Eliminating Corruption, Subsidies, and Kickbacks
In regards to eliminating corruption, subsidies, and kickbacks, New Zealand has one of the cleanest records. “Subsidies, tax exemptions, public procurement of goods and services, soft credits, extra-budgetary funds under the control of politicians—all are elements of the various ways in which governments manage public resources.” (Blog.World Bank) Governments collect taxes, use capital markets to raise money, receive foreign aid, and then allocate these resources to satisfy various needs. Some countries are transparent and make efforts to ensure that resources will be used in the best interest of the public. There is a less likelihood of malfeasance and abuse to occur when countries are more open and transparent. In countries where citizens are able to scrutinize government activities and debate public policies can make a difference. Countries that have freedom of press and high literacy levels helps with reform, and keeps a culture of participation, which is an important ingredient supporting various strategies aimed at reducing corruption. (Blog.World Bank)
According to the Transparency International’s Corruption Perceptions Index, New Zealand is consistently a top performer in creating transparent management of public resources.
The United States is not ranked as transparent as New Zealand. In 2016, New Zealand ranked number two in the world, while the United States ranked eighteenth. (Transparency) In the end, it is safe to assume that New Zealand will be less likely to have economic corruption.
Lopez-Claros, Augusto. “Six Strategies To Fight Coruption.” The World Bank. http://blogs.worldbank.org/futuredevelopment/six-strategies-fight-corruption. Accessed 01 Mar. 2017.
“Corruption Perceptions Index 2016.” Transparency.org. http://www.transparency.org/news/feature/corruption_perceptions_index_2016. Accessed 01 Mar. 2017.
Current Budget Status & Tariffs
Over the past eight years, New Zealand’s budget has seen a complete overhaul and it has finally reached a positive marker. New Zealand had struggled with a deficit in the billions of dollars for several years, reaching its peak in 2011 with $18.4 billion in the negative. However, thanks to a concerted effort by the government, which included an increased corporate tax rate as well as an increase in the income tax, they have managed to get back into a surplus of just over $1.8 billion dollars. Now that they are back in the green, New Zealand’s Minister of Finance has stated that his goal moving forward will be to slowly lower the income tax rate.
Most imported goods that New Zealand accepts do not have tariffs on them, however, “…Tariffs of five percent apply to some imported goods that are also made here including textiles, processed foods, machinery, steel, and plastic products.” (mbie.govt.nz) This rule of the 5% tariff is actually pretty new, as the Ministry of Business, Innovation and Employment (who used to control all tariffs) handed full control and policy making power over to the New Zealand Customs Service in 2012. Currently, there are only ten countries that are completely excluded from New Zealand’s tariffs and it’s worth noting that six of those ten are Asian countries, which could provide a good avenue for a restaurant to get food products into the country.
Income level – per capita GDP, Inflation rate and price stability, Size of state bureaucracy
The economy of New Zealand has been transformed by the government over the past 30 years. That being said, it has transformed to an industrialized economy from an agrarian economy. This is good because they are producing their own products which can increase their GDP levels for the country as a whole. They can, also sell their products to other countries which is beneficial to the whole country by boosting the income however, it has its drawbacks as well. This can cause a large gap between the upper and lower socioeconomic classes. The GDP for New Zealand as of 2016 was approx. $174.8 billion with a growth rate of 2.8%. As the whole economy continues to grow at a strong rate of 2.8% or better, consumers and businesses will continue to spend, however, they gain the money due to people having a substantial income. In addition to economy levels increasing, the country has a rising income rate each year. With income approx. $37,100 in 2016 it will continue to rise in the coming years. The inflation rate as of 2016 is 0.6%, as inflation rates raise, as a company we can increase our prices for more favorable margins. The price stability would be beneficial to the company because there will not be a steep increase in prices with an inflation rate of .6%. As of 2014, the bureaucracy is mainly made up of 85% private sector and 15% is public sectors.
Where does New Zealand get its economic growth from?
Private vs Public.
The private sector employees are receiving higher wage increases than the public sector (2.6% private wage increase, compared to a 1.5% public wage increase). This is mostly because the Private sector plays a much larger role in the economy than the public sector (85% private as mentioned above). When we break down the big contributors of the private sector we see Agriculture and Horticulture, we also see mining, forestry and fisheries playing a large role in New Zealand’s economy. Overall the primary sector contributes 7.6% GDP and over 50% of New Zealand’s total exports. The largest contributor of these factors is Agriculture which contributes a full 5% of GDP annually. Another 2.5% of GDP is contributed by the processing of primary food products. One of the surprising contributors to the agricultural industry is how important dairy is to agricultural procedures in New Zealand. Rising demand from developing countries as well as supply constraints helped push dairy prices to the highest level in not only the world but NZ-dollar terms in late 2007. Because of this, the primary sector wages increased which lifted spending habits, increased investments and generated a wider economy for NZ.
“Private vs Public Sector Pay Rates.” Stuff. The Dominion Post, n.d. Web. 01 Mar. 2017.
Commission, CorporateName=State Services. “Staff Numbers.” State Services Commission. CorporateName=State Services Commission, n.d. Web. 01 Mar. 2017.
“The World Factbook: NEW ZEALAND.” Central Intelligence Agency. Central Intelligence Agency, 12 Jan. 2017. Web. 01 Mar. 2017.
Rising imports, and privatized state-owned industries and utilities.
In comparison to the world, New Zealand is number 59 in regards to the national ranking bringing in roughly 34.83 billion dollars. In 2016, it was reported that the percentage of imports went down 26.4%. Imports mainly are mechanical machinery, textiles, vehicles and parts. Their import partners consist of China at around 19%, Australia, United States, Japan, Germany, and Thailand at 4.2%. The industries that New Zealand focuses on is agriculture, fishing, and mining.