What about ease of doing business? The World Bank's latest study ranked New Zealand as the easiest country to do business in out of 80 countries.
This top ranking has long seemed problematic. It may be justified in terms of the ease of registering a new business. But what happens after that?
The Paris-based OECD rates New Zealand as having the most hostile regime to foreign direct investment among its 38 member countries. It also ranks in the bottom half for the quality of product market regulation. And neither assessment takes into account the bureaucratic costs and delays involved in obtaining resource permits for new housing and other needed infrastructure.
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In New Zealand, companies and farmers have many accounts of bitter experiences about the difficulties they face in obtaining resource permits.
Our resource management laws create strong incentives to hinder progress rather than promote it. Only claimants directly bear the costs of delay.
A culture of delay punctuated by costly requests for additional information easily becomes the norm.
The most visible sign of the cost of delay is New Zealand's affordable housing problem: an artificial shortage of land for housing.
Property developers are not the only ones struggling to navigate bureaucratic quagmires, shifting targets and complex and prohibitive consultation requirements.
The cumulative impact outside of housing is less visible: New Zealanders' relatively low average productivity per hour worked is a visible indicator of the problem, but it's unclear how much of this is due to poor regulation.
Consider the example of a company we call “Kiwi Innovations,” which for obvious reasons is not its real name: we cannot risk acting in a way that would put us at odds with any regulator with discretion.
Kiwi Innovations has spent nearly a decade trying to set up a factory that could create jobs and export revenue in an area of New Zealand that desperately needs more income and jobs.
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The company's journey began many years ago when the local government granted it a resource development permit. The decision was appealed and, without the company's fault, the court quashed the permit.
The company made some minor revisions to its proposal and resubmitted it – to their surprise, they found they had to start the application all over again – years of lost time and money.
Further delays followed. Requests for additional information to extend deadlines appear to be built into the current system. As years go by, staff turnover occurs and files get lost, potentially reversing perceived progress.
Four years after receiving the first approval, local officials rejected the company's second application and told it should hire a planner who knew the system better.
The company simply thought that information about the project was enough. But in a discretionary system, content alone is not enough. Presentation matters, and presentations need paid guidance. Planners get to know who has influence in the team to agree, what the precedents are, which arguments are important.
The company hired a planner, but even though the project content was the same, it made a difference.
The implications are severe: when laws and regulations are unnecessarily complicated and decisions about trade-offs between competing considerations are essentially arbitrary, people don't know what they are permitted to do; some find it easier to invest elsewhere, while others choose not to invest at all.
Not surprisingly, the reluctance of dependent businesses to speak out against regulatory overreach perpetuates the problem.
Fortunately, the current administration is addressing this issue and is aware of all the problems mentioned above. What we don't know is what solutions they will come up with.
Instead of focusing on imposing outcomes, it would be better to focus on clarifying property rights. Insufficient property rights underlie the twin problems of underdevelopment (e.g. opposition to new housing) and over-exploitation (e.g. the tragedy of the commons).
When people must offer to buy land for which they want to determine their own use, they are confronted with the values their community will lose by getting their way. This time-honored approach will resolve many, but not all, land-use conflicts. It should be at the heart of any solution.