NZ 3rd in doing business survey – govt keen to do better

November 6, 2010

New Zealand has kept its third place in the World Bank’s doing business survey.

The overall ranking came from nine categories. We were first for starting a business and protecting investors, second for getting credit, third for registering property, ninth for enforcing contracts but only 16th for closing a business, 26th for paying taxes and 28th for trading across borders.

The overall ranking makes New Zealand one of the best countries in which to do business but a media release from Finance Miisiter Bill English and Minister for Regulatory Reform Rodney Hide says the government is keen to do better.

“This report confirms our reputation as a quality investment and business destination, and a country that promotes business confidence,” Mr English says.

“Across most of the nine indicators New Zealand compares very well internationally, which reflects the quality of our regulatory frameworks and the Government’s economic policies.

“However we believe there is still room for improvement. That is why we are continuing reviews of major regulation, which are aimed at cutting red tape and creating an environment where business can thrive,” Mr English says.

Mr Hide said the World Bank report highlighted the fact that onerous or poor regulation deterred investment and stifled growth.

“This Government is committed to increasing productivity by removing superfluous regulation that grew unchecked though much of the past decade,” Mr Hide says.

“Creating better regulatory conditions lifts business confidence, which in turn flows through to investment and jobs.

“Having a simple and transparent regulatory environment also helps attract international investment and we need to ensure New Zealand remains globally competitive,” Mr Hide says.

If Mr Hide put on his other hat as Minister for Local Government he would find plenty of scope for reform.

Regional, city and district councils have a plethora of regulations and red tape which appear to be designed to make doing business harder with no apparent benefit for anyone but the bureaucrats who make and enforce the rules.

Just one example: a couple set up a homestay in the country and sought permission to put up a sign. This was granted but only if it was erected at or a short distance from their gate.

The gate was immediately after a sharpish corner. The applicants pointed out that putting the sign a few metres further from  he gate, still on their property, would mean drivers would see it before they got to the corner rather than while rounding it which would be safer.

The council official agreed with their reasoning but said the rules didn’t allow for signs that far from the gate.

Owen McShane has more examples:

Farmers and all those other “cultural industrialists” are being bombarded with extra costs from all directions. Dairy farmers may well be our most successful export industry but tall poppies present a more attractive target for the ticket clippers. 

Most of these costs are generated by territorial local authorities, often in response to panic campaigns from ecological ideologues, underpinned by junk science. 

Regional Council farm inspectors – with no training, but carrying long books of rules – have directed a farmer to concrete line his silage pits, at a cost of about $70,000, even though there is no evidence that the pits are causing a problem. 

Farmers are fined thousands of dollars for machine failures that discharge some effluent to ground, even when the courts agree there has been no damage to the environment. 

When a winemaker friend started winemaking 10 years ago he needed a single licence, costing $150 a year to make and sell his wine.

By 2009 he needed a raft of licences, costing thousands of dollars, many of which require him to attend courses, such as how to deal with violent drunks. He has never had an issue with drunks in 20 years. 

He now needs a Food Safety Plan, a Hazard Analysis and Critical Control Point Plan, and a stream of ever-changing resource consents. All of these require auditing and monitoring.

He finally quit the industry.

What is most worrying is that because these costs are imposed and incurred literally at “the grass-roots,” central government seems to be largely unaware of their scope, their range and their fiscal impact. . .

The previous government gave local bodies more powers, at least some of which have resulted in more red tape and higher costs for businesses and individuals.

This needs to be addressed if we’re to maintain or improve our ranking for ease of doing business.

Our ranking for doing business was matched by a third place in the United Nation’s Human Development Report.

That looks at social factors including health, education and living standards.


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