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The OECD likes NZ's economic policy settings, but calls for more & broader taxes 'to improve the well-being of the most vulnerable members of society'

The OECD likes NZ's economic policy settings, but calls for more & broader taxes 'to improve the well-being of the most vulnerable members of society'

The OECD has called on New Zealand to raise tax revenues by instituting "environmental, land and capital gains taxes".

It says they may be necessary to "to improve the well-being of the most vulnerable members of society".

These are among recommendations in its 2015 Economic Survey of New Zealand published this morning.

Overall, the tone of the 151 page Survey is very positive.

It says strong fiscal and monetary policy frameworks and a healthy financial sector have yielded macroeconomic stability, underpinning growth.

They note employment is high, in large part thanks to flexible labour markets and ample immigration, business investment is robust, and households and firms are optimistic.

They also say well-being is high, although a considerable income gap with the top half of the OECD remains.

However, bottlenecks in housing, urban infrastructure and skills, inequalities in living standards, and rising environmental pressures all pose risks for sustaining growth. The government is moving to deal with these weaknesses, they say.

And although they say "housing poses some risks to the otherwise sound financial sector" the stresses in this sector do not attract much attention in the Survey.

It's key recommendations include:

Removing bottlenecks to sustain economic expansion

● Implement fiscal consolidation measures to reduce net debt, as planned, while continuing efforts to improve the well-being of the most vulnerable members of society. Allow the automatic stabilisers to operate fully.

● Provide guidance to regional authorities in the implementation of environmental and planning regulations, including the Resource Management Act. Reduce their economic costs and the scope for vested interests to limit competition or thwart rezoning and development that would be in the wider public interest.

● Implement infrastructure demand management strategies to reduce urban road congestion, notably congestion charging. Consider diversifying revenue sources for infrastructure funding, such as sharing in a revenue base linked to local economic activity or taxing the windfall gains that accrue to landowners from rezoning land for urban use.

● Draw lessons from the Canterbury Skills and Employment Hub (a labour-market matching scheme), trial it elsewhere and, subject to positive results, roll it out country-wide.

● More frequently update immigration skill shortage categories to reduce labour market bottlenecks.

Strengthen policies to reduce greenhouse gas emissions and water pollution

Terminate the transitional arrangements that halve the number of emission permits (and hence their price) needed by emitters in the NZ Emissions Trading Scheme. Develop a strategy to cut agricultural GHG emissions efficiently through a combination of pricing, regulation and R&D.

● Monitor the implementation of the 2014 National Policy Statement for Freshwater Management in regional plans to ensure water quality meets goals. Provide clearer technical guidance for regional councils. Ensure that information on environmental quality is comparable and reliable, in part by passing the Environmental Reporting Bill.

Implement co-ordinated reforms to make economic growth more inclusive

● Complement the recent welfare reform by following up people going off benefit, as planned, to ensure satisfactory outcomes. Strengthen the focus of social spending on lifting the long-term outcomes of the disadvantaged, including by improving coordination across the public sector.

● Raise the supply of social housing for low-income households. Increase targeted housing subsidies for low-income households that are not in social housing.

● Adopt a comprehensive approach to reducing obesity, covering personal actions, factors that influence physical activity and nutritional practices, and improved obesity management through primary care.

● Meet the 98% participation target for early childhood education. Ensure that the education provided is of high quality, includes programmes to enhance the involvement of parents and focuses more on the outcomes of children with disadvantaged backgrounds.

The full Survey is here.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


"And although they say housing poses some risks to the otherwise sound financial sector the stresses in this sector do not attract much attention in the Survey".

Whereas the Herald this morning says: "OECD's stark NZ property warning"

"Dramatic house price growth is burdening Kiwi households with debt and putting the nation's financial stability at risk, the OECD warns."

Both articles can't be correct. Someone's telling porkies!

Download the Survey from the link above. Let me know how you read it and how you would have summarised it. Personally, I am amazed at how the Herald got that take; RadioNZ too. But it's a 151 page Report, the housing stuff might be two pages, starting at p88. Most of that is a review of what the RBNZ and Govt has done.

Given the nature of the Survey and the real risks to NZ, I would have thought it merited more than that. I stand by my comment. Weak work from the OECD. I would not think NZ policy makers would worry about the OECD observations, even though other local media beat up on the tiny bit they did mention.

I'm not suggesting you are the one who is incorrect David. I'm just pointing out the contradictory information presented by the media to the public.

It makes it very difficult for people like myself (who haven't usually got time to read 151 page reports) to make informed decisions about anything when the information we read is so conflicting.

We are not a 'club'. We don't huddle to agree on a common approach. It is very competitive. You should be heartened that various media outlets do their own independent work. It is not a negative at all.

If you want a standardised, sanitised approach, PR can give you that. Get everything through State-owned media.

In my opinion a 151 page report should produce some main points which can't be misinterpreted. Otherwise the report is just a waste of space.

Open it. It does have an Executive Summary.

It is only a 'waste of space' for those that can't be bothered with detail. It is for serious analysts. It was not produced for readers who just want bumper-stickers. Proper analysis requires work.

Isn't Twitter exactly what you say - a bumper-sticker word limit medium?

Why so defensive and snarky?

In the Main Findings it states "Inflation and inflation expectations are well anchored" that should tell most readers what is going to happen to house prices.......but then there is the impediment of the sizeable current account......and then they want the bottlenecks removed and they are standing in the same bucket hanging on to the same handle as Steven and Kate....

Given the OECD thinks it knows best then I will have to send them a Declaration Guarantee form to fill out with the ramifications for them if there is a failure in any of their policy advice provided.....I have my family and future generations to consider here.

David, don't try and pass the blame onto readers like myself. There are 2 completely conflicting media stories which are supposedly covering the same OECD report. All I did was point out the truth and you got all defensive and tried to somehow pass blame onto me. That's ridiculous and there is no need for bumper sticker insults!

Blame the Herald reporter if you disagree with his article but don't try to offload the inconsistencies on me. Is it somehow my fault for observing the paradoxes? I'm just pointing out how COMPLETELY CONTRADICTORY the media can be.

"it's not a negative at all" - so you say. What is it then? You cant both be right so one of you is talking rubbish!

I agree both cannot be right.
This report shows signs of political tainting.
No direct reference to how excessively light-handed control of immigration is making the housing shortfall all but impossible to fix in Auckland

Try to apply for immigration as a non-resident.

Answer honestly. I did. I got 10 points, and the minimum is 100 just to apply for an 'expression of interest'. If I was non-resident and wanted to migrate to NZ I could not qualify. I bet most resident Kiwi's couldn't either.

It is very hard to qualify. To suggest otherwise is plain wrong.

That link is to the skilled migrant category. The skilled migrant category is (it seems to me) geared toward overseas students who have completed tertiary education here in NZ, and in particular in a skills shortage qualifying field - then the numbers will stack up. If successful, then parents and other family members are able to apply under the Family stream category (one not targeted at skills shortages).

But there are other categories - the business migrant/investor and investor plus - a matter of having enough money to bring along with you (and I believe you can invest it in either government bonds or housing (of all things) - I don't think your investment needs to be in a business/commercial activity.

And then there is the work to residence category (suitable for labouring-type jobs secured, for example in dairy, tourism, building etc.).

"then parents and other family members are able to apply" I think this is now limited to parents. It used to be an un-married brother/sister could also qualify but I believe this is no longer the case.

Note that even without having completed tertiary education in NZ, if it's a field with listed shortages like IT, and you're reasonably young, with some experience, it's not that difficult to reach ~150 points.

Having some NZ work experience and a job or offer will push you over 200.

I'm fine with it being ageist, because we want you to be paying tax here, and not just get sucked in via family stream and pull down benefits without having paid anything into the system.

Source: Personal experience

Filled it in - got 230 points

They are pretty ageist. ;]

I think to actually get in you need 140points or its a waste of time. So you need a degree+ and a job offer and be under a max age to get 140+

I agree most NZ'ers would not get into NZ...I was like you and can't obtain enough points.....However David something does appear to be amiss as many of the people I know who have come here don't fit the criteria either. Somehow they got in!!

Arguing the toss over the points system is irrelevant.
Don't mention the moneyed ones that by pass the points system.
What is relevant is that far too many are arriving and many of them are contaminating the Auckland housing market with the ability to buy rental properties as well as one to live in personally. They are the channel by which money from relatives and other hangers-on are using the status of the immigrant to create a boil which has to be lanced one way or another.

I got 200 points.
apparently we're short on cowboys ;) , I mean Farmer/Farm Managers.

I notice several technical sections. Why aren't we providing incentives for NZers who qualify but can't get into the jobs if these are areas of long term and absolute shortage? (rather than the usual heaping barriers in front of them)

NZ has a system where fresh blood can flow in and out to bring oxygen and nutrient to sustain and proper itself.

Keep this system in check and also keep this system as it is regardless of public options.

I went through today's criteria recently and its actually pretty tough, so light handed no it isnt.

Tell you a truth that for country-level reports from OECD, the main authors are ppl from NZ departments. Ppl from OECD compile them together with perhaps some light touch.

Who the heck are the people running the OECD and what experience and qualifications do they have which allow them to be in a position to advise NZ?

If any country is conforming to the OECD's desires and wishes then that country is not allowing true democracy to the citizens.

As a citizen of NZ I do not want my country to be a puppet........Has the OECD not assisted in leading the worlds economies into the GFC? The OECD muppets are as thick as two short planks!!

Ever since NZ joined the OECD we have gone down-hill as a country!! These idiots do not understand the difference between real wealth and inflation!! They are nothing more than Global Bureaucrats.

We joined in 1973;

Yes, global bureaucrats working to the dominant political ideology of our times: globalization.

Here is some typical rhetoric from the pro-globalizers;

And don't forget to mention that NZ joining the OECD was a Socialist policy!!

I don't care if it is business, politics or the public services etc .....but one person on their own or even a small group of people together cannot do the same damage as a large group of people in any capacity......when a mob rules look out!!

So you see the OECD as having a socialist political ideology?


Have you read the report?

Broadening the tax base and other meddling recommendations are typical of a Socialist agenda are they not?

People with hidden agendas are not up front are they?

No. Taxes are used to fund corporate welfare as well as individual welfare - so broadening the tax base can contribute to both. I read some analysis of NZ Budget 2015 saying corporate welfare cost each NZer $750 dollars per annum. And if you look at both WFF and accommodation supplements (these were not counted as corporate welfare) but to my mind, they are employer and landlord subsidies, respectively.

What I keep trying to impress upon you is that your definition of socialist/socialism is antiquated, or just plain wrong. Socialism is an economy structured on public/worker ownership of the means of production. The world left that economic model in the dust when neoliberalism took root. Both Labour and National governments in NZ since the Lange/Douglas era have been globalist in their political ideology.

lol. just No, Kate.

No to what, cowboy?

Socialism is pooling of resources, (I have recently been informed) then the redistribution of those resources for the collective. A quick look at the wikipedia page will show something similar, while their are several different models they all work on that basis.

The public/worker ownership is a fundamental untruth.
A "public" can't own anything because it doesn't exist. And neither does a "worker" except as an individual.
For such a thing to occur, the "public" or "workers collective" need to have a governance system... which means it is the rule of government (with zero private rights) not a public or worker rule. Which is Feudalism, kings and barons control the resources, the plebs have no representation except what their masters decree.

In the case of the WFF. It isn't a landlord subsidy. The price to the tenant is fixed by market, not by where the funding comes from.
Likewise for the employer. If anything the WFF, through the employer, subsidises low revenue pricing... which as we know isn't true because prices are difficultly high, so they subsidise the other "too high" expenses the employer faces... the most notable two are "the accumulated price of excessive leverage" and taxation/compliance burden. So if anything WFF, subsidises WFF and government ... :|

yes those are the _actions_ of socialism (government or collective ownership of resources) but they're not part of the dogma nor are they admitted on the sales brochure for socialism. Only Utopian images are provided which is why socialism is usually supported by resource consumers and almost never by resource producers.

How about Adolf Hitler and the Nazi party?

Mostly the OECD seem populated by free marketeers who freely isue 'advice" on how best to be a good little neo-liberal. I am rather surprised you dont gel with them maybe they are not extreme enough for you?

They can "advise" all they want BTW, there is no legal obligation to listen I am aware of?

if you are worried about us being a puppet you should be having a fit over the TPPA and TISA.

The Herald headline is indicative of the atrocious quality of reporting done by them .

Its a national disgrace that we have such shoddy , unobjective , one sided , left wing and lacking in probity reporting by the Herald

I have not renewed my subscription in protest

Why don't they report objectively , they harp on the idea of taxing the road users .............. just how do they think that burdening workers , commuters and business with an extra road tax will magically reduce the horrendous congestion we face ?

We need to urgently sort out the BUS CARTEL which dictates the whole public transport arrangement in Auckland . This cartel agrees between themselves on how routes are divvied up and heaven help anyone trying to get a licence in competition with an existing holder

Quite simply the horse needs to be in front of the cart , and we need to GET RID OF THE CARTEL TYPE STRUCUTURE in public transport bus companies .

The present arrangement is not in the Public Interest , and ALL routes should be open to competition from privately owned - owner driver commuter mini-busses

For the record the OECD was not premised on Socialist ideology , however during the 1960's and 70's much of Europe was left leaning and Portugal even had a communist coup .

WRT the OECD , one can assume that some of their lofty ideals and their measurements of stuff had more than a hint of the politics of the time influencing them

Also for the record: socialist and socialism (same goes for capitalist and capitalism) are not proper nouns and therefore should not be capitalized.

OECD tends to be very much free market mantra, no matter how broken such a religion it is.

'Free market' is an oxymoron today - no such thing really given the massive government interventions (i.e., corporate welfare) in the global economy. More appropriate to call it a 'globalist' mantra/agenda - as that reflects the multinational corporatist/militarist political element.

Only a matter of time before the distortions blow up in their faces, still probably not a lot to lose if we have market failure, a lot of people don't have a lot of equity anyway, just debt.

To raise supply and encourage densification it will be important to find ways to
increase community support for densification. A greater central role in dealing with local
objections might take some pressure off municipal governments.There may also be a need
to extend beyond the SHAs the limitation of appeals to those directly affected to augment
the housing supply response.

They are really talking about a reduction in democracy not an increase in support?