OPINION: Paul Melville.
This election, the standout issue is the cost of living.
It’s all the focus groups want to talk about.
Petrol, food, insurance, electricity, rates. The cost of everything has gone up and something must be done.
Looking back to 1990, everything was cheaper. Something has clearly gone wrong.
The party that can do the most to bring down the price-of-life should therefore win on November 7th.
NZ First would buy back the BNZ and break up the gentailers. National wants more supermarket competition. The Greens want a government-owned supermarket and will make university fees free. Labour will make GP visits free, cap the price of public transport and make it illegal for big companies to charge too much.
These ideas all sound good to focus groups. But how do they compare to policy in a country that has truly tackled the cost of living?
Which country has done the most to tackle costly life and what can we all learn from it?
There is no clear number one, but, by some measures, the answer is Nigeria.
A haircut can cost NZ$3, a night’s accommodation NZ$20 and lunch can be picked up for NZ$2.
So how can we achieve Nigeria’s cost of living?
Nigeria has privately owned supermarkets, banks and hairdressers, so perhaps public ownership may not be the secret. GP visits are not yet free.
There are, however, other policies worth investigating.
Nigeria’s minimum wage is about 50 New Zealand cents an hour, much lower than ours. Nigerian employment law provides considerably fewer protections for workers. The rules that regulate the environment and housing are a far cry from New Zealand’s RMA.
A sufficiently determined government could find opportunities to tackle the cost of living by copying some of these policies.
There is just one awkward data point for this international benchmark.
More than 40 percent of Nigerians live below the World Bank’s extreme-poverty line. New Zealand’s GDP per person is about 45 times Nigeria’s.
Having very low prices does not necessarily make things affordable.
This creates a problem for our cost-of-living strategy. A NZ$3 haircut is not cheap if you earn 50 cents an hour.
There is another way to make things more affordable, of course. We could become more productive and earn more.
Unfortunately, “productivity crisis” hasn’t yet shown up in the focus groups.
So, for now, back to the supermarkets.
Paul Melville is a Senior Fellow at the New Zealand Initiative
