New Zealand

   
 

Executive Summary

Healthy, stable
political system
New Zealand’s democratic system is based on a unicameral parliament, a working rule of law, a strong executive branch and effective government. The system is healthy and stable. Despite an ongoing debate over the adoption of a written constitution, the fundamental structure and operation of governance reflects represents continuity. New Zealand’s unique constitutional arrangements result in a significant concentration of power in a highly cohesive system of cabinet government. The country’s commitment to economic freedom is reflected in its leading position in the World Bank’s 2018 Doing Business report.
Election produces
shift to left
The review period of the SGI 2019 covers approximately the first year of the new (sixth) Labour government. In September 2017, the National party lost office after nine years in power. Despite success at the 2017 election, it was unable to secure a parliamentary majorty after its former coalition partners, the Māori and United Future parties, failed to win any seats and a third party, ACT New Zealand, retained only one. In late October 2017, Labour and New Zealand First (NZ First) formed a coalition government. A third party, the Greens, agreed to a confidence and supply arrangement, in exchange for some policy concessions and ministerial positions outside of cabinet. As a result, the new coalition government under Prime Minister Jacinda Ardern (Labour) was able to command the support of 63 of the 120 seats in parliament. The NZ First and Green Parties had relatively little in common, representing significantly different constituencies and policy agendas, and had little history of parliamentary cooperation.
Surprisingly stable, efficient government
Throughout the period under review the coalition has been surprisingly successful at providing stable and effective government. Of the two small parties, NZ First gained the more prestigious appointments: its leader Winston Peters was appointed deputy prime minister and minister of foreign affairs, and the party was allocated four seats at cabinet. In contrast, the Greens were kept at some distance, their three ministers taking up positions outside cabinet.
Prudent fiscal approach maintained
Throughout the review period, New Zealand performed well with respect to the three indicators that form the basis of this report: governance capacity, policy performance and quality of democracy. The new government maintained a prudent fiscal approach, and economic growth remained healthy. Policy initiatives included raising the minimum wage, curbing immigration, and restricting non-resident homebuying, as well as holding out the promise of a “well-being” budget in 2019. The abolition of national standards in schools pleased teachers’ unions, although doubts remain as to whether the promised improvements in student achievement will materialize.
Restrictions on sale of homes to non-residents
On 14 August 2018, the government passed the Overseas Investment Amendment Act 2018, which bans the sale of existing homes to non-residents as a means of easing the housing shortage in New Zealand. Australians and Singaporean nationals were made exempt from this ban due to free trade rules. Some of the coalition’s spending priorities that seek to redistribute wealth and opportunity have been criticized. Finance Minister Grant Robertson has stated that his immediate goal is to achieve a budget surplus. Deputy Prime Minister and Foreign Minister Peters is overseeing a large increase in the foreign affairs budget, much of which will be directed to supporting aid in the South Pacific. His NZ First colleague, Shane Jones, has received a “war-chest” to disburse around the country in his role as Regional Economic Development minister. Yet another NZ First member, Defense Minister Ron Mark, has secured cabinet support for the procurement of new P8 Poseidon maritime surveillance and patrol aircraft. This represents New Zealand’s largest military expenditure since the purchase of ANZAC frigates.
Immigration requirements tightening
In December 2018, shortly after the review period, New Zealand government signed the UN Global Compact on Safe, Orderly and Regular Migration (UN GCM). At the same time, it began to tighten its immigration requirements.
Citations:
Ayson, Robert 2018. New Zealand’s unusual coalition survives in a febrile world. East Asia Forum, 28 December 2018.http://www.eastasiaforum.org/2018/12/28/new-zealands-unusual-coalition-survives-in-a-febrile-world/

Stuff. 2017. NZ First, Green Party, Labour coalition deals revealed. 24 October 2017, https://www.stuff.co.nz/national/politics/98170259/nz-prime-minister-elect-jacinda-ardern-reveals-cost-of-coalition
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