National Business Review

Free trade needs an institutional framework that helps with the practicalities of trade across borders – particularly for when things go wrong.

This week, the Asia New Zealand Foundation released its annual survey of New Zealanders’ Perceptions of Asia and Asian Peoples. In some ways, its results are entirely unsurprising as a large majority of New Zealanders acknowledge the growing importance of Asia. How could anyone with only a cursory knowledge of economic realities disagree?

The biggest loser in Greece’s snap election was not even on the ballot paper. It was German Chancellor Angela Merkel whose austerity policies in the euro crisis were rejected by Greece’s swing to the radical left.

Mr Key’s defining strategy is one of incremental radicalism. It resists any bold rhetoric or big picture reforms. In their stead, reforms are taken one step at a time. This enables the government to make its case and take the public along a journey.

When Chancellor Merkel visits New Zealand or speaks at the G20, she will of course try to portray a very different image of her country. Unfortunately, the self-righteous self-image of Germany bears little resemblance with the cold, hard facts of its economy.

Land regulations are a cost and concern to New Zealand businesses, and they are probably a factor affecting the cost of living through land prices and competition effects.

We do not need big plans and visions and we do not need government to think on our behalf. We need the state to guarantee property rights, enforce contracts and provide a stable set of political and economic institutions.

Perhaps the occasional Grand Coalition is the price we have to pay for our MMP electoral system. If you want to avoid difficult coalition bargaining and prefer clear parliamentary majorities, then a first-past-the-post system would be better.