… to see oursels as ithers see us! (translation follows)
So said Robert Burns, Scotland’s most famous literary figure, reflecting on seeing a louse on a lady’s bonnet during a church service. Roughly translated, Burns was saying how good it would be if we could view ourselves objectively.
Now that the 2017 General Election is out of the way, it is safe to attempt an objective look at New Zealand’s economic performance.
Immediately after the election, my colleague, Hugh Dixon, posted an article on this site (26 September 2017), showing that New Zealand had one of the lowest debt to GDP ratios in the OECD. And before the election, the Treasury’s Pre-election Economic and Fiscal Update included an Executive Summary that started: “New Zealand's economy and the Crown's books are in a sound state” (PREFU, 23 August 2017).
That’s all good, then. But what do non-New Zealand observers think? One such observer is the OECD, which published its most recent Economic Survey of New Zealand in June of this year.
On the positive side, the Survey noted that:
- Well-being (general quality of life) is high
- Economic growth is strong (but less so in per capita terms)
- Unemployment is low
- Inflation is low
- Employment is shifting to high-skilled occupations
- NZers have high problem-solving skills in technology-rich environments.
But on the negative side, it noted that:
- Economic growth is not so great in per capita terms
- House prices are high, relative to incomes
- Labour productivity growth is low (and it continues to lag)
- Non-residential investment per capita is low
- Lower skilled jobs are at risk because of automation
Tertiary education attainment is below the OECD average (but many NZers are overqualified for their jobs).
Essentially, this all points to an assessment of: Not bad, but could do better. And, on the subject of doing better, the Survey made a series of thematic recommendations.
The first theme was: Making growth more sustainable and greener; and it included proposals to increase banking sector resilience, bringing forward the date for raising the age for eligibility for superannuation and indexing the age to life expectancy, introducing pollution charges and increasing the price of carbon, and intensifying the protection of threatened species.
The second theme was: Increasing productivity; and it included proposals to reduce the barriers to foreign direct investment, reviewing personal and corporate tax settings and the potential for broadening the tax base, encouraging councils to do more to accommodate growth, and strengthening the role and powers of the Commerce Commission.
The third theme was: Adapting to the changing labour market; and it advocated reviewing the minimum numeracy standards for school qualifications, increasing competence to teach mathematics, increasing infrastructure investment to support better housing and greater urban intensification, and considering expanding training and guidance for displaced workers.
Full details of the Survey can be found here: