Venu Menon
Wellington, July 14,2024
New Zealand businesses face bureaucratic hurdles, barriers to foreign direct investment, and cumbersome steps to acquire licences and permits.
Businesses also lack a competitive environment in key sectors, and lag behind in digital markets.
These findings were released on 11 July 2024 as part of the OECD Product Market Regulation Indicators (PMRI), which assess the “alignment of a country’s regulatory framework with internationally accepted best practices.”
The indicators measure impacts on competition caused by barriers to entry and expansion faced by businesses across the economy. State involvement in the economy was found to be roughly the same across OECD countries.
The OECD indicators are generated from a survey that runs every five years (since 1998).
Need for regulatory reform
Minister for Regulation David Seymour says the OECD PMR indicators show why New Zealanders “sorely need regulatory reform.”
“This shocker result should end any and all doubt that the Government must go to war on red tape and regulation,” he adds.
The minister says New Zealand has come a long way from being “ranked second in 1998 to now [being ranked] 20th [among OECD countries].”
He says the Ministry of Regulation has three tasks.
“One, to cut existing red tape with sector reviews. Two, to improve the scrutiny of new laws. Three, to improve the capability of the regulatory workforce.”
Economy-wide highlights
The PMR indicators show the key areas for improvement in New Zealand include easing the administrative and regulatory burden on businesses and more active participation by stakeholders in the regulatory consultation process.
Public procurement regulations need to align with OECD best practices. Although tariff and non-tariff barriers to trade are low, New Zealand “could further reduce barriers to foreign direct investment,” the indicators show.
Obtaining licences and permits
New and established businesses find it cumbersome to obtain licenses and permits. The PMR indicators show New Zealand’s “licensing regime is more burdensome than the average OECD economy.”
Regulation of lobbying activities
The lax rules around lobbying by interest groups with public officials mean that larger firms have an advantage over smaller ones, leading to an uneven playing field. Conflict-of-interest rules need to apply to policy makers more strictly.
Service sectors
Except in rail transport, the retail and transport sectors in New Zealand are “conducive to competition.” But regulatory barriers in the energy and e-communications sectors are thwarting competition.
Lawyers and accountants face constraints in an otherwise freed-up professional services sector.
Digital markets
Data-intensive markets, such as online businesses, search engines, and social media, pose new challenges that New Zealand “has not taken steps to assess or address.”
Product market regulation
Competition and pro-competition regulations are vital to “foster innovation, business dynamism, productivity, investment, and employment.”
For 25 years, the OECD Product Market Regulation (PMR) indicators have been the leading metric of pro-competitive regulatory settings, the OECD survey notes.
Venu Menon is an Indian Newslink reporter based in Wellington
