A year ago I visited New Zealand and came back thinking it has messages useful to Hawaii in dealing with our economic slump. Now an update is provided by New Zealand's consul general in Los Angeles, Jim Howell. He recently visited back home and last week spent several days in Hawaii. New Zealand’s
economic reformsNew Zealand is doing quite well in dealing with the economic crisis in Asia, he says. It projects 1998 economic growth at 2.8 percent, down only slightly from earlier estimates. Howell credits the positive picture to competitiveness, diversification, government openness and simplicity developed since New Zealand nearly went bust in 1984 and turned massively to privatization.
New Zealand's dollar has dropped in a year from 70 cents to the U.S. dollar to 55 but that helps New Zealand business, he says. Tourism is up with more travel from North America and Europe.
The simpicity of things in New Zealand may be hard for us to comprehend. Examples:
Howell has just filled out a single piece of paper as his 1997 tax return. He reported his income and figured his tax. There are no exemptions or deductions to calculate. It resembles the flat tax being talked about in the U.S. but has graduated rates up to 33 percent versus 66 percent pre-1984. New Zealand also has a simple, but hefty, all-encompassing general services tax of 12.5 percent.
Howell thinks New Zealand's No. 1 improvement in government may be its shift to accrual accounting. Goals for its government departments are clearly and publicly stated. Results are clearly measured.
The new accounting brings into the open possible hidden costs and long term obligations missed by focusing only on cash in and cash out. The change, he says, has effected a cultural change to greater acceptance of responsibility throughout government.
Some comparable proposals are included in the recommendations of Governor Cayetano's Economic Revitalization Task Force, now being debated by the Hawaii Legislature.
New Zealand has balanced its budget, reduced its national debt from 48 percent of gross domestic product to 28 percent, and is holding inflation below 2 percent.
It got a lot of bad press when power to downtown Auckland, its major city, shut off for weeks early this year. The lights are on again and the city is recovering. The power company has offered six months' free power to the affected businesses. It operates in a public-private twilight zone that Howell says has stirred arguments between those who want to fix things with more regulation and those for further deregulation. Failing old cables caused the breakdown.
Under new voting procedures introduced in 1996 New Zealand has its first coalition government, one with a single-vote majority in its 120-member unicameral Parliament.
The lead group in the coalition, the Nationalists, recently tossed out Prime Minister Jim Bolger and replaced him with Jenny Shipley. The shift has boosted the Nationalists in opinion polls.
Bolger will go to Washington in June as New Zealand's ambassador. A by-election for his seat from a rural district is not expected to destroy the balance in Parliament but will give a reading as to trends leading up to the next scheduled nationwide election next year.
THE minority party in the ruling coalition, First New Zealand, has sat tight through the change, which spells greater conservatism -- probably because it could lose seats if it forced an election now.
New Zealand's Maoris are well ahead of their Polynesian brothers and sisters, the Hawaiians, in settling claims against the government for loss of land and rights to white settlers. South Island, with a smaller Maori population, has resolved most of its claims. Significant progress is proceeding on North Island, where the Maori population is larger and hundreds of Maoris were killed in 19th century land wars.
A.A. Smyser is the contributing editor
and former editor of the the Star-Bulletin
His column runs Tuesday and Thursday.