Danish lessons

Published in Insights, The New Zealand Initiative’s newsletter, 19 July 2019

In late June, the Initiative took a delegation of our members to Copenhagen.

For a week, more than three dozen New Zealand business leaders travelled Denmark and South Sweden. We talked to business leaders, academics, journalists and politicians, and visited companies, education facilities, and government and non-government organisations.

This was not a mission to find new trading partners but a search for policy inspiration. There were plenty of opportunities on our travels for inspiration, especially in infrastructure.

In New Zealand, we know how long it takes to get even moderately sized infrastructure agreed on, financed and built. Denmark’s infrastructure, on the other hand, inspired us.

Take the Øresund Bridge and Tunnel. They connect the Danish capital of Copenhagen and the Swedish city of Malmö. At a length of 8 km, the bridge is the longest combined rail and road bridge in Europe. On the Danish side, it ends on an artificial island from where it goes into a 4 km tunnel.

More impressive still, the project was built in just five years and is entirely user-financed. After 30 years of operation, user fees will have covered the cost of this multi-billion-dollar project. Over this period, the bridge will have generated substantial economic benefits on both sides of the Øresund as Copenhagen and Malmö integrate more closely into a regional economy.

Though New Zealand also occasionally delivers new pieces of infrastructure, they rarely happen at this scale, speed or financial basis.

Denmark also made us think about wellbeing and living standards in New Zealand. We talk a lot about both. However, we often forget how both are derived from a thriving economy with high productivity.

Denmark’s GDP per hour worked is 78 percent higher than New Zealand’s. Its GDP per capita, however, is only 35 percent higher than ours.

The difference lies in the hours worked per capita. Per capita, the Danes work 24 percent hours fewer than New Zealanders. That is because of their 37.5-hour working weeks and six weeks of paid holidays per year. No wonder they celebrate their happy hygge lifestyle. They have the time to do that.

The Danes can only afford such limited working hours while still producing an extraordinary amount of GDP because they are fantastically productive.

Perhaps this, more than anything else, was the bottom line of our visit. Whatever Denmark does, it can only do so because it is backed by impressive productivity.

If New Zealand wants to improve its wellbeing, it needs to lift its abysmally low productivity first.