Treasury Staff Insights: Rangitaki article by Darian Woods
“Coming from a country that has just recovered from a volatile housing market, I want to offer some suggestions for New Zealand...”
We sat in an underground conference room, past two security checkpoints manned by camouflaged guards, edging the Bois de Boulogne park in Paris.
Representatives of the 34 other Organisation for Economic Cooperation and Development (OECD) countries faced us. Some wore headphones. Some spoke at length. All had a black placard with their country name: in our case, a clean white NEW ZEALAND in front; NOUVELLE-ZÉLANDE on the back.
We were discussing the draft Economic Survey of New Zealand. Every two years the Treasury assists some of the world’s best economists and policy analysts from the OECD with their study of New Zealand.
You can find the survey on the OECD’s website.
The survey is the OECD’s economic report card for New Zealand. Whether we’re getting richer. What the housing market might mean for stability. How we might adjust our rules to better protect our highly-valued rivers, birds and clean air.
They pose questions informed by international comparison: How open are we to foreign investment? Are we protecting workers who lose their job through no fault of their own? Will the next generation benefit from an education system as good as those of our peer countries?
But to write a quality report, they needed a sense check, to see whether the OECD’s observations fit the reality in New Zealand. So the Treasury’s Chief Economic Advisor, Tim Ng, with me and two other Treasury officials, met with the 35 Economic Counsellors at the OECD Headquarters. This was for a two-day discussion and redrafting session. This included the Treasury’s Nick Carroll, New Zealand’s Economic Counsellor.
At the OECD discussion, when you want to talk, you raise your placard vertically. It was a little surreal seeing the trickle of placards ascending around the room: Portugal, Denmark, Hungary, USA.
The chair was Bill White, a snow-haired, legendary economist who, years before the Global Financial Crisis, challenged Alan Greenspan to raise interest rates. “USA, you go first,” Bill White said, wryly noting that the United States was the OECD’s largest funder.
One country’s Counsellor was interested in New Zealand’s ICT education (“the trends are towards high-skilled occupations”). Another was “surprised” New Zealand doesn’t have public unemployment insurance. Someone commented on the Auckland Unitary Plan.
Perhaps the biggest surprise was how much effort each of these busy representatives put into scouring through the 80-page draft and offering suggestions.
New Zealand is a country with just over half the population of Long Island, New York, a Minnesota of the South Pacific, thousands of kilometres away from France’s pivotal elections; we’re on a land so on the edge of world maps it’s often left off entirely. Why did the 34 Economic Counsellors care about New Zealand?
The OECD’s 2017 report, released on Thursday 15 June, is 172 pages long. But it fits all its main findings and recommendations into one page. In short, off the back of strong institutions, low interest rates, immigration and construction, we’re experiencing strong economic growth. Our living standards on broader measures like health and community trust rate well.
Yet challenges remain: our productivity growth rate has slowed over the last 30 years. Elevated house prices may pose a risk. Automation and digitisation means high-education jobs are tending to grow, but lower-skilled jobs are proportionally shrinking. Our greenhouse gas emissions are rising.
Summing up, Bill White said that the issues facing New Zealand were problems most other OECD countries were facing. We might have a housing market to sort out, low productivity growth and tensions between our industries and the environment. But we’re not alone, and the rest of the world is literally around the table with us, both lending advice and learning from New Zealand.
And what was that advice from the Counsellor who’d come through a frothy housing market overseas?
“Don’t lose sight of how all the pieces fit together: bank regulation, planning, infrastructure, and affordable housing all play a part. Learn from our mistakes.”
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Treasury Staff Insights: Rangitaki
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