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So why is this?

27 October 2020

New Zealand is, all things considered, a pretty good place to live.

There is a stable political environment, the climate is not too extreme in heat or cold, the people are (mostly) friendly and there are very few poisonous creatures (except within the halls of power).

In short... there are many, many worse places to live than Godzone.

This is particularly true right now, as we enjoy the luxury of being virtually Covid-free, whilst the rest of the world suffers the pain of watching this virus cut huge swathes through their populations and their economies.

But is New Zealand as good as it should be?

More importantly, if it's not as good as it could be, why is that and what can we do to improve things?

The catalyst for today's column was this opinion piece published on NZ's favourite taboid fish-wrapper, Stuff.

The article makes a very valid point that somehow, we don't seem to be where we should be in terms of our cost of living.

If you stop and think about it, a huge percentage of our electricity is from renewable sources and is being generated by infrastructure that has been paid for many times over and thus owes us nothing more than the cost of its maintenance. So why are NZ's power costs so high when compared to our first-world peers?

We live in a country where some of the most fertile soils and most productive farming methods in the world ensure a bountiful crop so large that we're able to feed not just ourselves but a huge number of others around the world. So why are our food prices so high? Indeed, why is it that those "others" can often buy our wonderful produce and a much lower cost than we can from our own supermarket shelves?

Then there's the (as yet) inescapable cost of fuel. New Zealand's once cheap petrol prices have soared to the point where we're pretty much on par with the UK, a country that has always been one of the most expensive in the world. Compared to our neighbours across the ditch or those of the USA, Canada and elsewhere, Kiwis pay a fortune for their transport fuels.

Let's also not forget the single largest cost any of us face -- that of housing.

Although there has been a general trend for property prices to increase significantly in recent times, NZ has really led the world in the rate of that increase and now has some of the highest housing costs in the developed world, outside of crazy locations such as Monte Carlo.

Surely there's something badly broken when all these factors are taken into account.

How can it be that we get so little for our money when compared to other OECD countries?

As the story I linked to learlier suggests, I'm thinking that the main problem we face is that of pseudo-monopolies, duopolies and oligopolies -- plus a tax structure that makes property speculation a much safer and more lucrative investment than more productive things such as shares.

Our entire system seems to be geared to very much ensure that the rich get (much) richer and the poor get (even) poorer.

If you're already on the property ladder then with some leveraging, a little risk-taking and a lot of borrowing, you can earn more money sitting on your bum 365 days a year than the average labourer earns in a decade, despite the latter's many hours of hard toil.

We have so few players in the supermarket industry that they can set their own prices and margins, comfortable in the fact that unofficial price fixing has perhaps become the norm and won't even be challenged by agencies of government that are supposed to police such things. These players are also safe from competition due to the power they weild over manufacturers. It is pretty easy to see how the encumbents could stop a supplier from also supplying any new competitor simply by hinting at a "them or us" situation. No supplier could afford the loss associated with disappearing from the shelves of Countdown or New World could they?

And why doesn't government step in and do something?

Well perhaps that's a case of stones and glass houses.

The NZ government is in the power business via its SOEs Genesis, Mercury, Meridian, etc and the dividends paid out by these SOEs represent an important source of revenue for that government. In cohorts with other generators, this creates a very cosy oligopoly where competition is just a theory and the reality is that price fixing is a government-run fraud on the people.

So there we have it, the reality is that our little utopia is not the place many think it to be. Whilst we have many, many virtues and positive things going for us, we also have a nasty underbelly of gansterism that allows those with power and money to ensure that their own interests remain protected carefully cultivated -- at the expense of the legions who are doing the real work.

Or perhaps not. Maybe I've got this entirely wrong.

What do YOU think? :-D

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