Monday, September 11, 2006

World Bank ranks the NZ economy second most business friendly

Well, I've no idea how the right wing blogosphere in NZ will try to discredit it, but NZ has again received a very high ranking as a great place to do business.

The World Bank report, summary here, awards NZ second place overall (last year NZ was first, this time Singapore is) compared with 175 other nations and measured against 10 criteria. NZ achieves the top mark for the registering property and protecting investors criteria and has improved its ranking for paying taxes, enforcing contracts and starting a business. NZ has however, gone down in rankings against licences, employing workers and closing a business.

I'm picking the right will ignore that NZ has ranked in the top two for two years running and will instead decry the negative indicators.

11 comments:

David C said...

Yep, that's been their tactic every other year!

backin15 said...

The interesting thing for me about this is that simply having the right policies itself won't necessarily mean a major increase in business activity or investment - I think government's need to do more than just implement the economic policies du jour if they want to raise productivity and improve living standards and social equity. The really hard question for me is how much and when (and how to avoid crowding out the inventiveness and creativity of the private sector)?

I don't like Anderton's picking winners strategy. I do think additional incentives around R&D would assist but in the end the goal has to be increasing exports - dairy, forestry, seafood; these are the industries that we have to support to develop new products and new markets. They also large employers which has major advantages.

Cheezy said...

I agree with you about there being a lot more to it than simply what the government's doing, or even capable of doing... but if you read the right-wing blogs you'd be forgiven for the thinking the present administration is some kind of Cuba of the South Pacific, who never give free enterprise any kind of even break. A lot of them sound like sour scapegoaters, eager to blame anyone but themselves for not having made their first million yet.

backin15 said...

Yeah, I get thoroughly pissed off with the tendency of many RW bloggers to endlessly talk down NZ. I realise, having worked in Opposition, that there's a need to highlight a government's weaknesses or failings but there's a point after which I think it's just misguided and likely to be harmful - that is more harmful than the policies being derided.

You left NZ a while back Cheezy, what motivated you? For me it was simply a desire to not spend my entire life in NZ (sadly I was 30+ when I decided this and could no longer do the UK). It certainly wasn't a disatisfaction with NZ. Australia certainly has advantages, but in policy terms (economic and social), NZ shits on Australia which has a bloated and lazy public sector.

Cheezy said...

Like you, my leaving had nothing to do with dissatisfaction with NZ... well, not the kind of dissatisfaction that a government can remedy. It was a whole bunch of reasons - mainly personal/family reasons, coupled with the fact that most of my (mainly kiwi) friends live here now, and a growing realisation that I haven't seen as much of the world as I feel I should have by now... and realistically I was never going to do that from NZ.

Generally I think NZ has been 'on the up' during the past few years, and to be fair, I think this started - albeit slowly - while the previous National-led was in power. During the 1990s the grip that the new-right ideologues had on power and decision-making slowly began to loosen. And this picked up pace when Labour took power. I can't deny that it was good to (finally) feel as if I was living in a country in which low unemployment was a genuine objective. I thought their first 100 days were outstanding. Since then, I've got mixed feelings about their performance, and would change a number of things if given the chance (but that's politics I guess). Second and third term 'fatigue' has definitely set in...

However I'm not surprised that someone like you, with obvious knowledge about government & society, finds that Australia compares unfavourably to NZ in terms of the public sector... (and doncha prefer NZ foreign policy too?!). The right wing would like to throw the baby out with the bathwater in this regard, and what for? Lower taxes, on the whole. They're pretty transparent really.

Rob Salmond said...

So I agree with the thrust of this post - I have posted these world bank figures in comments on kiwiblog before, and gotten pretty feeble rants-in-reply from the likes of Tim Barclay, which show no sign of actually processing the information the World Bank is sending before decrying the government as ideological socialist thieves of one sort or another. Smarter RW commentators, I've found, tend to just ignore the figures and hope that they will go away.

Additionally, I just discovered that business confidence was, on average, 15 points lower over the first 6 years of Labour than over the last 4 years of National, even though growth under Labour was substantially higher than under National over those periods. Given that these confidence measures are **supposed** to simply predict the direction of the economy (typically over the next 6-12 months), regardless of who is reponsible for it, this either shows that business is either a really bad judge of its own future or that they simple use "business confidence" surveys as political pools, providing them with a vehicle to support the RW. This is why, I think, you hear much more on the RW blogs about confidence than about actual growth and jobs etc.

Span said...

Very interesting, particularly Rob's comments above about business confidence. One of the things that I've often wondered about business confidence measures is how people get less optimistic as the Golden Weather continues - i.e. they are smart enough to know that the longer it goes on the more likely it is to end soon (if that makes sense) and therefore they start to be less confident about the future as a result. Also I remember hearing some business confidence figures which showed that many business people were confident about their own business's short to medium term, but not confident about the economy in general.

Ruth said...

Business confidence is a contrarian indicator. You were right that this has been ignored.

As I said to Cheezy - our corporate, Citigroup - the world's largest bank - loves NZ, and has been bullish for years. Our turnover just keeps increasing and the outlook is great.

backin15 said...

All good points - Rob is right to point out the quixotic nature of some business indicators. Ruth's point about major capital fund managers is significant too because investment decisions are far less whimsical that surveys.

I was involved in the 2000 Government/Business Forum which was supposed to be a circuit breaker in the deteriorating relationship that developed between Labour and business after the 1999 election. That it did, for some time at least, was not just because it was good PR but because Labour did seriously develop and implement some new and business friendly policies - tax deductions on R&D being on I can remember.

Things are not rosy now and I think Cheezy's right about how hard it is for third term governments to sustain strong policy agendas.

I still think NZ policy mix on most fronts is solid, reasonable and succeeding or likely to succeed. Whether that's enough to secure the Centre Left another term - very hard to tell.

I'm genuinely wary of the direction a Brash-led government would take us - I think some tax cuts are reasonable (at least the thresholds) but not those they campaigned on. I also wonder if, after almost 8 years of pretty settled IR laws, National would try to wind back the clock to something akin to the 1991 ECA (to say nothing about Iraq, market rents for State housing, the Treaty etc).

iiq374 said...

Backin15 - I would dispute that the RW used / uses the tactic of ignoring these scales last year nor this year - or that the tactic was to focus on the negatives.

My recollection from last year - which would still appear to hold this year was that they were generally just incorrectly compiled.

For example I'd draw your attention to the "Registering Property" index on
http://www.doingbusiness.org/ExploreTopics/RegisteringProperty/
Also then read the methodology:
http://www.doingbusiness.org/MethodologySurveys/RegisteringProperty.aspx

Note they quote the cost (% of property value) for New Zealand as being 0.1% - yet this is a transaction that would attract GST, they are specifically excluding the tenanted going concern aspect which would make it zero rated.

You would also question who has managed to follow all "procedures that are legally or in practice required for registering property are recorded, even if they may be avoided in exceptional cases" in two working days - realising that this is adding days spent by seller and buyer seperately...

Most of the indexes are like this - and this was my enduring memory from last time was that they were just meaningless.

backin15 said...

IIQ, I haven't delved in the methodology particularly because, rightly or wrongly, I assume that a longstanding international survey by a reputable multilateral body will be broadly sound. Which is not to say that it won't have flaws, lots of labour market data is flawed in various ways because of inconsistent data definitions and reporting etc, however what generally matters is the trend over time. The trends in this survey are strong and positive. Of course to be genuinely helpful, the survey needs to cohere with reality but which reality; the whimiscal business confidence surveys or more sound data like GDP growth, stock market indicies, interest rates etc? Putting to one side, for the moment, the current account, NZ's economy is performaning well and that must be, in part at least, attributable to a consistent set of economic and labour market policies?

I think you're splitting hairs a little.

All governments, of all pursuasations, talk up the positive and down the negative however in this instance, an internationally credible body has given NZ a top spot - it does somewhat blunt the standard Opposition line that the country is going to the dogs...