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Announcements earlier this month make the Emissions Trading Scheme a bit less credible over the longer term. The problem can be fixed – and relatively easily. Read more
Now that we’re getting towards the end of the year, and I’m getting towards the end of my time as a contributor to this newsletter, I’ve been thinking about the news story that most stood out for me this year and that best encapsulates my experience of this country. The obvious answer is the story of Ned the snail. Read more
The population of South Korea is about 51 million. In a hundred years, it will likely be about 11 million – a reduction of about 80%. Read more
This month’s Nobel Prize in Economics arrives at an opportune moment. The award to Joel Mokyr, Philippe Aghion and Peter Howitt for having explained innovation-driven economic growth provides a salutary reminder about what drives prosperity. Read more
Dr Eric Crampton talked to Corin Dann on RNZ's Morning Report about Labour's proposed NZ Future Fund, alongside Simplicity co-founder Sam Stubbs. Dr Crampton raised concerns about the fund's restrictions on asset sales and questioned whether it would create economic fragility rather than resilience, arguing that the $800 million in diverted dividends would need to be replaced through spending cuts or tax increases. Read more
There’s a very old saying that taxation is the science of plucking the chicken without making it squawk. The earliest form of the saying seems to go back to a 1766 letter from French economist Anne Robert Jacques Turgot to David Hume – though the exact origins are disputed. Read more
Every time New Zealanders apply for a mortgage or business loan, they pay the price for the Reserve Bank’s controversial 2019 bank capital decision to increase capital requirements for major banks by almost 100%. The decision made our banks much more heavily capitalised than most of their international peers. Read more
1. INTRODUCTION AND RECOMMENDATIONS 1.1 This submission to the Reserve Bank of New Zealand (RBNZ) on its 2025 Review of Bank Capital Requirements (the Review) and accompanying consultation paper (the Consultation paper)1 is made by The New Zealand Initiative, an independent think tank supported primarily by major New Zealand businesses. Read more
Dr Eric Crampton talked to Ryan Bridge on Newstalk ZB about the Reserve Bank's recent self-review, which found the bank was too slow to raise interest rates after COVID-19. He argued the Reserve Bank should have recognised earlier that it was dealing with a supply shock rather than a demand problem, noting that excessive money printing in response to COVID's economic disruption drove inflation to 7.3% and required painful interest rate hikes to bring it back under control. Read more
Heather du Plessis-Allan discussed the Reserve Bank's handling of inflation during COVID on Newstalk ZB, highlighting that The New Zealand Initiative first identified that COVID could cause inflation a year and a half before the Reserve Bank began tightening in October 2021. She noted the Initiative also warned in February 2022 that inflation was becoming a problem, while the bank continued its cheap lending programme until December 2022 when inflation had already reached 7.2%. Read more