New Zealand PM Refrains from Condemning Beijing, Plays Up India Trade Prospects

Prime Minister and National Party leader Christopher Luxon speaks during a media stand-up at Parliament in Wellington, New Zealand on Nov. 3, 2023. (Hagen Hopkins/Getty Images)

New Zealand Prime Minister Christopher Luxon has stayed mum on current tensions between Washington and Beijing, saying his government will await further advice.

“We will continue to have strong relationships with our longstanding allies and friends, where we have common values, and we will look to build trade opportunities wherever we can ... we are a small country ... we don’t generate wealth by selling to ourselves,” he told a post-Cabinet press conference on Dec. 11, 2023.

He said the government would take advice on involvement in the AUKUS Pillar II deal, involving the United States, Australia, and the UK, as well as Beijing’s Belt and Road Initiative.

New Zealand’s two-way trade with China amounts to $40 billion a year, with both governments signing a “Memorandum of Arrangement” (pdf) on the BRI in 2017.

Bullish on Indian Trade Prospects

Despite not giving a clear indication of what areas of trade India might want to engage New Zealand (NZ) in, Prime Minister Luxon remained optimistic about the prospects of a free trade deal.

The Indian government has a highly protectionist policy, making the type of comprehensive agreement New Zealand has signed with the European Union and Britain very difficult to achieve.

But Mr. Luxon insists Trade Minister Todd McClay will be on a plane to India before Christmas to start negotiations for a future deal.

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Ministery of Foreign Affairs and Trade (MFAT) officials have long warned that such a deal was impossible, mainly because India cannot offer dairy access, and NZ could not agree to any deal without that access because of the significance of its dairy industry. The Indian government has expressed the same misgivings.

Some Indian tariffs for dairy products are as high as 200 percent.

While on the campaign trail, Mr. Luxon’s National Party promoted the possibility of an “early harvest” deal with India—a type of agreement focussing on areas where the two nations agree, leaving areas of disagreement for later.

This would represent a significant change from New Zealand’s longstanding, careful approach to trade deals, which came about to avoid encouraging other trade blocs to think they could force NZ into quick, less advantageous trade agreements.

But Mr. Luxon said his conversations with Indian politicians suggest that the country is willing to consider a more comprehensive deal.

“In my conversations with the Indian government and others, I think that we can build a deeper trading relationship with India. I have seen other countries do it and we haven’t,” he said.

However, he would not be drawn on what Mr. McClay might offer to induce India to the negotiating table. Trade between the two countries was worth around NZ$2.6 billion for the year ending September.

Trial Periods Back for New Workers

Meanwhile, New Zealand employers will regain the right to impose 90-day trial periods on all newly hired workers before Christmas, the government promised.

The former National-led government introduced 90-day work trials, allowing businesses to dismiss staff within the period without needing a reason.

Under the previous government, only businesses with less than 19 employees could use the trial period, and only if it was agreed to in writing beforehand.

Returning the right to larger employers was one of the key platforms of the libertarian ACT Party—one-third of the new coalition government with National and NZ First—as well as scrapping Fair Pay Agreements.

The changes were announced today (Dec. 11) at the regular post-Cabinet press conference by Workplace Relations and Safety Minister Brooke van Velden, who is also deputy leader of ACT.

She said extending 90-day trial periods to all employers would give businesses confidence to hire new people, and it would increase workplace flexibility.

It would also benefit people looking for work, she said.

“[The trials] allow employers to employ someone who might not tick all the boxes in terms of skills and experience but who has the right attitude, without the risk of a costly dismissal process,” she said.

The government will move quickly on the law because it can adopt ACT MP Todd Stephenson’s member’s bill, enabling it “to progress quickly and provide certainty to businesses.”

Ms. Van Velden assured reporters that “The extension of 90-day trials will not affect other aspects of employment relations, such as the requirement to act in good faith, or worker protections regarding pay, conditions, leave, and health and safety.”

Yet a Treasury-commissioned study in 2016 disputes Ms. Van Velden’s contention, finding 90-day trials did not help jobseekers and did not boost employment numbers.

The government is also moving quickly to remove Fair Pay Agreements legislation before any are finalised to ameliorate the “negative impacts” felt by the labour market.

“They do not help employees. Instead, they make life harder for businesses so they’re more hesitant to employ people,” she said.

Prescription Fees to be Reintroduced

Despite polls showing 86 percent of people support keeping prescriptions free for everyone, making it one of the most popular policies ever, Prime Minister Luxon said they will be reintroduced.

He said wealthy people should not be subsidised for a $5 fee when that money could be better spent meeting other health outcomes, such as providing 13 new cancer drugs.

“The reality is, we’d love to do it all, but this is not a wealthy country ... this is a country that cannot afford everything we want to do ... and we’re trying to look after the people who desperately need the help and support,” he said.

For families, prescription fees will be capped at $100 a year.