Long-term thinking, not the sugar rush of short-term promises, should inform our decisions when we head to the polls this November, writes Shamubeel Eaqab, chief economist at Simplicity.
New Zealand goes to the polls on November 7. Between now and then, we will be promised tax cuts (or hikes dressed up as something else), cost-of-living relief, and tougher law and order. These are the staples of retail politics: short-term sugar hits for the three-year electoral cycle. But the challenges facing New Zealand are structural, and certainly not easily resolved by these promises. For investors thinking in decades, the gap between what gets campaigned on during an election and what the country actually needs is itself a major risk.
A dispiriting tradition
New Zealand has a tradition of short-termism in economic policy. Successive governments, regardless of political stripe, have chosen what is convenient today over what is needed for tomorrow. Operating deficits in five of the last seven years. Infrastructure investment well behind budget. Age-related costs blowing out as predicted but untouched, while KiwiSaver incentives – one of the few solutions to our ageing population issue – are quietly trimmed. Productivity a buzzword without committed long
term action.
The political cycle incentivises this. Politicians optimise for the next election. Hard structural choices get parked. The November election will follow this pattern. But it is not just the politicians. It is also because the public do not want to bear costs or share benefits. These problematic politics reflect fraying social cohesion and increasing disconnection from the communities we live in.
The locally-led antidote
But there is an antidote to short-termism, and it is not better politicians or more willpower in Wellington. It is local communities. Local communities do not always work well. There are plenty of examples of ongoing issues. Rates held too low too long, borrowing too much, or not maintaining their infrastructure. But there are communities that are bucking the trend, which tend to share some common traits: strong local institutions, civic leadership, social cohesion, and a sense of collective ownership over their future. The ones that are struggling have often been hollowed out not just economically, but socially. The decisions that matter have been centralised away from them.
This is not a romantic idea. It is a practical observation during my travels for a documentary I am currently filming. Local communities understand their own labour markets, infrastructure needs, and social dynamics better than any Wellington official or politician. They have skin in the game and are there for the long haul.
If we are serious about long-termism in economic policy, we must empower local decision-making: devolving fiscal tools, funding infrastructure through locally led strategies, and investing in the social infrastructure that actually makes communities work well.
What investors should care about
For investors, this matters more than it might first appear. Long-term investment returns depend on the structural health of the economy, not on which particular party wins in November. And structural health is built from the ground up: in communities, in businesses, and in the quality of institutions.
One of the most useful things investors can do is pay attention to what we term social licence. Not as an ESG box-ticking exercise, but as a genuine risk indicator. Businesses that are embedded in their communities, which invest in their workforce, maintain relationships with the places they operate, and contribute to local economic life, tend to be more resilient over the long term. They are better positioned to weather regulatory changes, political volatility, and the global regime shifts that are rewriting the rules of trade and cooperation.
Conversely, businesses that extract value from communities without reinvesting eventually face consequences: regulatory backlash, workforce attrition, and/or the slow erosion of the social conditions that allowed them to operate. Social licence is not a nice-to-have. It is a critical foundation of long term success. But what does this actually mean for investors?
Practically, there are things that direct investors (individuals or active fund managers) can do. When evaluating a company, look beyond the financials to its stakeholder relationships. Does it invest in its workforce, or churn through people? Does it have genuine roots in the communities it operates in, or is it extracting value with one foot out the door? These are not just soft metrics; they show up in staff retention, regulatory risk, and long-term margins. When comparing businesses in the same sector, the one with stronger social license is often the more durable bet. For passive investors, the lever is different but no less important: choose fund managers who actively engage with the companies they hold – on governance, workforce investment, and community impact – it’s not always just about returns and fees.
There is also a growing opportunity to direct capital (and support) towards opportunities that generate strong returns while building structural economic health. This is not philanthropy or fluffy good feelings. It is recognising that some of the best long-term opportunities are those that will have the social license to operate over the long term.
Election conversation we should be having
Investors think in decades. So do well-knit communities. That alignment tells us something.
The best long-run hedge for your portfolio is not guessing which party will form the next government. It is a country that is fiscally sustainable, productively dynamic, and socially cohesive, and businesses that build or support it. Those are the conditions that generate long-term returns, and they are built bottom up from local communities.
That is also the election conversation we should be having. Not what short term promise will buy votes today, but how we can start to knit back our local communities so that we can bear the collective costs to enjoy collective benefits of a well-functioning society and economy.
So when election candidates come knocking, ask them the uncomfortable question: not what they will give you in the next three years, but what their plan is for the next 30.
Shamubeel Eaqub is chief economist and head of policy at Simplicity.
The information provided and personal opinions expressed in this article are intended for general guidance only and not personalised to you. These materials do not take into account your particular financial situation or goals and are not financial advice or a recommendation.
