Setting the scene: the world's largest experiment in economic reform and deregulation

In the 1970's and 80's New Zealand faced economic challenges so vast in number that by 1984 the country was at the brink of insolvency. New Zealand had become one of the most heavily regulated economies in the world as the Government tried endlessly to protect the economy from outside forces. Regulation in New Zealand, from an economic point of view, touched every facet of life from business and industry, agriculture, banking and finance and the public sector. There were tariffs for imports and price controls on exchange and food. There were even wage freezes.

Finally by 1984 the National Administration of Sir Robert Muldoon was forced into a snap election. A currency crisis had been in full swing and Sir Robert had refused reform or the need to devalue the dollar (against the advice of the incoming Government). The Labour party, led by David Lange, won in a landslide and the countries path to deregulation and economic reform had begun.

Called "Rogernomics" (after the Finance Minister, Sir Roger Douglas), the country began on a path that was unprecedented in western economic terms. Almost immediately New Zealand became a part of the global economy. Price and foreign exchange controls were removed, industry and service sectors were deregulated, assets sold off and a social economic experiment, that was to last a decade and include both Labour (Lange, Moore & Palmer) and National Administrations (Bolger & Shipley) had begun.

The end result however was not measured in terms of success of the economic returns - it was measured on the sheer number of New Zealanders who were forced out of work. As industry and business found themselves, overnight, operating in a deregulated global economy, they found in order to compete they needed to be efficient. Approximately 76,000 manufacturing jobs alone were lost between 1987-1992. Finally New Zealanders had enough and by the early 1990's the National Government came to power, only to continue the reforms of the Labour Government. This time however, the focus was on social policy reforms. All of a sudden the Social Welfare Department was split into business units and expected to run as businesses. New Zealanders had gone from reform to reform, from regulation to deregulation in only a matter of a decade.

When asked later what concerned him the most with the pace of reform, David Lange famously pointed out that the Government should have paused for a cup of tea.

But what had deregulation and the economic reforms of the New Zealand example given the rest of the world and what had Australia's nearest neighbour thrown our way? Let's take a brief look:

What did de-regulation in New Zealand give to the world?

Removal of tariffs and price controls

First of all, the New Zealand model showed what a country needed to do in order to become a part of the global economy. The impact on New Zealand wasn't the oil shock or some domestic matter - it was Britain's entry in the European Economic Community in the early 70's. This one impact forced tariffs on New Zealand exports for everything from butter to meat and produce. It shows, that deregulation and the need for trade agreements were paramount to continued economic prosperity. Deregulation and the cutting of red tape domestically allowed our banks to compete and industry to diversify into other markets. Removal of price controls and regulation domestically, also encouraged growth in the import sector.

The Reserve Bank of New Zealand Act 1989

The Reserve Bank of New Zealand Act 1989 removed interference by the body politic in the management of interest rates and inflation. "The Reserve Bank is responsible for independent management of monetary policy to maintain price stability. The degree of price stability is determined through a Policy Target Agreement with the Minister of Finance. Also, Policy Target Agreements are public documents and hence a government cannot secretly change the targets to gain a short term surge in economic growth." This meant the banking system was now independent of Government policy. Australia now, of course, has its own Reserve Bank Act

Other forms of deregulation that were to benefit other western economies were:

• Deregulation of the Airline industry
• Deregulation of the power and energy sector
• Deregulation of labor market controls with the implementation of the Employment Contracts Act

The problem was that while deregulation was an important factor in the history of New Zealand, as it is in Australia through the Hawke and Keating, Howard and Costello years - the pace of reform took many by surprise. Maybe, as suggested by David Lange, the country should have paused for a cup of tea.

So where are we today and is deregulation still relevant in Australia?

The answer is yes, but with the need to consider the view of the citizen in its implementation. For example, would New Zealanders agree today that a deregulated energy and power industry was the right way to go? The answer would be yes because they see the ability to still maintain some kind of ownership through private means. On reflection, deregulation forced competition which bred innovation. Today, as I write this approval has been given to the construction of a world class geothermal power station in the North Island that will power more than 20,000 homes. This was only possible because of a deregulated market. Competition bred innovation. The people of New South Wales don't see the benefit of sector private ownership because the political debate has taken over from the economic and social. The people are not ready for it but as a Government you have to prepare them for change using the New Zealand example of minimizing the impact on the citizen through managing the pace of reform.

The next question is whether or not there should be continued deregulation of the labor market and whether or not the path taken by the previous Howard administration was more advanced than the framework offered through New Zealand's Employment Contracts Act. Maybe it is not a case of further deregulation of the labor market - but it is time to step back and see how we can innovate within the current market environment. 

Let's take a look at some of the questions asked by the OpenForum on this topic:

Getting your ideas, what can your organisation contribute to the debate? Organisations need to understand that reform and deregulation have impacts and not just benefits. They need to ensure that through debate the benefits outweigh the negative impacts. Too often organisations contribute to the debate from one perspective and, more often than not they forget the workforce and society who ultimately are responsible for the manufacture and purchase of the good, service or product. Regulation and de-regulation are about finding a happy medium.

Asking, just how serious is the Australian Government about regulatory reforms?

Which sectors of our economy would most benefit from an improved legislation framework? If you were to listen to consumers then the demand would be for a tighter legislative framework when it comes to price controls for food and petrol. The problem is, by introducing forms of price control you begin to place restrictions on the economy. This then has a run on effect in terms of investment and trade. From a business perspective there could be improved legislative frameworks surrounding the governance of both private and public companies including strengthening of the rules that govern company director liabilities.

How can you maximise technology to help your businesses leverage their regulatory response? Technology is not an answer to improving the regulatory response process - having people who understand compliance and the legislative framework is important. For example, the new Childcare Management framework allows data to be sent electronically when it comes to compliance of child placements at an individual childcare facility - however, unless you clearly understand the purpose of the data collection then the input will not be of value. The path to Rome is paved with the bodies of Software sales rep's who say technology is the answer to improving regulatory responses.

Can Australia become a ‘regulatory pacesetter' in the global market through a more responsive, outcome-oriented and flexible regulatory regime? The reason I put forward the New Zealand example is because that country led the world in reform. To a large degree Australia has followed, and in the case of the energy sector in NSW, still has a long way to go. The true nature of a reformist is we never stop reforming. Unfortunately reform and regulation is like change management. Some people benefit and some people don't. Reform and regulation were things we needed to do because of an impact so sever we were forced to take action, we were forced to take the great leap. In New Zealand's case it was the brink of insolvency.

In Australia's case it is climate change. Australia has the opportunity to stop following and start leading. Now is a time for tough decisions on both sides of politics. Poling has showed Australian's are ready to make the change, they understand they need to make the change. The question is, can we put politics to one side and get on with the job of regulatory reform, implementation and change.

For Governments, Oppositions, policy analysts and reform junkies, like myself, you must always ensure that the people are ready to go with you. As the agenda drivers you need to ensure you understand that the people will arrive at that point - your job is to make sure you know when it is they arrive.

Matthew Tukaki is Director of SansGov and leads the organizations government policy, advisory and services practice. Matthew is the former General Manager of Education at IT&T Education, former Head of the review into Knowledge and Information Management Strategies at both the Joint House Department of the Parliament of Australia and the Australian Communications Authority, former Head of Government, Knowledge Management and Education at Dattatech Samsung SDS and former Chairman of both the National Skills for Schools program and the Government Policy Advisory Panel.