Interestingly, but coincidentally, I had previously talked about the paths that some rich nations (measured by GDP per capita) had taken. One of them was the financial services approach. My observation was that this seems to work only in relatively small countries (smaller than New Zealand) and that it generally means making the kind of compromises that I don't believe New Zealand would make.
Now, John Key has made the switch from national cycleways to financial services with the same level of consideration as the cycleway choice - ie not much. Financial services do not appear as primary industry for any country of any size that is rich, including Ireland (which is supposedly the model for Key's ideas). Being wealthy is about adding value not hanging on coat tails and that is what financial services is.
Very small countries can do very well by hanging on coat tails but there is one of two prerequisites for this. You either, first, have to be a country hanging on the coat tails of much larger neighbours (and I mean much larger - such as Liechtenstein to Switzerland and Austria and the rest of Europe); or second, you have to be willing to, perhaps not quite turn a blind eye, but certainly be very poor of sight.
You either represent a neutral and acceptable option to powerful neighbours (by virtue of not being a threat, somewhat dependent on the neighbours and culturally similar); or you don't ask questions about where all that money came from and you certainly tell no tales (ie you struggle to recollect any details of that particular transaction). Let's be clear, despite a national small man syndrome New Zealand does not fit the first category and I don't for a minute believe that we want to be in the second.
Hear is the fundamental problem with expecting financial services to lead to financial wealth. Capital is an enabler. Capital enables someone else to substitute for resources or labour or both. If you are specialising in financial services then the truism is that you are enabling someone who isn't you. Unless a country's wealth needs are at the margin of large neighbours wealth generation then enabling someone else will not generate sufficient wealth for a country to be wealthy. Despite the self-promoted importance of the financial community all money is dumb money. Money is basically a wildcard for resources or low skilled labour. If you don't have low skilled labour or resources then money can substitute, but it is no more wealth generating than iron ore.
Wealth comes only from high skilled labour. The kind of skill that can't be substituted for by capital no matter how much you can throw around. The kind of labour that doesn't make things but designs the things that others then make. The high skill atracts plenty of money which then pays for plenty of relatively cheap resource and cheap labour. Rich countries make some things, they can afford to pay their lower skilled populace lots of money (after all why not keep it in the country when you can) but what they do - fundamentally - is design the electronics, the ultra-lightweight ultra-strong materials, the robots that make robots, the processors that make processors, etc.
Assuming that New Zealanders are willing to hang up their morals then financial services might produce enough wealth to fund a population of, say, the Cayman Islands (about 49,000). That's enough to cater for two years of New Zealand's population growth - max! We could achieve the same economic outcome, in per capita terms, by restricting immigration for two years.