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Education, productivity and emissions: Three big problems NZ needs to fix, according to the OECD
The country is being told it needs to get inflation under control, balance the books, raise educational achievement, and lift productivity.
The Organisation for Economic Co-operation and Development’s (OECD) annual survey highlighted a familiar list of problem areas that needed attention, and forecast economic growth of less than 1 percent this year, rising to just under 2 percent next year.
It said economic growth has stalled and a “rebalancing” was under way to counter high inflation and large budget deficits caused by increased spending during the pandemic.
“Monetary policy will need to remain restrictive coupled with further fiscal consolidation to help curb inflation and restore fiscal space,” the survey commentary said.
It said the Reserve Bank (RBNZ) would need to keep interest rates high until inflation was close to its target band, but also said the government needed to control spending and get the budget back into surplus.
“The government should set operating allowances and tax policies that will gradually reduce the fiscal deficit to reach budget balance.”
It said any tax cuts needed to be fully funded either by spending cuts or an increase in revenue, and said tax reforms should consider a capital gains tax.
Among other suggestions included an independent body to cost policies, and amending immigration rules to control population growth and help fill the country’s real skill shortages:
Productivity
Similar to the International Monetary Fund report in March the OECD made much of New Zealand’s low productivity.
It pinpointed the lack of competition and restrictive foreign investment rules as barriers to improved productivity.
“In some sectors, market concentration can be so high that regulation will not suffice to improve competition enough, and structural solutions such as break-ups, although as a measure of last resort, could be warranted.”
It called foreign investment rules some of the most restrictive in the OECD and should be relaxed to allow easier entry of small to medium enterprises and foreign firms to markets.
Education
The report warned declining school achievement and long-standing inequity for Māori and Pacific students were “a serious threat” to prosperity.
It said research had linked lower scores in the Programme for International Student Assessment (PISA) tests of reading, science and maths to lower productivity.
“This suggests that the decline of almost 29 points in New Zealand’s average PISA score between 2006 and 2018 will eventually reduce aggregate productivity by close to 4 percentage points,” it said.
The report said teachers needed more support including a detailed curriculum, efficient assessment tools, and more advice on the best ways to teach, with the support coming from the Education Ministry’s regional offices.
“The system seems to be missing a sufficiently deep and well enough funded intermediate support layer to help schools and teachers put policy into action, design detailed curriculum guides and assessments and deliver them as well as spreading best practices more generally,” the report said.
It said the school system should remain devolved but the way policies were implemented needed a major overhaul.
Photo: AFP
Emissions
The OECD also said the country needed a more systematic approach to cutting greenhouse gas emissions and a coping with climate change.
It said the recent cyclones had highlighted the ad-hoc nature of disaster recovery funding between government and private insurance companies, and the need for risk based decisions to help prepare and adapt for climate change events.
“Monitor the price and availability of insurance for climate related disasters, and, if required, stand ready with options for reform of the market, considering the balance of public and private, optional and mandatory insurance coverage, the nature of risks and household disadvantage,” the report recommended.
It also said the Emissions target Scheme (ETS) needed to be reviewed in how forestry resources are accounted for, while the pricing of agricultural emissions needed to be settled.
VIA RNZ
The chief executive of the Parliamentary Service is confident there will be enough room to accommodate the increased number of MPs and their staff coming into Parliament.
On current numbers, up to 131 MPs could be sitting in the Chamber following the election, brought on by a record overhang result.
Clerk of the House of Representatives Dr David Wilson told the Spinoff that currently the debating chamber had enough chairs to seat 124 MPs – including the Speaker of the House – and work was being done to accommodate more by altering the seating arrangement.
In a statement, Parliamentary Service chief executive Rafael Gonzalez-Montero said planning for a larger Parliament had been going for “some time”.
“Now that the election results have confirmed an increase to the number of members we are looking at several options.
“We are confident we will be able to accommodate all members within the Chamber.”
VNP / Phil Smith
Gonzalez-Montero said office accommodation for members and their staff would be “stretched” for a short time, but the new Members’ Building was only a few months away from “practical completion”.
That building – located behind Parliament – was due to be ready to occupy in April next year and had capacity to accommodate around 30 backbench MPs.
“All members should be in fit-for-purpose accommodation from that point,” Gonzalez-Montero said.
Following the 2023 election, 123 MPs sat in the Chamber – a record number at the time. That decreased to 122 following the resignation of National MP Judith Collins.
Collins held the seat of Papakura and stepped down in May and Parliament voted against holding a by-election because it was too close to the election.
The election result also meant high-ranking National Party MPs like Chris Bishop, Paul Goldsmith, Nicola Willis and Gerry Brownlee – Speaker of the House and an MP for 30 years – would likely not make it back into Parliament.
Only resigning or retiring MPs were permitted to give a valedictory speech meaning none of them would get the chance to give a valedictory statement.
Asked if their would be special allowances for valedictories, Wilson said in a statement that normally only MPs were allowed to speak in the House but the House could suspend its own rules or temporarily alter them.
“It could do so to allow former members to address the House.”
Wilson said no such arrangements could be made until the next Parliament opened and members sworn in.
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