New Zealand has made remarkable progress in areas such as road safety, health and life expectancy over the past five decades. But according to economist Dr Oliver Hartwich, the country's biggest economic challenges now require bold structural reform rather than incremental change.
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Progress built over decades
New Zealand has achieved significant long-term improvements across many aspects of national life.
Writing in the New Zealand Herald, Dr Oliver Hartwich of the New Zealand Initiative points to the dramatic fall in the national road toll—from 843 deaths in 1973 to 272 last year—as an example of how steady, incremental improvements can deliver substantial results over time.
Rather than one major policy change, safer vehicles, tougher drink-driving enforcement, improved road design and graduated licensing all contributed to reducing fatalities over several decades.
Hartwich says similar long-term gains can be seen in life expectancy, infant mortality and smoking rates.
The charts that aren't improving
While many social indicators continue to improve, Hartwich argues that productivity and housing affordability tell a very different story.
Drawing on research published in the new book New Zealand by Numbers, co-authored with Bryce Wilkinson, he notes that New Zealand's productivity has steadily fallen behind comparable economies.
Measured by economic output per hour worked, Australia now produces around US$77 per hour, Britain US$68, while New Zealand generates less than US$50.
According to Hartwich, although productivity has continued to improve in absolute terms, competing countries have improved much faster.
Housing rules changed everything
Hartwich argues that housing affordability has similarly deteriorated through decades of accumulated regulation.
He points to research from the Infrastructure Commission showing that before the Town and Country Planning Act 1977, house prices rose by roughly 0.5% for every 1% increase in population.
Following planning reforms, that relationship increased to approximately 2% for every 1% population growth.
He contends that the Resource Management Act further constrained housing supply, gradually creating today's affordability problems through increasingly restrictive planning rules.
Incremental change has limits
Unlike improvements in road safety or public health, Hartwich argues that productivity and housing cannot be solved through small policy adjustments.
Instead, he believes they require governments willing to undertake substantial structural reform despite inevitable political opposition.
He points to New Zealand's economic reforms during the 1980s and early 1990s as evidence that bold policy changes can significantly improve economic performance.
According to Hartwich, productivity growth accelerated during that period before slowing again as reform momentum faded.
Education reforms receive praise
Hartwich identifies Education Minister Erica Stanford's overhaul of the education system as one example of modern structural reform.
He highlights the introduction of structured literacy and mathematics, curriculum redesign and planned replacement of NCEA with a new assessment system from 2028.
Whether every aspect succeeds or not, he argues these initiatives represent the kind of deliberate reform required to reverse long-term declines in educational achievement.
Reform requires political courage
Hartwich concludes that many of New Zealand's most difficult challenges now require governments prepared to make unpopular decisions.
While some improvements occur naturally through technological advancement and gradual policy evolution, he argues that restoring productivity growth and housing affordability will depend on sustained political leadership over many years.
Without that commitment, he warns, New Zealand risks continuing to fall behind its international competitors.
Does This Affect New Zealand?
Hartwich's analysis reflects one of the central debates likely to shape the coming election: whether New Zealand's economic challenges require incremental adjustments or deeper structural reform.
Housing affordability, infrastructure delivery, productivity growth and education outcomes remain persistent concerns across successive governments. While there is broad agreement that these issues matter, there is far less consensus over how much reform is required—or how much political disruption voters are prepared to accept to achieve long-term change.
Source
Original Article: NZ Herald — Housing affordability and productivity must be tackled to keep NZ moving forward by Dr Oliver Hartwich. HERE: https://www.nzherald.co.nz/business/housing-affordability-and-productivity-must-be-tackled-to-keep-nz-moving-forward-oliver-hartwich/premium/NL5NN6SHZRAIPG7IIFYAATCCDE/
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Oliver is the Executive Director of The New Zealand Initiative. Before joining the Initiative, he was a Research Fellow at the Centre for Independent Studies in Sydney, the Chief Economist at the Policy Exchange in London, and an advisor in the UK House of Lords.
Oliver holds a master's degree in economics and business administration and a PhD in Law from Bochum University in Germany.
Oliver is available to comment on all of the Initiative’s research areas.