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Business Advice

Challenging Our Assumption

Author: Matthew

Nov 2017

Michael Dunlop, Chairman

Picture above: NZ Business delegation meet about 20 Kiwi doctoral and post-doctoral students at ETH University in Zürich, one of the top 10 universities in the world, specialising in science and technology. Apple, Google, Microsoft and Oracle have all established research campuses in Zürich and work collaboratively with ETH.

It was quite unsettling to discover that I was not as open-minded, critical in my thinking, and as informed as I had thought. Being part of The New Zealand Initiative business delegation to Switzerland was the moment of realisation.

In the past 50 years, Switzerland has increased its per capita wealth from on a par to twice that of New Zealand.  Their population is around nine million, ours around five million. How did they do it? They have an unbelievable commitment to competition.  That means that there is no national education curriculum – it is decided at a regional level.  That means that 'national' solutions by central government are abhorred. 

Normalisation is seen as anti-competitive unless proved otherwise. In fact, regional and local government directly raise as much tax revenue as central government.  Imagine halving the expenditure of central government and doubling that of local government – and it is local government and its communities that determine the tax rates. If we had the same number of local government bodies per capita as Switzerland we would have around 1400, not 78. Rather than amalgamate, they would divide up our local government bodies. Their experience is that people and communities rise to the occasion when they are allowed to; and they succeed inordinately.

And tertiary education.  Universities are predominantly owned and run by regional government.  Entry to universities is held at around 20% of the student population so that the majority of tertiary students can be in skilled trades and technology training (our Polytechnics).  Business hires undergraduates so that they work two or three days and study for the balance.  Now there is another revolutionary idea – students who are learning on the job at the same time as they are being formally educated.  No wonder their work-force is more fit-for-purpose than ours is.

Unemployment is around 3% and they bring in over 200,000 permanent workers from across their borders, such is the strength of their economy. While they are a small country like us, this has not prevented them establishing a raft of major global businesses in a range of sectors: think of Nestle, Novartis, Roche, ABB, Adecco, Holcim, Syngenta, Schindler, Siemens, UBS, Credit Suisse, Suisse Re – all Swiss companies developed from a population of under nine million.

Our country now has a strong growth record and there are innovative policies coming through, but we aren't 'there' yet. As we approach a General Election, I realise that there is more than the current prescription which is that efficiency comes from national solutions.  The Swiss have demonstrated the opposite is true. Maybe we need to find some different solutions to our still too-low productivity record.

Finally, we, albeit a small company, have become members of The New Zealand Initiative in order to help fund better public policy research and better solutions.  We encourage more businesses to join.