Learning Policy Lessons From New Zealand

Lynne Kiesling

Tech Central Station has an article today on tax policy in New Zealand from Veronique de Rugy. She describes the background of the changes to the tax code in the 1980s, and how New Zealand has experienced economic growth as a consequence.

Tax policy is not the only area in which New Zealand did it right in the 1980s and 1990s. New Zealand famously revised their fishing license system, making quotas into transferable property rights and thus providing fishers with tradeable assets. These policies have been quite successful at simultaneously maintaining the industry and fish populations.

But a less well-known industry in which New Zealand’s policies can provide useful lessons is electric power. In privatizing their electricity industry, New Zealand kept the wires as a regulated industry, but unbundled the whole supply chain all the way from generation to end use. End use customers have retail choice, can choose to see price signals and bear price risk at a level of their own choice, and have implemented sophisticated technology to help them manage their energy choices.