OECD Product Market Regulation (PMR) Indicators: How does New Zealand compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
New Zealand
1.24
OECD average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
New Zealand 5 Most competition-friendly countries
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Regulatory barriers to competition in New Zealand are slightly below the OECD average. The administrative burden on new businesses is low and the framework regulating public procurement is in line with key OECD best practices. In contrast, regulatory procedures are more complex than in most OECD countries and the government owns or controls firms in many sectors, including key network sectors. In addition, while the barriers to entry faced by foreign suppliers are quite low, barriers to foreign direct investment are high.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
New Zealand
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
New Zealand
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS In New Zealand, most professions face less regulatory constraints to competition than in most other OECD countries. Further, barriers to competition in retail distribution and in the retail sale of medicines are lower than the OECD average. In contrast, institutional arrangements in most network industries are less competition-friendly than in most OECD countries because the government owns shares in the largest operators.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation New Zealand 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation New Zealand 5 most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2
1 0 Lawyers
Accountants
Architects
Civil engineers
Professional services
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
Regulatory barriers to competition in New Zealand are limited, but there is scope for improving product market regulation in some sectors and domains.
Strengths
Challenges
The administrative burden on new firms, whether limited liability companies or personally owned enterprises, is one of the lowest among OECD countries.
Retail distribution has a regulatory set-up that is more conducive to competition than in many OECD countries, even though some regulatory constraints remain for online sales.
The regulatory regime for freight transport by road and long-distance passenger transport by coach are among the most competition-friendly in the OECD.
Public ownership of firms is more extensive in New Zealand than in many other OECD countries, and there is scope for better aligning the rules on the corporate governance of state-owned enterprises with key OECD best practices to ensure a level playing field between state-owned and privately owned enterprises.
Barriers to foreign direct investment are among the highest in the OECD.
Entry and conduct regulation of lawyers is much stricter than for other professions. For example, only lawyers can have ownership and voting rights in law firms and lawyers are banned from cooperating with other professions.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org