Minister for Regulation David Seymour. Photo / Marty Melville
Minister for Regulation David Seymour. Photo / Marty Melville
New Zealand has become a more regulated and difficult place to do business, according to a new OECD report.
In 1998, NZ had been among the least regulated countries in the OECD, an organisation of mainly wealthy countries.
New Zealand was second behind the United Kingdom, based onthe OECD’s Product Market Regulation indicator, which measure’s a country’s regulatory framework against international best practice.
Countries are scored from 0 to 3, with 0 indicating fewer regulatory barriers and 3 indicating more.
New Zealand is now very much in the middle of the pack, with a PMR score close to the OECD average - although the OECD notes that changes to methodology have made direct comparison’s different.
Interestingly, NZ appears to have improved its score over time, scoring 1.45 in 1998, 1.29 in 2003, and 1.23 in 2008, and 1.26 in 2013.
It has stayed roughly the same since then.
New Zealand’s poor performance relative to other countries appears due to other countries deregulating with greater speed and vigour, leapfrogging NZ in a race to become the most business friendly market.
Lithuania is top of the pack with a score below 1. It is followed by Sweden, Ireland, the UK, the Netherlands, and Estonia.
New Zealand scored particularly poorly when it came to measuring the ease of obtaining licenses and permits to do business, with the sixth worst score of any country in the OECD - roughly double the average.
And NZ came last in the ranking of countries that had adapted regulatory systems to adapt to digital markets. This index measured the way countries had adapted their regulatory systems to address the competition issues that arose from new digital markets.
Labour's regulation spokesman Duncan Webb. Photo / Mark Mitchell
The Minister for Regulation David Seymour said the result was a “shocker” that should “end any and all doubt that the Government must go to war on red tape and regulation”.
“The quality of regulation in NZ is in freefall. From being ranked 2nd in 1998, we are now 20th in this year’s survey. It’s no coincidence that NZ experienced strong productivity growth in the 1990s but has fallen behind since,” he said.
“It is too difficult to invest, and Kiwis have their productivity sapped because of the time spent complying with edicts from Wellington.
“Not only does poor regulation add cost to the things we do, it ensures other activities don’t go ahead. The cumulative effect is a country of ‘can’t’, with the ‘can-do Kiwi attitude’ a memory,” he said.
Labour’s regulation spokesman Duncan Webb said the report provided “useful insights for where we can do better in effective regulation as well as where we excel - such as the very low barriers to entry for new firms”.
“While overall we are above the OECD average and have improved since 2018 we agree that there is room to improve and lower regulatory burdens in some areas,” Webb said.
He said NZ’s “very low score” on matters related to lobbying required “immediate attention”.
“This report should not be used to remove import regulatory controls or ride roughshod over environmental protections, such as by giving ministers sweeping powers to grant consents to vested interests,” he said.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
