Taking Stock – 12 November 2026

Edward Lee writes:

New Zealanders went to the polls on Saturday, with the preliminary results suggesting that the existing government is likely to remain in office, despite a strong campaign from opposition parties seeking a change in government.

National, ACT and New Zealand First collectively secured a projected 67 of the 131 seats in Parliament.

By comparison, Labour, the Greens and Te Pāti Māori secured just 57 seats between them, ten fewer than the existing coalition parties. 

The remaining seven seats went to The Opportunity Party, which has indicated that it would negotiate first with the party holding the most seats. This makes a change of government less likely, although the final result is still to be confirmed.

I suspect many investors will welcome this result. Businesses have spent much of the year considering what a change in government might mean for taxation, regulation, debt costs, exchange rates, interest rates and major development projects. 

The prospect of retaining the current government offers reassurance and stability, particularly for companies that have already committed substantial capital to projects under the existing regulatory framework.

The election comes at a time when New Zealand's economy is struggling.

Many businesses have experienced several years of subdued consumer spending and rising operating costs, with higher oil prices, global food prices and council rates adding to the pressure.

Unemployment increased to 5.7% in the September quarter, with approximately 174,000 New Zealanders unemployed. Annual inflation has eased from its earlier peaks but remains at 3.7%, above the Reserve Bank's target range.

When I look at what is happening overseas, New Zealand's economic difficulties are hardly unique.

Canada, another developed economy with considerable natural resources and a relatively small population compared with its larger trading partners, has an unemployment rate of 6.7%.

Across the Tasman, Australia's annual inflation rate has reached 4.3%, higher than New Zealand's 3.7%.

I make these comparisons because there has been a tendency to blame the government of the day for almost every economic difficulty New Zealand faces.

Governments certainly influence economic outcomes, sometimes considerably, but they do not control global inflation, international interest rates, commodity prices or the economic performance of our major trading partners.

I think New Zealand has become far too reliant on government spending to support economic growth. We need more private investment, particularly in industries capable of generating export earnings and creating employment.

We have considerable natural resources, renewable energy potential, a strong agricultural sector and opportunities to expand our infrastructure and export industries.

Yet we have also developed a reputation for making major projects extremely difficult to progress, whether that be a solar farm, a communications tower, a port expansion or a mining project.

For businesses considering investments worth hundreds of millions of dollars, the risk is not just about whether a project will be profitable, but also how long it will take to obtain approval, what conditions might be imposed and whether the rules could change before construction even begins.

A company can spend years undertaking technical studies, consulting communities, acquiring land and arranging financing without knowing whether it will ultimately be permitted to proceed.

If investors believe the regulatory environment could change significantly following an election, they will demand higher returns to compensate for that uncertainty, or, more likely, simply invest elsewhere.

New Zealand is competing with other countries for investment capital, and I suspect we sometimes forget that investors are under no obligation to put their money here.

I am not suggesting that developers should be exempt from environmental requirements as they should be required to demonstrate that their projects can operate responsibly. However, once those requirements are established, companies should be entitled to a fair and timely decision that shouldn’t take over a year to make.

Changing the rules midway through a project can cost investors millions and undermine confidence in investing in New Zealand.

One area where the election result is already being felt is the sharemarket.

The Fast-track Approvals Act has been an important development for companies seeking to progress major projects in New Zealand. It provides an alternative approval pathway for projects considered to have significant regional or national benefits.

Importantly, I have yet to see evidence that the fast-track process has resulted in poorer environmental outcomes. Projects are still subject to environmental assessments and consent conditions.

Despite its name, the fast-track process has hardly been fast for some of the companies involved!

The legislation was an area of considerable disagreement during the election campaign, with some opposition parties expressing concerns about the legislation and the types of projects being considered.

A change of government could have introduced considerable uncertainty for companies already progressing projects through this framework.

Santana Minerals is a good example.

Santana has spent considerable time and money progressing exploration, engineering, environmental studies and development planning.

Its project is approaching a critical stage in the fast-track approval process, with a draft decision expected late November or early December.

Since Saturday's election, Santana's share price has increased by more than 10%, recently trading at approximately 62 cents.

I do not think these share-price movements are entirely coincidental.

Investors appear to be taking some comfort from the prospect that the existing government, which introduced the fast-track legislation, may remain in office.

I suspect the reduced likelihood of a change in government has contributed to the buying interest.

Santana's recent correspondence with the Fast-track Panel provides another example of the difficulties facing developers.

On 3 November, lawyers representing four Ngāi Tahu rūnaka wrote to the Expert Panel expressing dissatisfaction with what they considered inadequate consultation over changes relating to a road access issue associated with the project.

Their lawyers argued that the lack of consultation raised concerns under the Ngāi Tahu Treaty Settlement and section 7 of the Fast-track Approvals Act.

Yet Kā Rūnaka have been actively involved in the approval proceedings for months, including making submissions, presenting evidence and participating in discussions with the Panel.

The Panel also specifically invited Kā Rūnaka to comment on the agreement reached between Santana's project company and Central Otago District Council concerning the road. 

Santana's CEO, Damian Spring, has since responded, outlining the engagement undertaken and the opportunities provided for Kā Rūnaka to participate.

Given the extensive involvement of Kā Rūnaka throughout the proceedings, including an express invitation to comment on the agreement, I find the suggestion of inadequate consultation difficult to understand.

Their lawyers maintain that the complaint concerns direct consultation over the latest changes, rather than their involvement in the wider proceedings.

Despite these concerns, Kā Rūnaka's lawyers stated that they were not seeking to address the implications of the late changes further but wanted the Panel to consider their concerns when making its final decision.

So after extensive technical assessments, multiple requests for further information, public submissions and months of engagement, a company can still face accusations that it has not consulted sufficiently.

At what point does drawn out consultation become an obstacle to getting anything built?

Santana has already committed considerable resources to bringing the project to this stage. Further delays would have financial consequences, not only for shareholders but also for the businesses and communities that could benefit from the mine proceeding.

If developed, the project will bring new jobs, new businesses, new homes, and generate export income for Central Otago. 

Of course, getting consent is only half the battle. 

Construction costs, commodity prices and financing will ultimately determine whether these developments are commercially successful.

Investors already have enough commercial risks to consider without having to worry about the rules changing halfway through a project.

Electricity generators such as Meridian Energy face similar commercial considerations. Obtaining consent for new generation capacity is important, but the investment must still make financial sense. Building a wind farm or hydroelectric development is of little benefit to shareholders if the eventual returns are inadequate.

If the election result holds, I suspect the next uncertainty will concern which ministers receive the major portfolios and how the coalition parties agree to govern over the next three years.

I will be particularly interested to see who becomes Minister of Finance, and who takes responsibility for infrastructure and resources. These are appointments that could have a real influence on investor confidence.

I would also be interested to see whether the next government places greater emphasis on reducing expenditure, limiting borrowing and encouraging private investment.

New Zealand already faces considerable fiscal challenges, and there is limited room for governments to increase spending without considering how it will be funded.

Borrowing to build productive infrastructure can make sense. Borrowing year after year to pay the government's everyday bills is another matter.

We cannot keep looking to the government to stimulate the economy. Ultimately, it is businesses that create most of the jobs, pay wages and generate the taxes needed to fund our public services.

I would like to see the next government place greater emphasis on removing unnecessary barriers to investment, particularly in industries where New Zealand has a natural advantage.

Consider the rather extraordinary situation involving one of Lodestone Energy's proposed solar farms.

Despite receiving approval through the fast-track process, the project is now facing a High Court appeal from, believe it or not, the Environmental Defence Society (EDS).

I find this frustrating. The project could generate enough renewable electricity to power approximately 45,000 homes, yet an environmental organisation is attempting to overturn its approval.

A company can go through the approval process, receive consent and still face the prospect of expensive legal proceedings before construction can begin.

What particularly concerns me is that we have an environmental organisation challenging a renewable energy project at a time when New Zealand desperately needs more electricity generation.

I have no idea how many members EDS represents, but I would be surprised if most New Zealanders supported preventing a project of this nature from proceeding.

I would like to see the next government examine whether the current appeals system strikes the right balance between protecting the environment and allowing much-needed infrastructure to be built.

There must be a point at which developers can rely on an approval and proceed with confidence.

We should be capable of developing our natural resources and building new renewable electricity generation without compromising sensible environmental standards. At present, I am not convinced we have the balance right.

A good business does not automatically become a poor investment because a particular party wins an election, just as a weak business does not become a good investment simply because the political environment appears favourable.

Company earnings, balance-sheet strength, management quality and the price paid for an investment remain fundamental.

I believe we have spent too much time debating how the country's existing wealth should be distributed, and not enough time discussing how we can create more of it.

We cannot tax or borrow our way to lasting prosperity. At some point, we need businesses to invest, employ more people and produce more of the goods and services that New Zealand can sell to the rest of the world.

Rather than continuing to burden businesses with unnecessary regulation, we should be doing everything we can to encourage investment. New Zealand is a small economy competing for international capital. We need to make this country a more attractive place to invest, not a more difficult one.

If Saturday's election result holds, the next government will have an opportunity to provide the certainty businesses need to make those investments.

I hope it takes that opportunity.

Travel

16 November – Wellington – Gavin Parkes

17 November – Lower Hutt – David Colman

17 November – Christchurch - Chris Lee

18 November (am) – Christchurch – Chris Lee

18 November (pm) – Ashburton – Chris Lee

19 November – Timaru – Chris Lee

8 December – Takapuna, Auckland – Chris Lee

9 December – Ellerslie, Auckland – Chris Lee

Investors who would like an appointment to meet are welcome to contact us.

Chris Lee & Partners