New Zealand


Policy Performance


Economic Policies

After years of restrained budgets, the country scores in the upper-middle ranks (rank 15) in terms of economic policy. Its score on this measure has risen by 0.2 points relative to 2014.

Successive governments have pursued a prudent, sustainable approach to spending. Growth has been moderate and stable over the last few years, at around 3%, but is showing perceptible declines. Debt levels are moderate by OECD standards, showing steady small declines thanks to years of modest budget surpluses. U.S.-China trade tensions have undermined business confidence.

Unemployment rates have fallen to under 4%. Labor-market policies have helped reduce youth-unemployment rates, but indigenous-community unemployment rates remains troublesomely high. Wage rates are showing only modest increases

Corporate taxes are high in international comparison. The incoming Labour-NZ First government rolled back planned tax cuts for families, and raised tax credits instead. The new government has also allocated funds for R&D tax incentives, with the goal of lifting R&D spending to 2% of GDP within 10 years.

Social Policies

With high educational attainments and a strong health system, New Zealand falls into the top ranks internationally (rank 6) with regard to social policies. Its score on this measure has fallen by 0.2 points relative to its 2014 level.

The country’s education policy delivers high quality, equitable and efficient education and training, with early childhood achievement a particular strength. The new Labour government introduced free tertiary education for first-year undergraduates. The health care system generally provides high quality services, though gaps between Māori and non-Māori health outcomes remain substantial.

Social-security benefits are comprehensive, but high housing costs are a growing problem for the poor. The new government has launched an affordable-housing construction program. Child-poverty rates remain a concern. Women’s labor-market participation rates are still well below that of men, but paid parental leave has been extended to 26 weeks, and family benefits have been increased.

Pension policies prevent poverty. Private pension plans are increasingly popular, but have been criticized for a lack of transparency. Record immigration figures were reached in 2017, but the NZ First government-coalition party has been instrumental in pushing a longer-term plan to reduce net immigration substantially by tightening up on work and student visas.

Environmental Policies

Showing gains in several key areas, New Zealand falls into the upper-middle ranks (rank 17) in terms of environmental policy. Its score on this measure has increased by 0.7 points relative to its 2014 level.

The new government appears committed to passing and implementing a zero-carbon policy, enshrining a climate-change target into law and creating an independent Climate Commission. Consultations on the issue are underway.

New Zealand’s largest greenhouse-gas contributor is methane from farm animals, with the country having the highest share of emissions from agriculture within the OECD. However, the existing emissions-trading program excludes biological agricultural emissions.

Water usage is another area of concern. The new government banned future offshore oil and gas exploration, but 22 existing permits are unaffected.



Quality of Democracy

With fair and transparent electoral policies and a strong rule of law, New Zealand receives a high overall ranking (rank 8) for the quality of its democracy. Its score on this measure has declined by 0.3 points relative to 2014.

Voting policies are open and inclusive. Seven seats are currently designated for Māori representatives. A new law requires lawmakers who quit or are expelled from their parties to give up their seats. Campaign financing is monitored by an independent commission, but private funding is criticized as being insufficiently transparent. A binding referendum on cannabis legalization will be held in 2020.

The broadcast media sector is largely controlled by Australian companies, with the print sector also effectively a duopoly. Civil rights and political liberties are strongly protected. Child poverty is increasingly being viewed as a human-rights issue. Anti-discrimination regulations are broad, but Māori and Pacific Islanders experience occasional discrimination in the education and health system.

Despite the lack of a written constitution, strong courts and a culture of respect for the law afford legal certainty. Corruption is very rare.



Executive Capacity

With a strong focus on interministerial coordination, New Zealand is rated among the top performers (rank 4) in the area of executive capacity. Its score on this measure has declined by 0.1 point relative to its 2014 level.

Power is concentrated within the cabinet, resulting in a highly cohesive system of cabinet government. The Department of the Prime Minister and the Cabinet (DPMC) has a number of strategic policy-advisory units. Formal and informal coordination between ministries and with the government office is common. The Labour-NZ First government faced some initial challenges due to ministerial inexperience.

Impact assessments are mandatory and systematically performed, with a strong quality-assurance component. Ex post evaluations are not mandatory. The government’s use of digital tools is highly developed. Societal consultation is not legally required, but is widely practiced.

Despite the coalition nature of the current government, its communication coherence has remained strong. While special interests sometimes influence the development of regulations, subsequent enforcement is generally unbiased. The government elected to continue the previous government’s support for a TPP trade agreement even after the United States’ withdrawal.

Executive Accountability

With mixed oversight capabilities, New Zealand falls into the upper-middle ranks (rank 16) with regard to executive accountability. Its score on this measure has declined by 0.3 points relative to its 2014 level.

Parliamentarians have comparatively slim resources, but ample oversight powers. The highly effective ombuds office is the world’s fourth-oldest. The review period saw the introduction of a proposal to enhance the powers of the privacy commissioner and make reporting of privacy breaches mandatory.

The population’s policy knowledge is generally strong, though participation levels among young people are low. TV and radio broadcasts offer considerable high-quality information. A decline in investigative journalism in the electronic and print media has been partially offset by internet commentary.

Decision-making styles in the traditional political parties vary. The small number of well-organized economic associations are involved in lobbying and policy formation. Other civil-society groups are frequently consulted by decision-makers.
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