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The domestic economy was also deeply regulated. Compulsorily, all workers must have union membership; wages and awards are set; employers and employees are locked into the system, they have no choices; thus productivity was low. New Zealand became an inefficient economy, and its standard of living fallen dramatically compare to other countries in OECD. The following graph shows the real GDP per capita in New Zealand compared with OECD average.
Source: NZ Treasury
With the Lobour Government being elected in 1984 and the signing of the Closer Economic Relations Treaty with Australia, New Zealand started to embark on a remarkable economic reform...
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