The same chart delivers two verdicts. Measured against our own past, the road toll is a triumph. Measured against the world, not so much.

The gap between the two measurements is why we compiled a second book. New Zealand by Numbers, published a fortnight ago, looked backwards and asked whether New Zealand was improving. Our new book, New Zealand by Comparison, looks sideways and asks whether New Zealand is keeping up. It compares New Zealand and 28 countries across more than 100 indicators.

A pattern consistent enough to serve as the book’s theme is that New Zealand’s society outranks its economy.

New Zealand has the highest labour force participation of all 29 countries. It ranks second for economic freedom, fourth for honesty in government and fifth for the rule of law. New Zealanders report greater life satisfaction than people in richer countries including the United States, Germany and Britain.

The economic half is less comfortable. The average employed New Zealander worked 1708 hours in 2023, compared with 1611 hours in Australia and 1523 in Britain. Whatever faults our economy has, they are not because New Zealanders are work-shy.

Productivity depends not only on effort but also on investment, scale and access to competitive markets. Photo / Alyse Wright

The problem lies in what each hour of work produces. New Zealand generates 49.6 international dollars of output per hour, adjusted for what money buys in each country, which places it 20th of 29. Australia produces 76.8 dollars an hour, 55% more. An Australian worker produces in 39 minutes what a New Zealand worker produces in an hour.

Productivity sounds abstract until it reaches the wage packet or the government’s budget. A country producing less in each hour must work longer or earn less. New Zealand workers are already doing their part in terms of effort. But New Zealand lacks sufficient capital, scale and competitive pressure to turn that effort into value.

The danger of accepting a middling position becomes clearer when countries once far behind begin to catch us up. In 2000, Poland’s income per person was less than half New Zealand’s. Adjusted for purchasing power, it now stands at about US$45,200 against New Zealand’s US$49,300. On current trajectories, the Polish will overtake us within a decade.

Estonia makes the same point on a different metric. It is small, peripheral and was far poorer than New Zealand within living memory. Its pupils now score 510 in PISA mathematics, 31 points above New Zealand. Size and location did not prevent Estonia from eclipsing New Zealand in educational success.

International comparisons suggest New Zealand can still improve in areas such as educational achievement despite many longstanding strengths. Photo / Mark Mitchell

These examples do not support a simple story of national decline. Rather, they reveal opportunities other countries have taken while we have improved more slowly.

Geography will always be a challenge. New Zealand is distant from large markets, and our domestic market is small. Those disadvantages make good policy even more important.

The report points to shortfalls in capital per worker, firm scale, competition, trade and the supply of land for housing. Policy cannot move New Zealand closer to Europe or Asia, but it can stop making distance and smallness more costly than they need to be.

The institutional inheritance supporting New Zealand is not guaranteed either. Our score for honesty in government remains high but has fallen 10 points in a decade. On the World Bank’s measure of government effectiveness, New Zealand has slipped to 15th of 29.

New Zealand still has some advantages that many countries would envy, yet some of those foundations are weakening while economic decisions are postponed. Other small countries show that positions can change, but also that they do not change by accident.

Keeping up with international competition requires deliberate choices, pursued for long enough to compound their effects.

Otherwise, New Zealand will continue to improve slowly while the rest of the world moves further ahead.

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