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Free Press - November 2nd

Free Press

ACT’s regular bulletin

Exceptional Culture
The All Blacks’ back-to-back Rugby World Cup victories are just a small part of an exceptional period of dominance. Only the Australian Cricket team and a guy who played pool in the 1990s have ranked number one in the world longer than the current All Blacks. Up until 2004 the All Blacks had won 75 per cent of all games, three wins for every loss. Now they are at 86 per cent, a staggering six wins for every loss. They are big and they are talented, yes, but it’s their culture that’s exceptional. Teams such as McLaren Mercedes come to study the culture and at least one book has been written on what the world can learn from them.

New Zealand Exceptionalism
New Zealand actually leads or nearly leads the world in a whole host of areas and has done since the early 1990s. It is not the done thing in the land of the tall poppy, but this week Free Press rehearses some of the rankings and achievements that make New Zealand exceptional, with a few areas for improvement.

Freest Markets
For 45 years the Fraser Institute have been executing a Milton Friedman-inspired project to measure who has the freest markets of them all. They measure sound monetary policy, low and flat taxes, openness to foreign investment, the amount of government expenditure, and the strength of property rights. In 1970 New Zealand had the 21st freest economy out of 53 measured countries, since the early 1990s we’ve consistently finished in the top three out of 157 countries. The countries ahead of us are Hong Kong and Singapore, which are closer to city states than countries, so we’re first for free markets.

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Greatest Civil Liberties
Freedom in the World has been measuring political freedom and civil liberties since 1972. They ask questions such as whether people can freely and peacefully assemble, and whether the elections are free and fair. New Zealand has had a perfect score every year the index has been done, and is one of only seven countries to have maintained democracy throughout the 20th century. (To be fair, several more were trying but through no fault of their own were invaded by totalitarians.)

Best Place to Do Business
Last week the World Bank ranked New Zealand second easiest place in the world to do business, based on measures such as ease of starting a business, accessing basic infrastructure, and dealing with government departments such as the tax department. Free Press realises many small business owners will be aghast at this result, but it partly reflects that fact that governments elsewhere are even worse!

Least Corruption
New Zealand has been pipped at the post by Denmark and has recently become the second least corrupt country out of 176 countries measured after a long run at number one. Those who have travelled and done business even to presumably Western countries such as Austria will know that New Zealanders’ sense of playing fair and above board is rare if not unique in the world.

Greatest Prosperity
The Legatum Institute, funded by a Kiwi expat billionaire, publishes an annual Prosperity Index, measuring the wealth, health, and happiness of 142 countries. Last year New Zealand ranked third. We were pipped by Norway and Switzerland, who are vastly wealthier than New Zealand due to their oil reserves and proximity to a market of half a billion people. Also, Free Press suspects the index didn’t consider how boring those countries are so we are claiming victory on this index too.

Human Development
We don’t usually care what the U.N. says. We don’t care for being lectured on human rights by despots and on race relations by the occasional genocidal maniac but, since Helen Clark will soon be running this madhouse, we acknowledge New Zealand’s strong showing in the U.N. Human Development Index (7th in the world).

Environmental Custodianship
Yale University’s Environmental Performance Index ranks New Zealand 16th/178 for being a good environmental custodian. It is a weird index. It ranks New Zealand first for access to clean water and 95th for access to sanitation. Then it ranks us 94th for agricultural subsidies. New Zealand’s removal of all agricultural subsidies was not only unique but good environmental policy. Farmers no longer waste fertiliser to get subsidies.

If It’s All So Good Why Are We Bothering?
As Graham Henry told the All Blacks after a 42-6 win over Wales, “the challenge is to always improve, to always get better, even when you’re the best –especially when you’re the best.” New Zealand probably led the world at women’s emancipation by 1900 – thankfully we didn’t stop then. Plus there are a few areas where we aren’t leading, with the enduring component holding us back being the size of government.

Housing Affordability
Demographia’s International Housing Affordability Survey tells us that New Zealand has the highest ratio (5.2) between house prices and income anywhere bar Australia (where they have a capital gains tax and foreign buyer restrictions). While a house in the average city of over one million population costs 3.6 years’ income, in Auckland it is 8.2. The Demographia data covers literally hundreds of housing markets and presents compelling evidence that it is the supply of land that city councils will let you build on that affects affordability. Auckland’s result is no surprise given Auckland Council’s fetish for forced intensification.

Superannuation Sustainability
Australia, France, Germany, the U.K, Belgium, Spain, Ireland, the U.S. and basically every other developed country is in the process of raising its retirement age, or at least has announced it will. At the 2006 census New Zealand had five workers per retiree, by the time current students retire there will be only two workers per retiree. The interesting thing is it’s not really an issue for current or imminent retirees; they’re fairly safe unless there is a radical upheaval. It is however an issue for the young. Sadly, John Key’s Prime Ministership will be remembered for delaying the inevitable pension age adjustment as much as for the flag referendum.

Foreign Investment
Despite our general free market credentials we rank 48th/54 for openness to foreign investment (i.e. there are only six countries harder for foreigners to invest in). Foreigners already see a tiny country with a volatile exchange rate that is expensive to get to, so we pay high interest rates for capital. Idiotic decisions such as that to block the Lochinver sale for arbitrary political reasons only make our natural capital shortage worse. We should remove economic considerations from the Overseas Investment Office’s mandate and have them focus only on security. They know little about economics anyway.

Education Equality
Despite our high overall ranking, we have very high education inequality. Much of it is split along ethnic lines. A Statistics New Zealand breakdown of PISA results showed that, if considered as a separate country, European New Zealanders would rank first in the world, Asian 7th, Maori 28th and Pasifika 35th. We need to do better at providing education that works for all New Zealanders.

Imagine….
…if there was a party that staunchly defended New Zealand’s free markets while promoting greater openness to foreign investment, more choice and innovation in education, opening up the supply of land for housing, and adjusting the parameters of NZ Super to fit our demographic reality? Thankfully you’re already reading ACT’s newsletter and if you haven’t already please join or donate.

ENDS

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