Jacinda Ardern and Christopher Luxon’s letters to each other revealed – New Zealand Herald

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Nearly four years ago, a successful chief executive partnered with the Prime Minister to help solve some of New Zealand's economic problems like infrastructure, training and excessive regulation.

The Prime Minister was "delighted" with the executive's appointment, and the pair appeared to get on well. Four years later, that chief executive, Air New Zealand's Christopher Luxon, is vying for Prime Minister Jacinda Ardern's job, while she tries to argue the advice she once welcomed would, in fact, be bad for the country.

Luxon and Ardern corresponded regularly before he became a politician. In 2018, he was appointed to lead the Prime Minister's Business Advisory Council, a post he resigned when he left Air New Zealand a year later, expressing an interest to enter politics.

Two years of that correspondence has been released to the Herald under the Official Information Act.

The result is mostly what you'd expect. Ardern's correspondence is warm and occasionally effusive in its praise. Luxon's is dry and to the point - at one point he attaches a 68-page report from management consultancy McKinsey on "harnessing automation for a more productive and skilled New Zealand".

Writing to Luxon in October 2018, appointing him to the council, Ardern praised him for offering his "time and energy", writing "I look forward to exchanging ideas and working together on policies that will help us transform the New Zealand economy."

Less than a year later, after Luxon left the council, Ardern wrote again, addressing Luxon with a more familiar "Dear Chris", having previously written to him as "Christopher" (a small mistake on her part, Luxon expresses no public preference against "Chris" but he's "Christopher" to his family and those close to him).

"I would like to thank you and your colleagues from Air New Zealand for the enormous effort you have put into establishing and chairing the Prime Minister's Business Advisory Council in its first year of operation.

"I have very much appreciated the enthusiasm and engagement of Council members on policy issues affecting businesses both small and large in New Zealand," Ardern wrote.

She added a handwritten "Thanks again, Chris!" to her letter.

The council's concerns ran the gamut of business concerns with government, from excessive regulation to New Zealand's infrastructure deficit.

As chairman, Luxon was responsible for feeding these concerns back to the Government (writing to Ardern, he adopted the more formal "Dear Prime Minister").

On infrastructure, Luxon said the system that "sits beneath effective and sustainable infrastructure development in our country is fundamentally broken".

"We also have a proclivity as a nation to focus on the short term and on individual projects as a means of addressing our challenges rather than addressing the system itself".

Luxon told Ardern the country was at an "infrastructure crisis point", but said it "is not ... the fault of the current Government".

"These issues are multi-generational and systemic. However, we believe your Government has the opportunity to begin resetting our systems and to address this crisis."

As for fixes, Luxon said he wanted to encourage the Government to "be bolder and think bigger".

Luxon, who has been critical of growing the size of the public service since becoming leader (he told the Herald he has a "major issue with the cost that's going into our civil service at the moment. I think we're adding a huge amount of centralisation, a massive amount of bureaucracy and we're not getting better outcomes"), proposed to create a whole new ministry for planning and cities.

"New Zealand should establish a Ministry of Cities, Urban Development and Population," Luxon wrote.

"This new portfolio could incentivise locally developed, long-term and tangible strategies and execution through to the administration of City Deals. This would include allowing local authorities to capture part of the value created through their own successful strategies and initiatives," Luxon told Ardern.

He also suggested the establishment of "a civil service academy for local and central government" to build "needed capacity in commissioning and managing projects of national significance".

Luxon said the Government should review the Resource Management Act (RMA), the Local Government Act (LGA) and the Land Transport Act (LTA), perhaps through a commission of inquiry. The Government did review the RMA, and has proposed rolling functions of the LGA and LTA into legislation that will replace the RMA.

When it came to just how these infrastructure projects should be paid for, Luxon hewed to the centre. His advice noted there would be a need for "debt-funded" infrastructure, but also urged a "philosophical shift" to embrace "public private partnerships" (PPPs).

"Government needs to ask itself whether there is any great social benefit in the state owning certain assets, especially when that comes at the expense of other government priorities and responsibilities," Luxon wrote.

Labour is open to the use of PPPs in transport (but not in health or education), however its experience with Transmission Gully has meant no transport PPPs have been greenlit under its watch.

Luxon suggested the Government should immediately greenlight the 12 road projects, known as Roads of National Significance the Government had iced when it shifted transport funding away from highways in 2018.

Luxon said that projects should be "opened to private investment" and progressed.

"New Zealand cannot simply rely on the market to deliver projects of scale that are of national significance," Luxon wrote, suggesting the Government should draw up a "national master plan", or "New Zealand Prospectus", of what it wanted to build.

Despite being critical of the cancelled roads, Luxon was supportive of the idea of multi-modal transport, which is where the Government decided to direct its attention after axing those 12 roads.

"... our transport infrastructure solution is not a binary choice between rail or roads, but a comprehensive scaled-up solution of rail and roads and coastal shipping and other modes," Luxon wrote.

"Our system must be totally integrated and agnostic as to mode of transport as each region will have different needs."

He suggested the Government amalgamate the way it funded road, rail, and shipping - which the Government has subsequently done in part.

He said the fund that pays for transport projects with fuel tax and road user charge revenue should be supplemented with general tax revenue "to pay for social and environmental outcomes from investment in rail, walking and cycling".

A list of ten policy priorities from Infrastructure NZ was attached to that letter. One of the priorities included was to establish national three waters entities, taking water services from councils - a policy National now firmly opposes. It is not clear from the correspondence, whether Luxon endorsed every part of the Infrastructure NZ advice he was sending to Ardern.

It is not clear either, whether the Prime Minister ever had the time to drill into the 68 page McKinsey report, however one person who did was then-Economic Development Minister David Parker, whose passion for dry economic literature, particularly Thomas Piketty, is well-known in Parliament.

In June of 2019, he wrote back to Luxon saying the Government was developing an "Industry Strategy" for 10 different sectors of the economy.

He said this was in part thanks to the advice of the Council and the McKinsey report it had sent the Government.

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Jacinda Ardern and Christopher Luxon's letters to each other revealed - New Zealand Herald