New Zealand is consistently ranked in the Heritage Index of Economic Freedom as one of the freest economies in the world, due to robust trade, light regulation, strong fiscal health, and a tourist magnet for the entire world.
But since the start of the COVID-19 pandemic, they have had dramatic lockdowns and their borders have largely been closed. In addition, their relationship with China continues to expand, while they build out a “security” presence throughout the Southern Pacific.
On this episode, we talk with Jordan Williams of the New Zealand Taxpayers Union, and examine differences between the U.S. and New Zealand COVID-19 response, and what a relationship with China should look like.
Tim Doescher: From The Heritage Foundation, I'm Tim Doescher, and this is Heritage Explains.
Doescher: Several years ago, we did an episode on New Zealand. Why? Well, first off, it's a place I adore and visit as much as I can. The rugby, the traditions of the Indigenous Māori people, the breathtaking landscapes, and, of course, I've always been fascinated by this tiny nation of nearly 5 million people, and close to 26 million sheep.
Doescher: Come on, John Popp, the sheep sound effect? Really?
Doescher: But for the most part, New Zealand has been a very interesting case study on the application and success of free market principles and individual liberty. In fact, Heritage Foundation touts it as one of the freest economies in the world, according to our Index of Economic Freedom, consistently placing in the top five freest economies in the world.
Doescher: The reason? Robust trade, rule of law, property rights, a lack of harmful government subsidies for things like agriculture, and competitive tax rates.
Doescher: But over the law last two years, like everything, COVID changed the landscape.
Clip: Effective immediately, we will move to alert level three nationwide. After 48 hours, the time required to ensure essential services are in place, we will move to level four. These decisions will place the most significant restrictions on New Zealander's movements in modern history.
Clip: Shops closed, offices shut down, and city streets completely deserted. New Zealand returned to a life in lockdown for the first time in six months. Strict restrictions were imposed in a bid to hold to any spread of the contagious Delta variant of the coronavirus.
Clip: I cannot see or point to any countries in the world that are maintaining a strategy of keeping their countries completely COVID-free whilst opening up to international travel between each other. And that means that, in a way, we are world leading.
Doescher: Since the COVID-19 pandemic, polling suggests a vast majority of New Zealanders have been supportive of these lockdowns. And that's because there were hardly any cases. But as restrictions eased, COVID cases increased, lockdowns were reinstated, and economic factors worsened. Now it seems like the mood is shifting.
Clip: In New Zealand, as the country tries to stamp out an outbreak of COVID having been free of any form of local transmission over the last three months-
Clip: Daily COVID cases have today soared into uncharted territory, prompting some experts to say it's too soon to ease Auckland's restrictions next week. It's the third time this week that daily case numbers have shattered previous records.
Clip: They get wetter and louder. But the opposition to mandates, masks, and vaccines remains, the crowd growing from several hundred yesterday to about a thousand today.
Clip: You've really picked a day to join the protest.
Clip: Well, weather doesn't matter, does it? You got to be here when you got to be here. Yep.
Clip: How long are you planning to stay?
Clip: Well, we'll stay until we get a result.
Doescher: According to a recent poll commissioned by the New Zealand Taxpayers' Union, the leftist Labor Party's popularity is falling, and Prime Minister Jacinda Ardern's personal popularity is falling even further.
Doescher: In addition, we're receiving reports that China is continuing to build out their presence in the region, most recently establishing a security deal with the Solomon Islands and other territories close to New Zealand. And of course China is. They are everywhere. And I'll give you a hint. They are not for more freedom and prosperity.
Doescher: We were recently visited by Jordan Williams. He runs the New Zealand Taxpayers' Union. Like Heritage Foundation, they're a member-driven organization who stands for lower taxes, less regulation, and government accountability.
Doescher: On this episode, Jordan takes us through the fascinating evolution of New Zealand COVID policy, giving us stunning comparisons to the US. We also talk about how, since COVID, New Zealand has higher taxes, more government spending, more regulation, and, of course, the dangers of an increased presence of China, and what that means for America.
Doescher: More after this.
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Doescher: Jordan, it's been a couple years. We've had a couple things happen since we last spoke, mainly a global pandemic, which has kept me out of New Zealand, but you're here in America and it is great to see you.
Jordan Williams: Tim, it's great to see you now in your home offices rather than at the New Zealand Taxpayers' Union.
Doescher: Yeah. There in Wellington, it was a rainy afternoon when we had our meeting, and I'll never forget it. And now a lot's changed. Like I said, New Zealand Prime Minister, Jacinda Ardern, says, "This is not an end, it's a new beginning," when referring to COVID restrictions being lifted after a massive surge cases that has happened throughout the country.
Doescher: If you go and look at the case graph, it's a flat line for the most part for the last two years, and then all of a sudden, within the last couple months, it shot right up. And it really is chilling, because you've had some of the strictest lockdown measures, quarantine things, vaccine passes, double doses of vaccines being required, three month lockdowns, outdoor mask mandates, all that stuff. I just want to get your take on this thing. For an American, that seems like a lot. But I want to get yours on it.
Williams: I totally disagreed with the approach Jacinda Ardern and the government took. But even I, in my heart of hearts, wanted her to succeed. And unlike most of the world, when New Zealanders were told, "Stay the heck at home," we all did. And to even the government's [stonking 00:07:39] astonishment, we actually didn't flatten in the curve, we eliminated this thing.
Williams: So, then we were in a position where we had New Zealanders stuck overseas, and extremely difficult to get in to New Zealand. Basically, closed borderers in all. There was a horrible lottery of human misery to get back into New Zealand to get very limited spots. And they were just repurposed hotels. You had to stay in a hotel for two weeks, and you were tested up the wazoo, and then you were let out.
Williams: But for the, except for that first very harsh, and it was very harsh, lockdown, but had the support, overwhelming support of the public at the beginning. We lived a normal life for 18 months. There was a few weeks where we had snap lock downs in our larger city, but it was worth it because we eliminated it and were back to normal.
Williams: But then Delta came along and the government was caught on the hop because of the, we weren't vaccinated. And then just strived for the 80, 90% vaccination, and basically said to Auckland, our largest commercial center, city of one and a half million, that we'll let you out when we had 80%. And we very quickly got to 80%, but then it was, no, no, it's got to be 80%, including 80% the Indigenous Māori population.
Williams: And all, and then this suburb, and it was all just... It was very clear that the government was trying to delay the inevitable. And a big reason was that, is because the government really hadn't done the work in our health system.
Williams: We literally had a two year, or 18-month head start. The thing is, the end of last year, we knew we had to open back up, but New Zealanders were so scared, and the body politic and the intelligentsia knew we had to open up, but it was politically almost impossible. The government didn't know how to open back up, because the population was so scared, because that's what Jacinda Ardern's whole brand had turned into. She protected us from COVID.
Williams: Now that COVID, even though... Auckland's just peaked, the rest of New Zealand hasn't, we're having just unbelievable [crosstalk 00:09:52]... who knows what the case numbers are, because the testing was maxed out pretty quick.
Williams: But yesterday, the government announced that we're getting rid of masks, outdoor limits on venues is just totally gone, indoors going up to 200, vaccine passes are out the window I think second of next week, I can't remember the exact date.
Williams: But it's, we are following the rest of the world in terms of getting rid of everything because we're welcoming back tourists, at least from Australia, from one April.
Williams: I think the rest of the world from one May, So, it is close to back to normal. And I think... I don't think we were the smartest in the world, I take that back from what I'd said for the last two years, but I don't think we were the dumbest. And I credit this place, the Pfizers of the world, [your 00:10:45] amazing medical technology, for actually giving us that option.
Doescher: Well, let's talk about some of the shutdowns here, and what the shutdown did. I mean, tourism for me, my flights were basically canceled. Two and a half years ago I had a trip planned, that was over. Out the window. Tourism's been decimated there.
Williams: Yeah. [crosstalk 00:11:06] It's our largest export earner, but totally [inaudible 00:11:08]. In fairness, though, New Zealand does have quite a liberal labor market. So, the unemployment rate is still among the lowest in the OECD.
Doescher: That's true. But I will say this, though, that with things that have been happening with a lot of increase in government spending-
Doescher: There's a new 15% online tax, I'm sure that's something that your organization is probably researching a little bit. There's been wage subsidies obviously for shutdowns and things like that. Frozen salaries, things like that, from the government in Wellington. So, I'm just wondering, just some of the actions that have been taken because of the lockdowns. What do you and the New Zealand Taxpayers' Union see as a long term effect on the economy?
Williams: Well, at least we don't need to go into the weeds in terms of the individual policies. I'll give just two factoids. The first is that our Reserve Bank [inaudible 00:12:08] printed 50 billion for the government to spend. Economic response was the second largest in the world in terms of proportion of the economy, only behind the United States.
Williams: And what do you know? We are seeing unbelievably high inflation at home. It's reaching six, 7%. New Zealand was the first in the world for solely inflation targeting for the Central Bank. That's now being unwound by this government. We have a government that was, for the first time since we've had our electoral... We have a Europe, unfortunately have a European style electoral system that was instituted in '96.
Williams: The Jacinda Ardern in the 2019 election was the first government since '96 to get a full majority, not having to rely on a support partner in parliament. And that was solely on the back of COVID. But now, and at least we do monthly political polling, for the first time, COVID's not the main issue, it's the economy.
Williams: And we have a government that's a one trick pony, only knows how to lock down, basically. And save Nana, and half New Zealand... it's very, the first time becoming very polarized. Save Granny, for others it's like, you haven't done the work here. Every area of policy. Climate change, Jacinda Ardern's nuclear, she's called it the Nuclear-Free Moment, which is very tied to the New Zealand sense of identity. You know, emissions are up. They promised a hundred thousand new houses. In four years, they've built 500. It is just in every area of public policy, this government has failed to deliver. And I'm not exaggerating, it really is the worst government in my lifetime.
Williams: But COVID saved them, but now we're moving on.
Doescher: And here's the other thing with moving on, as you start opening up, people start going out, they start going to a restaurant, and they realize that the tab is exponentially higher than it used to be, they see that the clothing price, they see everything is more expensive. This is real. That's what I like to say here, it's real cost and real lost for real people.
Williams: Yeah. And gasoline. We picked up, I don't know who's doing it in the US, but if you're listening, we love you. The Biden on the gas pumps. The Biden, "I did that, oh, LOL," we literally, my organization, did the same thing with Jacinda Ardern, and we launched it three weeks ago, and we sent it out to our members and people could buy it. And we're like, "Here's your free, 'I did this' Jacinda Ardern pointing sticker." Please don't put it on a petrol pump. But if you do, or if you see one, please send us a picture. With Jacinda Ardern last week, on Monday, despite being the Prime Minister that says that climate change is the biggest issue, she cut petrol taxes.
Williams: Gasoline taxes. And only Taxpayers' Union were calling for that. We're the only ones that had linked petrol prices to... We also did a stunt where we went down to a petrol station and refunded people's gasoline tax for an hour. By the end of the hour, there was queues down the road. And it was that 51% of the price of petrol in Auckland, or gasoline, is tax.
Williams: And it just dogged Jacinda Ardern for the next week, because she said, "Well, it's the Ukraine situation, it's the international environment, we can't possibly control"-
Doescher: They love the play that. Yeah. They love to play it.
Williams: Well, hang on Prime Minister. Half the money's going to you.
Doescher: Right. Yeah.
Williams: And it's a really good example of groups like Heritage, the Taxpayers' Union, and why the third sector matters. And I mean, as fiscal conservatives, petrol tax isn't the, it's not the hill to die on, but it does remind people of the burden of government.
Doescher: Yeah. I want pivot here because one thing that Americans may not know about New Zealand, is it's in export, import. I mean, it is especially heavy on the imports from other nations to get goods and things like that. I mean, it's an island in the middle of the ocean. And I want to talk a little bit about China here.
Doescher: I know that there's a big relationship there. I think it's like 30 billion total trade relationship with China, which is a huge number. There's all sorts of different things going on there, and I'm wondering, is that something that with human rights abuses happening in China, and with the rise of communist, their relationship with Russia, things like that... I just wanted to hear your take, from a liberty loving guy, is the trade relationship worth it? Or what is the perception there with New Zealand?
Williams: China is our largest trading partner. And the biggest geopolitical problem New Zealand has is that, like Australia, our economic ties are diametrically opposed to our cultural and security ties. Meaning that it's the US, it's [inaudible 00:17:15], it's the Western world. But economically, our cart is hitched to the Chinese horse. And that, I mean, I'm bitter, actually, at the New Zealand body politic and our Ministry of Foreign Affairs, equivalent of your state department, that our number one priority is don't get between the US and China, because then we have to pick a side. New Zealand's very small, and China can make an example of us.
Williams: And New Zealand has done some really dumb things. For example, the last, and this is the John Key, the National Conservative government, they got us elected onto the UN Security Council. So, that one priority is don't get between the two, and these geniuses that are actually just career diplomats that are there for their own jollies, certainly not for the protection of New Zealand interests, go on this damn Security Councils. The one bloody place where you have to pick a side and it matters. Just absolutely mad.
Williams: I think there is a lot more awareness now, because New Zealand... There's been a couple of instances where Chinese have just made an example of us, but also the trade disputes between Australia and China, that has caused us to sit up and take a look. And this is around, I think it was iron ore Australia rejected, or coal or something.
Williams: So, the issue is now, it's more in the forefront, but compared to Australia, I worry we're not standing up for it as much. And by that, I mean, in terms of media coverage, the stories that sort of, oh no, that's a bit awkward. It is very clear there is Chinese money going into our major political parties.
Williams: The mayor of Auckland is currently, in fact, ironically, he might actually be, to my disgust, these former labor cabinet minister and labor party leader, now Mayor of Auckland, is probably going to get the gig for the US ambassador, which is disgraceful. He's currently under investigation by our Serious Fraud Office for nondisclosure of what I understand was a donation from a CCP figure.
Williams: Now, this is... I think the tide is turning because the main parties are waking up to this risk. But, to be frank, there's a real naivety to it. New Zealanders are inoffensive. We like to pride ourselves in getting along with everyone. But that also comes with a naivety.
Williams: But the last point I want to make is coming to North America, it's really interesting, scary, and refreshing. I've got back from Ottawa the day before yesterday, and I'm really refreshed. It was cultural shock coming here that everyone is determined to move on from COVID. And I get you've still got cases and I've still got risk [inaudible 00:20:12] and all that sort of thing. But even in the Ubers, you got to tick to say, "Yes, I'll wear a mask," but the Uber drivers are like, "Don't worry about it." You guys are determined to move on. You have to make bookings here in DC and in New York and the Broadway theater I went to, it was awful.
Williams: In Canada, which have almost identical, they got rid of the mask mandate, literally the day I was there. But the attitude of the people was not determined to move on. The restaurants were empty, the bureaucrats are not back in the offices, or the business... I was in Ottawa, so it's mostly bureaucrats.
Williams: But when I get home, what I already wanted to figure out is what side of the coin of New Zealand is on. Are we choosing to be scared and wanting to stay at home, or are we determined to move on? And I think that I feel really encouraged from this trip that the US is. And of course, there will be another peak. There'll be more surprises.
Doescher: Sure. It's there.
Williams: Hopefully, it's over. [crosstalk 00:21:08] But probably isn't.
Williams: But there is something in the American attitude, and I know that you guys have been through, that I can't possibly under understand, the refrigeration trucks in New York, and the... It's been it's been a hard one. I'm not belittling that at all. But the attitude of that American spirit is really identifiable between here and Canada, and I'm really encouraged by that. And I hope like heck New Zealand takes that approach than the living in fear and wanting to stay closed.
Doescher: Well, Jordan, your organization, New Zealand Taxpayers' Union, is going to be, and has been, a driver in that attitude of trusting people. Individual liberty, freedom, these universal bits of goodness that we have to share with each other, and we can encourage each other with. And I am so grateful for you and your friendship over the years. And I cannot wait to come to Wellington and see the growth that you've had over the last two, three years. So, thanks so much for being here,
Williams: Tim, you guys do God's work over here, and I can't wait to see you again down under.
Doescher: Now, I know things in New Zealand are challenging, like everywhere in this world. But I'm going to be honest, as soon as we are allowed, I can't wait to go back. Want to go with me? Send me an email at [email protected]. Or if you liked this episode of Heritage Explains and you listen on a regular basis, it would really help us out if you hit that like button, hit that share button, or left us a cheeky comment, wherever you listen.
Doescher: And John Popp wanted me to remind you, don't be sheepish about it.
Doescher: Michelle's up next week. We'll see you then.
Heritage Explains is brought to you by more than half a million members of The Heritage Foundation. It is produced by Michelle Cordero and Tim Doescher, with editing by John Popp.