New Zealand’s overall performance still average - graded C

The New Zealand Institute has today released its update to the online NZahead report card assessing New Zealands performance on 16 economic, environmental and social measures.

The New Zealand Institute Director Dr Rick Boven says, “These are long term measures that take time to respond to strategy change, policy responses and implementation. Since the September 2010 release two trends have improved while three worsened.”

Compared to other OECD countries New Zealands gross national savings has been consistently below the OECD average since 2004. However in 2009 and 2010 the savings rate increased so the household wealth trend was reassessed as improving rather than deteriorating.

The trend of carbon dioxide emissions per capita was reassessed as improving rather than stable, though the improvement resulted mainly from good weather and a poor economy, not from policy or behavior change.

The trend for net migration of New Zealand citizens was downgraded from improving to deteriorating. In the year to June 2011 almost 30,000 New Zealand citizens departed, double the number of departures in the previous year. Departures are usually higher when the economy is relatively strong because of the reduced risk in moving, and we see that here; the increase in departures occurred as the economic outlook improved following the Global Financial Crisis. More than half of those leaving went to Australia and a jump in departures from Christchurch occurred after the 22 February earthquake.

The educational achievement trend was downgraded from improving to stable, not because of any significant decrease in education scores but because of our improved understanding. New Zealand scores well for educational achievement at age 15 but is not improving relative to the performance of other countries. The serious disadvantage experienced by Maori and Pacific students persists and in 2006 New Zealand had the lowest median age of leaving initial education in the OECD.

When releasing the latest figures the Chief Coroner identified the countrys suicide rate has remained “stubbornly the same”. The trend based on that data has been downgraded from improving to stable. New Zealands 15-19 year old suicide rate remains the highest among the OECD countries. In 2010-11 for every one female suicide there were three male suicides.

Overall New Zealands performance relative to other countries remains generally poor. On three measures the country performs relatively well, with a grade of B for life expectancy, educational achievement and agricultural land per capita. On six measures performance is average with a grade of C, and on seven measures performance is poor with a grade of D.

Dr Boven says, “Performance must be lifted to ensure New Zealand remains an attractive place for its citizens. Strong social and environmental performance is required for long term economic success.”

Economic measures

Real GDP per capita remains lower than the 2007 figure and New Zealand is ranked 22nd of 34 OECD countries. The low GDP ranking results from low labour productivity. There is no convincing evidence yet that New Zealand is on a path to catch up with Australia, nor is there a convincing plan explaining how New Zealand will be able to grow its economy faster than other OECD countries.

The most important export industries, agricultural commodities and tourism, lack competitive advantage so they have low productivity. The New Zealand Institutes discussion paper ‘A goal is not a strategy: Focusing efforts to improve New Zealand’s prosperity’ argued for efforts to grow exports of high value differentiated goods and services. New Zealand has the resources, inventiveness and opportunity to grow high value exports but shortages of talent, capital, knowledge and connections mean that the shift to a high value export economy is slower than it could be. The Institutes discussion paper „Plugging the gap: An internationalisation strategy’ sets out 14 policy proposals to improve performance.

Environmental measures

New Zealands environment is a very important economic asset, providing agricultural commodities for export and attracting tourists. As the population grows and agriculture intensifies, the amount of productive land per person and the quality of waterways is declining. Invasive species impose costs for prevention, productivity losses and remedies. Ongoing greenhouse gas accumulation in the atmosphere is increasing the risk of experiencing adverse effects due to climate change.

Despite ongoing environmental damage, New Zealand remains a country with low population density and many resources. New Zealands safe haven potential is valuable in a world where risks are increasing.

Social measures

New Zealanders average life expectancy continues to improve, at a rate of three to four months per year. Improved performance by District Health Boards in reaching national health targets and many health initiatives such as becoming a smoke-free nation are contributing. The suicide rate is average for OECD countries and stable but the youth suicide rate remains very high. Assault mortality in New Zealand is much higher than in the best performing OECD countries and there is great concern about violence affecting families. Latest figures for 2010-11 reveal a decline in family violence offences which is a

marked reversal of what had been a steady upward trend in recent years. The lowest number of murders since 1986 occurred in 2010-11 but the 25 year murder trend remains flat.

Income inequality has reduced in New Zealand over the last year, mainly because the recession reduced the wealth of many wealthy people through lower investment returns.

Data published in „The Spirit Level: Why Equality is Better for Everyone’ shows that countries with greater income inequality suffer more health and social issues. New Zealand has higher than average inequality and higher than average health and social issues.

In New Zealand inequality of incomes is associated with disadvantage. Outcomes for disadvantaged groups in New Zealand remain a very important feature within the NZahead data – children are experiencing poverty, Maori males have low life expectancy and Maori and Pacific youth are seriously disadvantaged in education and employment.

Youth unemployment has been highlighted recently as an important issue. Youth aged 15 to 19 comprise over one-quarter of New Zealands unemployed. Serious social issues and high costs result.

The usual response is remediation when at risk youth experience difficulties. However that approach has proven unsuccessful. The recent New Zealand Institute discussion paper „More ladders, fewer snakes: Two proposals to reduce youth disadvantage’ argues that it is better to intervene earlier to prevent youth from getting into difficulties.

Keeping young people engaged and at school means they will be more effectively prepared for work and less likely to become unemployed. Many school leavers are not successfully progressing from school to tertiary education or work.

“We propose improving the school-to-work transition by establishing better pathways to work for non-academic students, aligning skills supply with future skills demand, involving employers more and providing high quality career guidance for all,” says Dr Boven.

The NZahead report card can be viewed at www.nzahead.org. The report card includes graphs showing trends and international comparisons as well as information about what is being done to improve outcomes.

For more, see NZahead__Full_Report.pdf

ENDS

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