New Zealand 2015 sustainable and inclusive growth

1. www.oecd.org/eco/surveys/economic-survey-new-zealand.htm
OECD
OECD Economics
2015 OECD ECONOMIC
SURVEY OF NEW ZEALAND
Sustainable and inclusive growth
10 June 2015

2. Well-being is high
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Source: OECD (2015), OECD Better Life Index, www.oecdbetterlifeindex.org.

3. Per capita income growth is good
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Source: OECD, National Accounts and Economic Outlook database.

4. Labour-market performance is good
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Source: Statistics New Zealand, Work Income and Spending and OECD, Labour Force Statistics database.

5. House prices are high
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Source: OECD, Housing Prices database.

6. Greenhouse gas emissions intensity is high
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1. Excluding removals from land-use, land-use change and forestry.
Source: OECD, Environment - GHG Emissions Statistics database.

7. Income inequality has increased to above the
OECD average
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Source: Calculations from the OECD Income Distribution database, www.oecd.org/social/income-distribution-database.htm.

8. Main Findings
o The economy has performed well in recent years, and well-being is high.
o Bottlenecks could limit the economic expansion, especially housing and
infrastructure shortages in Auckland.
o Growth in greenhouse gas (GHG) emissions continues almost unabated,
and expansion in the dairy industry is harming water quality.
o Māori, Pasifika and low-income households tend to be worse off than
others in terms of income, housing, health and education outcomes.
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9. Key Recommendations
 To increase housing supply, reduce the cost of environmental and
planning regulations and the scope for vested interests to thwart rezoning.
 To reduce infrastructure bottlenecks, implement infrastructure demand
management and diversify revenue sources for local governments.
 Strengthen the Emissions Trading Scheme, and develop a strategy to cut
agricultural GHG emissions.
 Complement the welfare reform by following up people going off benefit
and focusing social spending more on improving long-term outcomes.
 Get more effective teachers into struggling schools. Increase early
childhood education.
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10. Sustaining the economic
expansion

11. House price growth has been uneven
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House prices have
increased the most
in Auckland
About two-thirds of
population growth
is centred here
High house prices
pose financial
stability risks
Source: Real Estate Institute of New Zealand.

12. Housing affordability is eroding in Auckland
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 To increase housing supply, reduce the cost of environmental and
planning regulations and the scope for vested interests to thwart
rezoning.
Source: Reserve Bank of New Zealand, Financial Stability Report, May 2015.

13. Infrastructure shortages are limiting growth
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Source: World Economic Forum (2014), The Global Competitiveness Report 2014-2015.

14. Reforms to support infrastructure provision and
better manage demand
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Implement congestion charging to reduce urban road
congestion.
Diversify local revenue sources to aid provision by:
sharing in a revenue base linked to local economic
activity.
taxing the windfall gains that accrue to landowners
from rezoning land for urban use.
Use Public-Private Partnerships where efficiency gains
outweigh higher private-sector borrowing costs.

15. Skills shortages have emerged
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 Draw lessons from the Canterbury Skills and Employment Hub, trial
it elsewhere and, subject to positive results, roll it out country-wide.
 Update immigration skills shortage categories more frequently.
Source: Ministry of Business, Innovation & Employment (2015), Jobs Online Monthly Report, March.

16. Policies to enhance environmental
sustainability

17. Greenhouse gas emissions are projected to
grow strongly
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 Terminate transitional arrangements that halve the price of NZ
Emissions Trading Scheme permits.
 Develop a strategy to cut agricultural GHG emissions efficiently
through a combination of pricing, regulation and R&D.
Source: Ministry for the Environment (2014), Briefing for Incoming Ministers - Environmental Stewardship for a Prosperous New Zealand.

18. The dairy expansion has reduced water quality
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 Monitor and provide clearer technical guidance for regional councils
implementing environmental regulations to meet water quality goals.
 Improve the comparability and reliability of environmental data.
Source: OECD/Eurostat Agri-Environmental Indicators Database; OECD Aglink database; Statistics New Zealand.

19. Making growth more inclusive

20. The jobless poverty rate is very high
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By contrast, the
in-work poverty
rate is low
Source: Calculations from the OECD Income Distribution database, www.oecd.org/social/income-distribution-database.htm.

21. Welfare reform to reduce poverty
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 Complement the recent welfare reform by
following up people going off benefit.
 Increase welfare benefits and step up job-
search and activation investments.
 Review benefit abatement rates and childcare
costs to strengthen incentives for those on low
incomes to work more than 20 hours per week.

22. Housing costs are high for low-income households
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 Raise the supply of social housing.
 Increase targeted income subsidies for low-income households not
in social housing.
Source: B. Perry (2014), Household Incomes in New Zealand: Trends in Indicators of Inequality and Hardship 1982 to 2013.

23. Māori, Pasifika and low-income households
have worse health outcomes than others
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 Adopt a comprehensive approach to reducing obesity.
 Reduce the costs of access to primary health care for the poor.
Mortality ratios for disadvantaged vs advantaged groups
Source: OECD calculations based on data extracted from the New Zealand Census Mortality Study WebTable Results.

24. Socio-economic background has a large effect
on education outcomes
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Source: OECD (2014), PISA 2012 Results: Excellence through Equity: Giving Every Student the Chance to Succeed, Vol. II.

25. Education reforms to improve outcomes for
individuals in disadvantaged groups
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 Meet the 98% participation target for early
childhood education; and ensure high quality.
 Provide more financial support to recruit and
retain effective teachers in schools with
achievement challenges.
 Strengthen measures to help school boards and
staff use data to improve outcomes.

26. More Information…
www.oecd.org/eco/surveys/economic-survey-new-zealand.htm
OECD
OECD Economics
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