All Hail New Zealand – the Ideas Crucible of the World

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By Harry Phibbs | 4:54 am, December 14, 2016

There are 7.4 billion of us on this planet. Of that tally there are 4.7 million living in New Zealand. So that’s 0.06%. Yet the Kiwis have managed to get quite a bit of attention from the other 99.94%.

It is easy to find New Zealand on the map. Also they beat the rest of us at rugby. Many of us grew up eating New Zealand lamb and butter. Now we find ourselves drinking New Zealand wine.

Of course for the British the ties are very close. The Kiwis are not just allies – they are family, and we share a Queen.

Yet while there is great loyalty from New Zealand there is also a great spirit of innovation and independence in that far away land.

When it comes to policy, to testing our new ideas in business or politics, its tiny population routinely sets the pace.

This week the country had a new Prime Minister. John Key has stood down and the National Party has chosen Bill English. As the Finance Minister since 2008 he has a proven record of success.

In the year to June the New Zealand economy is expected grew by 3.6%. In the UK we managed 2.1%, in the USA it was only 1.2%.

After working on the family farm for a few years, English got a job as policy analyst at the New Zealand Treasury from 1987 to 1989. This was when Roger Douglas was the Finance Minister – and the bold free market reform programme known as Rogernomics was being implemented.

While Margaret Thatcher was the British Prime Minister and the rest of world was struggling to keep up with Thatcherism, in New Zealand they were striding ahead.

The top rate of income tax was halved – from 66% to 33%. Subsidies – including to farming – were scrapped. Free trade was embraced. Exchange controls lifted. State ownership was reduced and welfare reform embraced.

Those changes were controversial, but have been vindicated. In recent years the same approach has been applied by English. He has cut tax but managed a budget surplus.

“For the first time in a generation, we have a net annual movement of people into New Zealand from Australia – rather than an exodus of Kiwis across the Tasman,” announced English in his budget speech in May.

During the John Key era we have seen the “roll out” of working prisons – with the hope that inmates being taught skills will reduce re-offending.

It is not only in politics but business. “In medicine, trials are conducted on guinea pigs, rats, mice and rabbits. In digital businesses, tests are performed on New Zealanders,” says The Economist.

Microsoft and other big technology firms, including Facebook and Yahoo, “use New Zealand as a development lab, as do games companies and small startups.”

While in the field of scientific endeavour researchers in New Zealand are trying to prevent livestock belching methane to avert global warming.

By definition, the risk-taking and innovation sometimes fails. Yet overall the approach has seen a country that enjoys great economic success – while retaining exceptional natural beauty and being very much at ease with itself.

As it enters an era with a new Prime Minister, it has every reason for optimism. The rest of us should be grateful to them for the astonishing contribution they make.