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2019 OECD Economic Surveys: New Zealand 2019

image of OECD Economic Surveys: New Zealand 2019

Well-being in New Zealand is generally high, although there is room for improvement in incomes, housing affordability, distribution, water quality and GHG emissions. Economic growth is projected to remain around 2½ per cent. The main risks to the outlook are rising trade restrictions and a housing market correction. Labour market reforms have been initiated to increase wages for the low paid but will need to be implemented cautiously to minimise potential adverse effects. Substantial planned increases in bank capital requirements should reduce the expected costs of financial crises but might reduce economic activity. To improve the well-being of New Zealanders, the government is amending legislation to embed well-being objective setting and reporting, developing well-being frameworks and indicator sets and using well-being evidence to inform budget priority setting and decision-making. Immigration increases well-being of both immigrants and most of the NZ-born, although associated increases in housing costs, congestion and pollution have had negative effects. A raft of measures is underway to make housing supply more responsive to demand. However, strict regulatory containment policies, which impede densification, need to be replaced by rules that are better aligned with desired outcomes and alternative sources of finance found to relieve local government infrastructure funding pressures.

SPECIAL FEATURES: WELL-BEING; MIGRATION; HOUSING

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Well-being: performance, measurement and policy innovations

From an international perspective, New Zealand fares well in several aspects of current well-being, but faces challenges in housing affordability, household income and earnings, mental health, and child well-being. There are also large inequalities for health and educational outcomes, and a high share of economically vulnerable people. Social capital is a particular strength, but New Zealand’s natural assets are being depleted. The Treasury has developed its Living Standards Framework and associated Dashboard to integrate well-being evidence more systematically in its advice to the Government. The Dashboard is consistent with international measurement practice, but has some indicator gaps, particularly for natural capital. The New Zealand Government is applying a well-being approach to policy and budget decision-making, including legislating for well-being objective-setting and reporting. Continuing to develop the evidence base that supports the well-being approach is critical. Effective implementation requires further investment in methodological development, civil service capacity-building, and strong leadership across government.

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