New Zealand


Sustainable Policies


Economic Policies

After years of restrained budgets, the country scores in the upper-middle ranks (rank 14) 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 but steady in recent years, declining in 2019 to 2.1%. Thanks to years of modest budget surpluses, overall government debt is low by OECD standards, at around 19.2% of GDP. Business confidence has fallen to the lowest levels since 2008, driven by global trade concerns.

Unemployment rates have fallen to under 4%. A regional development program has focused on reducing income and employment gaps for Māori and Pasifika communities. Separate programs address youth unemployment. The minimum wage is rising in annual increments. The job market suffers from a shortage of skilled workers and seasonal labor.

Revenues are skewed toward personal-income and value-added taxes. The Labour government designed its 2019 budget around “well-being priorities.” Tax incentives for R&D have been increased, with the goal of increasing R&D spending to 2% of GDP over the next 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 0.1 point relative to its 2014 level.

The country spends more than any other OECD country on education, with early childhood education and care a particular strength. However, outcomes are on average significantly poorer for Māori and Pasifika students. The healthcare system generally provides high quality services, but is showing signs of being overburdened. Gaps between Māori and non-Māori health outcomes remain substantial.

The income gap has been steadily widening, with high housing costs a growing problem for the poor. An affordable-housing construction program was scrapped, and a new program seeks to provide house-ownership funding support. Child-poverty rates remain a concern. Employment rates for women are well above the OECD average. Domestic violence is a serious problem.

The basic pension policy effectively prevents poverty. Private supplementary pension plans are increasingly popular, but have been criticized for a lack of transparency. The attack on a Christchurch mosque in 2019 shook the country’s sense of security, and resulted in a ban on military-style semi-automatic weapons. The prime minister has also led an international initiative on hate speech.

Environmental Policies

With a growing focus on climate-change policy, New Zealand falls into the upper-middle ranks (rank 21) in terms of environmental policy. Its score on this measure has increased by 0.2 points relative to its 2014 level.

The government has passed a climate-change act that targets a reduction of greenhouse-gas emissions (aside from biogenic methane) to zero by 2050. The country derives 85% of its energy from renewables, and its largest dairy company is reducing its use of coal-fired power.

However, the country’s large agricultural sector produces considerable methane and nitrous oxide gasses. The meat and dairy sector has taken a toll on freshwater resources, with more than 60% of the country’s freshwater resources heavily polluted. New water regulations will be implemented beginning in 2020. A new biodiversity strategy is also being developed.

The country has signed a number of multilateral agreements on environmental protection, including the Paris Agreement. Its current policies are not rated as consistent with holding warming to below 2°C, however.

Robust Democracy


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. Campaign financing is monitored by an independent commission, but private funding is criticized as being insufficiently transparent. Referendums on cannabis legalization and assisted dying will be held in 2020.

The broadcast media sector is largely controlled by international companies, with the print sector also effectively a duopoly. Civil rights and political liberties are strongly protected.. Anti-discrimination regulations are broad, but Māori and Pacific Islanders experience occasional discrimination in the education and health system. Some positive-discrimination measures in favor of these communities exist.

Following the Christchurch mosque shootings, a new government investigative unit has been tasked with finding and prosecuting “hate speech” online. Despite the lack of a written constitution, strong courts and a culture of respect for the law afford legal certainty. Corruption is very rare.

Good Governance


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 0.2 points 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, with all policy proposals reviewed in cabinet committees.

Impact assessments are mandatory and systematically performed. New RIA guidelines have expanded the scope of assessment. The use of digital tools is highly developed. Societal consultation is not legally required, but is widely practiced. The Labour-led government has delivered on a substantial number of its promises, and the prime minister was praised for her response to the Christchurch shooting.

After some inconsistency of messaging under the current coalition government, communication has become more coherent. While special interests sometimes influence the development of regulations, subsequent enforcement is generally unbiased. A new Public Service Act will give the public administration more flexibility, and clearly establish the principles of an apolitical public service.

Executive Accountability

With mixed oversight capabilities, New Zealand falls into the upper-middle ranks (rank 15) with regard to executive accountability. Its score on this measure has declined by 0.1 point 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. A proposal under consideration would enhance the powers of the privacy commissioner and make reporting of privacy breaches mandatory.

The population’s policy knowledge is generally strong, with voters submitting a large number of comments on issues with public resonance. The media landscape is dominated by commercial companies. Newspapers provide high-quality content, but broadcast companies focus on entertainment.

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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