Before we can get to the hopeful part, we must acknowledge where New Zealand is facing ruin.
New Zealand finds itself in a vulnerable position. Though considered a developed economy, it is performing poorly on many indicators.
Regarding GDP per capita, New Zealand now sits below countries like Italy, Belgium and Iceland.
Our annual labour productivity growth has hovered around a meagre 1 per cent for the past three decades.
The OECD ranks us as the most restrictive economy for foreign direct investment (FDI) among its members.
No wonder that as a percentage of GDP, our FDI stock is now lower than it was 25 years ago.
Meanwhile, the International Monetary Fund (IMF) predicts we will have the worst current account deficit in the developed world this year. One in 11 dollars of our GDP is effectively funded from overseas.
And that is before we even get to how New Zealand’s state services are underperforming. New Zealand’s government sector does not provide a decent education. It does not run a world-class healthcare system. Its infrastructure delivery leaves a lot to be desired.
Though it would be an exaggeration to say that New Zealand lies in ruins, something is obviously not right. Far from being “God’s own”, we have become distinctly average, if not mediocre.
Unpleasant as it is, it needs to be spelt out directly. New Zealanders prefer to think everything is fine. Number 8 wire and all that. She’ll be right. We are not so good at admitting when things go wrong. But an honest analysis of our sad state of affairs is vital to overcome it.
Here is a starter for 10
New Zealanders believe we are a country open to the world. That we are almost the ones who invented free trade.
Well, not quite. Though New Zealand got rid of most tariffs, signed bilateral trade agreements and facilitated the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), we never took full advantage of the globalised economy of the early 21st century.
The reason is that New Zealand understands globalisation mainly as a byword for selling our raw products on international markets. And yes, we are good at that.
But globalisation is more than that. It should have meant linking our business networks deeply into the world economy. That might have happened had we seen more foreign direct investment come here. And then we would have witnessed a growing international connectedness in our economy, too.
Alas, this never happened. We did not make it easier for international companies to invest here, nor did we make migration procedures any easier.
Some of this is due to Covid-19. During those Covid years, our border was almost impenetrable to foreigners (and to many Kiwis, too).
But New Zealand’s hostility to foreign investment precedes Covid by decades. Our country has never been easy to navigate for international investors.
In justifying these restrictions, we kept telling ourselves we were protecting our vital interests by vetting anyone who might come here. But in truth, it is us paying the price for this supposed vigilance.
Who knows how many furniture stores never made it to New Zealand because of these restrictions? Or supermarkets? Or pharmacy chains?
How many multinational factories never got built in New Zealand because of our regulatory barriers to entry? How many research facilities? How many data centres?
And who knows how much New Zealand consumers would have been better off given these additional choices?
New Zealand needs another liberalising wave to unlock the opportunities of globalisation (or whatever is left of it).
But just opening up more to the world is not enough. If we want to be an attractive destination for international capital, we also need to become a more attractive place for international talent.
And this means more than making visa processes faster and easier. It is also about getting our schools up to world standards. Or our healthcare system. And solving the housing affordability crisis, for that matter.
Because for global talent to settle in New Zealand, this country needs to offer a better all-around package. We should not expect highfliers from advanced countries to consider living here if we can only offer nice scenery.
Incidentally, if we managed to improve the basics such as health, education and infrastructure, we would also make it more likely to retain our own talent ... before they consider leaving for Australia.
There is a lot of ruin in a nation, to be sure. But New Zealanders have it in their hands to turn our country around.
Yes, New Zealand is going through a rough patch right now. But with the right leadership, we can get out of our current malaise and become world-class again.
· Dr Oliver Hartwich is the executive director of The New Zealand Initiative.
