rights and role. But neither New Zealand First nor the Green Party has any real interest in debating their respective positions with each other – the far more important point for both was to window dress where they stood for the benefit of their supporters.

The same goes for ACT and Te Pāti Māori and their dispute over the Treaty Principles Bill. Each desperately needs to be able to portray the other as intolerant, unreasonable and anti-democratic to validate its own position and strengthen its appeal to its core supporters. Again, it is less about reasoned debate of differing points of view than an absolute statement of an unshakeable position. The last thing either seek or want is any form of compromise or reasoned discussion.

This sharpening political fundamentalism is creating a difficult problem for both National and Labour, more traditionally broad churches than narrow lines of opinion. It is more acute for National at present, simply because it is the leading party of government.

Prime Minister Luxon often looks hamstrung by the extreme or unreasonable positions of his support partners. While he cannot endorse them, because they are not what his party stands for, he cannot reject them outright either, because that would destroy his coalition government. But pretending the differences are not there at all, as Luxon often appears to do, is the worst position of all. It leaves the government looking weak and indecisive. Therefore, to resolve this dilemma, National needs to better develop its own political story, complete with its own “goodies” and “baddies”, instead of just hoping, as currently appears to be the case, that its tick-box list of achievements will carry the day.

It is a smaller but similar problem for Labour at present. However, it will grow as the election nears and more attention is paid to the radical policies of the Green Party and Te Pāti Māori and how they might be accommodated in a future Labour-led government. Opposition leader Hipkins is frequently critical of Prime Minister Luxon’s current difficulties, seemingly unrealising that precisely the same challenges are lurking just around the corner for him in the run-up to the election.

The demise of political debate as it used to be, in favour of the fervent, dogmatic statement of party opinion as incontrovertible fact as we have now, has dramatically changed the nature of political discourse around the world. The absolutist way the Trump Administration and its allies operate is the obvious extreme example. But our political system is not immune from these features. The redefinition here of political debate to be less about the exchange of ideas than the statement of pre-determined positions should be viewed with increasing concern, rather than just becoming accepted, the way it seems to be.

Over fifty years ago, the satirical television show Monty Python’s Flying Circus attacked the then emerging lowest-common-denominator approach to resolving complex issues in a skit where the existence of God was decided in a wrestling match, by two falls to a submission.

Sadly, that is precisely the same approach we are taking to complex political issues today.

The first opinion polls of the year send a mighty wake-up call to the coalition government, but they are not the death knell some might think. Polls are always a snapshot in time, subject to particular influences at the time they were taken. A more accurate assessment emerges from the trends that they disclose over time, rather than the result of any one individual poll.

In this regard, a rolling average of the polls shows that while an election held today would be extremely close, the coalition government is still marginally ahead of the Opposition bloc. However, that lead has been reducing steadily. While for most of 2024 the difference between the two blocs did not move much since the 2023 election, National’s support has fallen sharply since September/October, with Labour’s increasing, although not as sharply.

Nevertheless, the National-led coalition is more precariously positioned at present than each of the last two Labour-led governments were at similar stages in the previous two Parliaments. For example, at the equivalent point in in 2019, the Labour-led coalition was leading the centre right bloc by almost 12 percentage points. And at the same point in the last Parliamentary term, in 2022, the Labour-led bloc still had a substantial lead over National and its allies.

Much can of course change between now and election day. By the start of 2019, National was beginning to open a small lead over Labour, only to see that completely obliterated by the onset of Covid19, and Labour’s historic election landslide later that year. Similarly, in 2022 Labour’s comfortable lead over National waned and fell away altogether during the year. Labour’s handling of Covid19 was no longer an asset and was turning people off in droves, leading to the government’s defeat in 2023.

Therefore, it is far too soon to draw firm conclusions about the implications of the parties’ current ratings for the 2026 election outcome. However, some general observations can be made, based on the figures.

The first is that unlike any other lead party of government under MMP, National has no electoral fat to draw upon when times get tough. Its 38% party vote share at the last election – far lower than the vote share of the Key and Ardern governments when they were first elected – means it has no reservoir of support to draw upon.

Its current polling average of just under 33% of the party vote is at least ten percentage points below what it should be for the party to be confident of re-election in two years’ time. Of arguably more concern for the government is that National does not yet appear to have a strategy for growing its vote share to this extent.

At the same time, the situation is not all that rosy for Labour. The polling average shows its vote share has grown by only about three percentage points in the last six months, leaving it still well below the level of support it would need to lead a government after the next election.

Of the minor parties, support for the Greens and ACT has been relatively stable since the last election. Both are on average rating less than a percentage point higher than at the election. Although one recent poll showed New Zealand First’s support hovering around the 5% party vote threshold level, its support on average has not moved from the 6.6% party vote level it recorded on election day. Given New Zealand First’s historic propensity to perform far better at election time than it ever does in opinion polls during a Parliamentary term, that leaves it in a comfortable position at present.

Te Pāti Māori looks to have more than doubled its party vote support since last year’s election – to around 5.4% according to the latest polling averages. But it is unlikely to see this rise in support translate into a significant increase in its number of seats at the next election. This is because all its seats are electorate seats. If it holds all these seats at the next election and wins around 5.4% of the party vote as current polls suggest, it would still only be entitled to the six electorate seats.

This creates a potential problem for Labour should it be in a position to form a government after the next election. Most of the new votes Te Pāti Māori could attract will likely have come from Labour, given Māori voters’ historic links to the Labour Party, but the return in terms of seats won for the centre left bloc may not be as great as it might be had those voters stayed loyal to Labour.

A further complication for Labour is that Te Pāti Māori is almost certain to make policy demands – like the establishment of an independent Treaty of Waitangi Commissioner with the power to veto government actions about the Treaty – that Labour will find difficult to accept in whole or part,  without risking alienating conservative elements of its own core constituency. Hipkins’ vacillation on the issue demonstrates Labour’s problem: it cannot afford to be too dismissive of Te Pāti Māori’s demands because it is unlikely to be able to form a government without them, but, if it is too agreeable, it risks not getting enough votes of its own to be in a government-forming position.

While ACT and the Greens have uncompromisingly nailed their colours to the National and Labour masts respectively, New Zealand First has been somewhat more ambivalent about its options. At this stage, however, there appears to still be too much bad blood between New Zealand First and Labour, following the experience of the 2017-2020 coalition, to see a Labour-led government involving New Zealand First as a viable option.

All this suggests that the next election is still the National-led coalition’s to lose. However, more antics of the type seen from David Seymour of late could hasten that process.

 

From the Prime Minister’s state of the nation speech onwards National has made it very clear that its unrelenting focus this year will be on catching the economic growth wave. It clearly hopes that this, along with Reserve Bank-engineered falling interest rates and, unless Donald Trump gets too much in the way, steadily falling inflation, will both help it to overcome stubbornly high unemployment rates and give the “squeezed middle” sufficient incentive to vote National once again at next year’s election.

But despite the constant talk about going for growth, National has so far revealed very little about specifically how it intends to achieve that. The closest any Minister has come to spelling out a plan has been New Zealand First Resources Minister Shane Jones with his commitment to more mineral exploration. While there is arguably considerable potential value in exploiting some of the country’s mineral reserves, that policy alone is unlikely to satisfy National’s growth objectives, even if all the conservation and environmental issues involved with more mining can ever be resolved.

In any case, New Zealand should have long learnt through bitter experience that governments picking winners in whatever sector is not a viable long-term way to achieve sustainable economic growth and development. Businesses seeking to invest in New Zealand, be they local or foreign, need assurance about the long-term investment and business environment before they commit to the economy in a way that will foster growth.

That is where the “bold” package of tax reform Finance and Economic Growth Minister Willis is mooting for this year’s Budget becomes critical. New Zealand’s current business tax rates are no longer competitive nor conducive to encouraging new business to locate here, or existing export businesses to stay.

Our current corporate tax rate of 28 cents in the dollar is out of line with countries we like to imitate where we can – in Ireland the corporate tax rate is 12.5%, and it is 17% in Singapore. Australia has a two-tier system of 25% for companies with a turnover of less than $A50 million, and 30% for those above that figure. In the United States the federal corporate tax rate is currently 21% although President Trump has pledged to reduce that to 15%. China’s corporate tax rate is 25%, with lower rates for some low-profit companies.

New Zealand’s current 28% corporate tax rate was set back in 2011, when I was Minister of Revenue. I had also overseen an earlier review, in 2007, which had led to the rate being reduced from 33% to 30% in that year’s Budget. However, prior to that, the last time corporate taxes had been reviewed was nearly twenty years earlier in 1988, following the 1987 Sharemarket Crash.

Only two business tax reductions in the last 36 years, and the last one nearly 14 years ago, at a time of considerable change and turmoil not only shows how badly New Zealand has lagged other countries, especially at a time when the international movement of capital and technology has never been more rapid. It also shows the extent to which successive New Zealand governments have failed to appreciate the role competitive corporate tax rates can play in attracting and retaining investment and jobs.  Without investment and jobs, and the wealth they create, it is increasingly difficult for modern societies like ours to fulfil all the responsibilities citizens expect.

So, Nicola Willis has a lot of catching up to do to both restore competitiveness in New Zealand’s corporate tax rates, and to stimulate the long-term investment that should flow from that. There will almost certainly be a significant short-term revenue loss from reducing corporate tax rates to a more competitive level. Part of her bold strategy will be having to absorb this, at least until the gains from the new rates start to flow in terms of new investment. Whatever she does, she must resist the temptation to try to offset potential revenue losses by new or additional taxes elsewhere that will nullify the benefits of lowering corporate taxes.

And should she make a change in this year’s Budget, she needs to then commit to regular reviews – say five yearly – to ensure that the new rates remain internationally attractive and competitive. Ireland and Singapore have shown that once it is underway, the bandwagon effect of competitive corporate tax rates gathers momentum exponentially, and the gains quickly flow.

Many have dismissed Prime Minister Luxon’s “growth” as just rhetoric so far, more about deflecting criticism at the start of the new political year of the government’s performance to date. Willis’ proclamation she is prepared to be “bold” offers not only the hope that she understands the need to reform our corporate tax rate, but also that she will now get on with the job of doing something about it. It will be to the country’s benefit.