Japan interested in New Zealand's economic deregulation
2 September 1994
Commerce Commission Chairman Alan Bollard has been invited to Japan to speak to business people and government officials about New Zealand's experience in economic deregulation.
Dr Bollard spoke at a seminar organised by the Kobe Chamber of Commerce and Japanese financial newspaper Nikkei yesterday and is in Tokyo today talking to government officials and more business people.
Many of the business people are interested in investing in New Zealand. That investment will be encouraged by the start of direct flights between New Zealand and Japan on Sunday and the reopening of the Consulate General in Osaka.
Dr Bollard said the conclusion to be drawn from New Zealand's experience is that there are big efficiency gains to be had from deregulating previously protected industries. However, if that is done quickly, there is danger of a recession during the transition. But if it is not done in a hurry, it can be hard to maintain the political resolve necessary for the programme.
"New Zealand industry and agriculture moved, within a decade, from being on of the most protected in the western world, to being one of the most (if not the most) deregulated. New Zealand business became dependent on market forces and its own managerial and work skills for survival," Dr Bollard said.
The key piece of legislation in the deregulation process has been the Commerce Act. It has allowed companies wide scope to restructure themselves and to merge with others. It places a low regulatory burden on them - it defines and prohibits anti-competitive behaviour but does not tell businesses how to operate.
However, in line with that light regulation businesses cannot expect to lobby the Government to get special treatment if they are put under pressure by better performing local or foreign firms.
"Today the Commerce Act is acting as an important mechanism inducing business managers to change from an insulated business environment to assume a more competitive, efficient managerial culture. This has already happened in manufacturing and some services, but it is still some way to go in some utilities and in industries as diverse as health and education," Dr Bollard said.
The biggest challenge will be to determine the conditions for access to natural monopolies like power lines, phone lines, airports, wharves and gas pipelines and how their owners need to behave with would-be competitors.
Some key cases are now before the courts and the way they are resolved could have a big impact on the future shape of New Zealand's competition policy.
"In the meantime, the New Zealand competition regime is receiving a lot of attention from overseas as a possible model to guide behaviour in deregulated environments."
Media contact:Vince Cholewa, Communications Officer
Phone: work (04) 471 0180