New Zealand is an island country of
four and a half million people;
a nation of immigrants,
both recent...and from long ago.
So the family came out from England
in the very early part of the 19th century.
They felled and milled timber to
grow a new nation.
It's a land of hillsides dotted
with sheep and cows.
Here with us we have 29,000 sheep
and about 2,400 cattle.
And New Zealand's abundant
coastline teems with fish.
The most important thing I enjoy
about fishing is we see dolphins
and whales and sharks
and penguins and turtles,
and you see all of these things.
When you stand here on this land,
you cannot help but marvel at the
natural beauty.
It's truly astonishing.
It's hard to imagine that thirty
years ago New Zealand was on the
brink of economic collapse.
I mean, it was tough...losing a farm,
and my childhood dreams of owning a
farm had been dashed.
It ruined some lives.
There was some real pain out there.
Some real pain and some real hurt
and some real anger.
I had some good personal friends
lose everything they had through
those times, and it was bloody hard.
The country was in crisis,
and it was clear that something
drastic had to be done.
New Zealanders,
affectionately called Kiwis,
took the painful steps required to
stop the downward spiral,
and bold reforms were voted in.
I'm Johan Norberg and I'm here in
this beautiful land to share the
story about how the Kiwis took the
bull by the horns,
reformed their country and became
genuine trailblazers for the world.
Major funding for this program was
provided by:
The Donald and Paula Smith
Family Foundation.
Additional funding was provided by:
Donors Trust Incorporated.
If you can imagine this,
we were a benign North Korea.
Everything was controlled
by the government,
and I mean everything.
You had to have a
permit to go on a holiday,
and get the money for travel.
I remember my father bought a car,
and he had to put his name on a
waiting list for like six months.
And then you had to go into a lottery.
It was dreadful.
There used to be a 6 to 9 month
waiting list to get a telephone put on,
and this is in a house that had all
the infrastructure in place.
We're a dairy-producing country,
so if you wanted to eat margarine,
you needed a doctor's letter of support.
It was crazy.
A pair of working boots
manufactured in New Zealand were
probably three or four times the
price of a pair of boots in the
United States.
It meant everything that we had
here was expensive,
or way more expensive
than what it could have been.
In 1960, New Zealand was the 3rd most
prosperous country in the world.
Twenty years later,
it had fallen to 18th.
No one was untouched by the decline.
New Zealand's parliamentary
government had evolved into a
controlled system that dictated
everything from salaries to the
manufacture of staplers.
But the heart of New Zealand's
economy wasn't manufacturing,
it was agriculture.
And families who had been farming
here for over a century were the
backbone of New Zealand's
agricultural economy.
Families like the Cashmores.
Yeah, so this property is just under
5,000 acres.
So on it are just under 4,000 ewes
and just under 400 cows run on it.
Our income is around 40% from sheep,
15% from wool,
and the rest from cattle.
I've got two boys.
Robert is managing the home farm
operation here.
In 1840, New Zealand became a
British colony.
Then, in 1852,
the colonists were granted self-rule.
But the British influence continued.
So the family came out from England
in the early part of the 19th century.
So William Cashmore was the first
member of our family to come here
and he was my great-grandfather.
He rode in here as a young man,
no road, no nothing.
They felled and milled timber to
grow a new nation.
Then they started grazing stock.
They just- they got bigger and bigger.
The British needed meat and wool
and New Zealand provided it.
By the 1950s,
Kiwis enjoyed some of the highest
incomes in the world,
although the United Kingdom was by
far New Zealand's main market.
Bill Cashmore grew up working on
his family's farm in this stable,
growing country.
In his late 20s, he met Lynn,
his wife to be.
I didn't come from a farming background;
I came from a farming town.
I've been here 34 years...and
yeah...I can't get her to leave.
(laughs) I like it.
We used to sell everything to the
UK back in the day.
In my father and grandfather's day
everything went to England.
After World War II,
the New Zealand government started
to regulate farming output and
prices in an attempt to steady the
income of farmers.
In the 1960s,
New Zealand's government introduced
financial subsidies to help farmers
increase production.
But in the 1970s,
the UK became part of the European
Economic Community and the Kiwis
lost their favored trading status
with Britain.
Demand for exports dropped.
In reaction, the New Zealand
government added even more subsidies.
Whether Bill Cashmore wanted them
or not, government subsidies shaped
how he ran his farm.
What we did have was guaranteed
prices and we received things
by the government.
It got to the point that a third or
more of our income was being
supplied from central government.
So let me tell you about what I
call the skinny sheep policy where
farmers were given a dollar a sheep
I think it was,
50 cents or something, and it was nuts.
Because the more you ran the more
money you got paid to do so,
but it didn't mean that the quality
you were producing was any better
or was it good for the environment
having overstocking on marginal land?
No, it wasn't.
The subsidies led to over-use of fertilizers,
overcrowding of livestock on the land,
and using land that wasn't suited
for farm animals at all.
By the early 1980s,
it was clear to most farmers that
the subsidy program wasn't working.
Not only were farmers in trouble,
the whole economy was
grinding to a standstill.
No industry was untouched by heavy
government controls.
There were controls on wages, prices,
dividends, rents and so on,
to import almost anything you were
required approval from the central bank.
To give you an idea how extreme it was,
when my grandmother, who was 70,
wanted to read a British magazine,
she had to get permission from the
treasury and had to write a letter
to explain why she should be able
to receive that,
rather than going to read it in the
public library.
New Zealand was founded by people
who broke a lot of rules to get here,
and who genuinely wanted to be
liberated from the shackles of
fiefdoms and control by lords.
And the strange part was they kinda
swapped it for the fiefdom of the state.
Tom Palmer has worked in over 90
countries around the world,
partnering with local organizations
that are fighting for individual
rights and economic liberalization.
New Zealand had followed a model in
the past that the government should
promote certain industries and
jigger the rules,
so those industries will be
selected as winners.
And so, the government had to subsidize
and create all kinds of
manufacturing for automobiles
and television sets, and so on.
So one of Dad's businesses in the late 70s,
early 80s, was an importer for
televisions and VCRs.
The only way to do that was to
bring in TV sets in pieces.
And because of the
New Zealand regulations,
they had to be assembled
in New Zealand,
even though none of the parts were
made in New Zealand.
So we go to Japan,
sit down with these Japanese and
try and explain to them that
we'd like them to effectively
disassemble their TV sets,
send them to us,
we will build a factory,
screw them all together,
put them in a box,
put them back on the shelf at
twice the price.
We were required to do that by the law.
The Japanese thought that they were
completely nuts.
And, of course, it was completely nuts.
This was not adding value.
This was busy work that subtracted value.
It made everyone in the society poor.
What you have to appreciate is that
New Zealand was a controlled
economy by the government.
Anything that was
brought into the country,
you had to have a license for.
So if you had a license to say
bring in tires, or machinery,
it was a license to print money, basically.
It was a pretty cool deal if you had it.
We didn't have one of those, unfortunately.
The trouble was the whole tangle of
regulations and controls and subsidies.
And New Zealanders knew it
wasn't working,
that's when the trigger went off
for highly, highly radical reform.
By 1984, the economy was collapsing.
After nine years spent denying the
economic reality surrounding him,
Prime Minister Robert Muldoon,
leader of the National Party,
was feeling his support dwindling,
and he suddenly calls a late night
press conference to announce
new elections.
Have we got a date, prime minister?
We've got a date the 14th of July,
which we worked out in government
house as being the appropriate day.
That doesn't give you much time to
run up to an election, prime minister.
It doesn't give my opponents much
time to run up to an election, does it?
The New Zealand people,
if they want me to lead a government,
they'll vote accordingly.
If they want that other bloke to
lead a government they'll vote for him.
That's it...right?
Yup, that's it. Okay.
9:30 p.m., Saturday the 14th of July,
1984, a moment of political history.
Muldoon and the National Party lose
in a landslide and the Labour Party
takes control.
David Lange becomes prime minister,
and within days a new finance
minister is appointed.
He is Roger Douglas.
Well, I think that New Zealand has
tremendous potential;
it has to be remembered that in
1956 we were the richest country in
the world.
We've slipped down.
One of the big things that we did
was to take immediate responsibility.
There was no point dwelling on what
Muldoon hadn't done over nine years.
When you were elected it's your
responsibility, you own it.
New Zealand's finances were in
worse shape than anybody thought.
When we met with the reserve bank
and the treasury,
they explained that the country had
run out of overseas funds,
we had run out of people to
borrow money from,
and the next loan was due in two
weeks and we couldn't pay it.
Douglas had a tough love vision for
New Zealand's future.
We took interest rate controls off;
we got the wage controls off;
so we did a whole lot of
things immediately.
We took away a lot of support
for manufacturers.
We opened up import licensing.
We took away or removed privilege.
We just got rid of government
handouts to special interest groups.
Roger Douglas was very concerned
about low-income New Zealanders.
He was in that sense quite
traditionally left wing,
but he'd come to the recognition
that the normal policy measures one
associates with the left wing
simply were not working.
Many of the first reforms affected
the farmers directly.
Within 6 months,
all farming subsidies ended.
The Federated Farmers supported this,
but only if trade restrictions were
simultaneously removed.
This way the cost of farm
equipment would drop,
and farmers would have access to
world markets.
New Zealand got rid of the whole
raft of that sort of thing.
Farmers had better access to
imports like tractors and other
goods that they had a harder time
getting before.
And it was interesting because it
taught me a lesson that if you
package the reforms as we did,
that becomes the key to acceptance
because whilst the farmers might
have been unhappy to lose all
their subsidies,
they gained by the fact that they
could import from anywhere in the
world cheaper.
The dramatic wave of reforms was
dubbed "Rogernomics."
Virtually all industries were affected.
I think you know that it is going
to be a difficult transition.
On the other hand,
my responsibility was to look at what
was best for the whole of New Zealand.
Shockwaves reverberated
around the country.
From my personal point of view,
we went broke on the farm partly
because of those reforms.
All subsidies for agriculture were removed.
So our income dropped
30% overnight, bang.
Changes for New Zealand farmers
happened fast and hit hard.
Interest rates soared and property
values plummeted.
It was happening so fast that you
could hardly get used to one before
the next one was rolled out at you.
Lynn went back to work full-time,
and I worked every weekend either
shearing sheep or
fencing on other farms.
On the weekends
it was all hands on deck,
it was get out there and do what
needed to be done,
especially when we lost our labor unit.
Robert, our eldest boy,
every weekend he'd be with me
helping me muster or draft sheep or
swinging on a brim when I was
crutching 20,000 sheep on my own.
Those were bloody tough days.
You were lean, mean, but determined.
We sold our share of the farm
out to our partners,
and the price we sold out for meant
that we lost quite a bit of money.
I mean, it was tough.
Losing a farm and my childhood dreams
of owning a farm had been dashed.
But hell, in hindsight it was the best
thing that ever happened to me.
I was in my early 20s,
so I was adaptable,
I could go and do other things.
For most the decision was clear...
adapt to the new economic reality
or lose the farm.
Then things started to improve.
So I've done a combination of things.
We've used smart genetics;
we've used better management practices.
Same number of ewes,
same number of cows,
but they're producing 30 to 50% more.
Across New Zealand,
farmers who managed to hang on to
their land were able to compete in
the international market as never before.
Well, we didn't have a choice.
New Zealand is a little wee country
at the bottom of the world.
So we have to compete by selling
beef to the United States,
lamb to Britain and Europe and China,
and wool everywhere and fruit and
vegetables and everything else we do.
We've got to ship it there and
still sell it cheaper than what you
can do it.
So we have to compete.
Before Rogernomics,
New Zealand farm productivity
gains were about 1% a year.
The Federated Farmers of
New Zealand reported that in the
20 years after the reforms,
productivity gains soared to
5.9% a year,
an improvement of almost 500%.
There's no way I'd ever go back to
anything that's got government
involvement in it.
One thing I've learned is that individuals,
given the right incentives and the
right signals from the politicians
will deliver.
So let people make their own
individual choices.
Let them work hard,
make those sacrifices to achieve
the things they want for themselves,
for their family,
and for their communities.
That's what delivers.
You try and spread the benefits
out everywhere;
you get a very thin smear that
doesn't achieve much.
Agriculture and farming,
and working and business is in
our blood in this family;
it's in our genes.
And long may it continue.
New Zealand's riches lie not only
on fertile farmland,
but in the oceans as well.
These are some of the most abundant,
scenic fishing grounds in the world.
Fishing is both a way of life here
as well as a major industry.
A lot of times we'll work 24/7.
So we won't get much sleep longer
than two hours.
We're fighting the elements and we
only get paid on what we catch.
So, we're not on an hourly rate where
we're going to get our twenty bucks.
You have to be able to pay for the fuel,
pay for the ice before we can put
any money in our pocket.
We got to put the fish on the boat,
and then export it.
So that's a big responsibility for
the skipper and the crew,
knowing that someone in America or
Britain, or Australia is going to eat this
fish in about three days' time.
It's got to be top-notch.
Roger Rawlinson's ancestors,
Maori, first settled these islands.
Crossing the Pacific,
navigating by ocean currents and stars,
they found their way from Polynesia
to the shores of New Zealand.
Centuries later, the British arrived.
In 1840, they signed the
Treaty of Waitangi with several
Maori chiefs from the North Island.
The treaty granted the British sovereignty,
but also recognized Maori rights to
their ancestral lands and their
fishing grounds.
Fishing is an important part of
Maori culture.
There were birds here in New Zealand,
but there weren't many mammals;
there's not a lot of other things to eat,
so fish played a big part in our
lives for the first 1,000 years we
were here.
And it's going to play a big part
in our lives for the next 1,000.
Today, like Roger Rawlinson,
many Maori make their livelihood
from the sea.
I left school when I was 17.
So I pretty much started fishing in
our little dinghy.
After a couple of years,
our 12-foot parker craft dinghy was
no longer useful for us,
so we decided we'll get something a
bit bigger.
We got up to about 15-foot,
which to me was a big boat,
and we decided we'll set more nets,
we'll catch more fish,
we'll work harder, work longer,
and that proved to be successful.
It's not only the Maori
using these waters.
Thousands of non-Maori fishers
harvest the seas, as well.
But there isn't an unlimited number
of fish in the ocean,
and indiscriminant fishing harms
underwater ecosystems.
In 1977, New Zealand began the process
of expanding its economic boundary
from 12 to 200 nautical miles.
And in 1982,
when the United Nations Convention
on the Law of the Sea formalized
the 200 mile limit for all coastal states,
New Zealand's fishing zone became
one of the largest in the world.
By that time,
fisheries in other parts of the world
were collapsing due to overfishing,
so there was a huge demand for
New Zealand's fish.
Fishermen with every kind of boat
from 15-foot long-liners to giant
factory trawlers plied the ocean
catching as many fish as possible.
New Zealanders, too,
were in danger of destroying
their own fishery.
It was just a free for all.
It was just a pretty wasteful
process because there was a
lot of fish caught.
It was clear that some species in
the region were about to be
completely wiped out.
The entire ocean ecosystem
would be impacted.
New Zealand's government had been
regulating the fishing industry by
mandating what gear could be used
and how it could be used,
but there were no conservation
limits on total catches.
Many fishers simply ignored the laws,
taking an "everyone else is doing it,
too" mentality.
There's no future if catches continue
the way they are at their present rate
and with the number of vessels
hammering away at the very
small patch of fish that's here.
One by one, Rogernomics was
transforming many industries.
It was now time to reform the
fishing industry.
In 1986, the government,
scientists and the fishing
community worked together to come
up with a new system called the
Quota Management System,
or QMS.
The QMS would determine how many
fish of each species could be
harvested each year,
while ensuring fish stock sustainability.
Catch limits were then put in place.
So in the early 80s,
we had a change of government who
looked to free up our economy,
to set quite strong rules,
but allow that to form an even
playing field for private
enterprise to develop things.
We decided that the only way to do
it was to set a conservation limit,
a quota or a total allowable catch,
on each of the fisheries and allow
the industry the flexibility to
determine what method they used and
how they harvested.
But the QMS didn't stop there.
Each individual fisher or fishing
company was allotted a percentage
of the total harvest based on how
much they had caught in the past.
That percentage could be sold or
leased like any other property right.
Now the fishers could trade, sell,
or buy more quota based on their
own individual needs.
The incentive changed from catching
as much as you can,
to making the best economic return
on the catch within your quota.
So at that time,
I was a much younger fishermen;
wanted to keep building.
So I thought I'll buy some quota
and at that time,
five ton of quota was worth about
$12,000 a ton to buy, $60,000,
and my home was worth $120,000.
It was a big call to invest in a
piece of paper for half the value
of your home.
My wife was very worried about it.
To buy a piece of paper half the
value of your home,
she was not too happy about
mortgaging the house to do that.
Just as there's a limit to the land
that's available for development,
there's a limit to the number of
fish and ocean space.
With quota ownership,
fishers gained a direct benefit
from protecting the fish population
and the ocean environment,
much the same as farmers gain
direct benefit from protecting
their livestock and farmland.
And so, a fishery on the brink of
disaster started making a comeback.
The fishers achieved what previous
regulations failed to accomplish.
Dave's gamble to mortgage his house
and buy more quota paid off.
The $60,000 quota investment he
originally made is now worth
nearly $300,000.
I've got 6 little long-line boats,
long-lining for snapper, terakihi, gurnard.
Since the introduction of the quota
system in 1986,
I think the snapper fishery here
has probably doubled,
I think, according to the science.
It's actually easier to catch fish
now than it was pre-quota.
QMS is really good for the fish.
You can actually catch a lot more
fish for a lot more of the year.
And we've got a really robust
system where we document every
fish that we catch,
and the area that we catch it.
If there is possibly over-fishing
in certain areas,
they can decide we're going to drop
the quotas for a year and see
what happens.
And that can happen quite simply
and quite easily.
So therefore, for us as a fishing industry,
we can manage that ourselves
without government intervention.
One of the side effects is that you
actually have very strong
conservation ethics built in
because conservation is good for
business because sustainability is
good for business.
The first instance is to get the
by-catch over while it's still alive,
some of skates, stingrays,
some of the small snapper that
might be still in there,
we'll measure those out,
and get those back ASAP to give
them a chance to swim back, yeah.
Brightly colored streamers are hung
from long lines to prevent seabirds
from chasing the bait on the hooks.
Other new techniques increase
sustainability as well.
Like gillnets that minimize by-catch,
or acoustic pingers that warn
endangered dolphins,
keeping them safely away
from fishing gear.
In the end,
the discerning buyer around the
world wants to know that not only
is the quality great,
they also want to know that their
fish isn't being caught in a way
that's harming any other parts
within the sea environment.
So what happens on board is crucial.
As a fish comes off the line,
its ikijimi spiked in the old
Japanese technique,
which means that the fish dies
without any stress.
We put it in straight in a
polystyrene box and on a plane
within hours of it coming off the water.
We're in the world famous
Fulton Fish Market.
We're known as the second largest
fish market in the world.
On a daily basis we'll move
anywhere from 100 to 300,000
pounds of fish.
We've been buying fish from Lee
Products for the last 19, 20 years.
What's unique about the fish out of
New Zealand is the quality of the fish.
At times we can't get the quality
this good from our local fish,
which is about six hours away,
and these are more than two days away.
So that's one of the unique things.
I don't know how the fishermen do it,
how they preserve the quality of the fish,
but the fish are fantastic.
There's been dozens, if not hundreds,
of articles and coverage over the years
about our amazing system, our QMS.
There's been peer review,
independent articles,
comparing what we do versus the way
other nations manage their fisheries,
and we always come up right towards
the top there.
Fishermen here have a unique
connection to the sea,
a sense of the past,
and a commitment to the future.
But it's perhaps the island's
indigenous people, Maori,
who hold the strongest connections.
We want to be here for a long time.
So I've got my kids coming through,
I want them to be able to say in 30
years' time, "Dad did the right thing."
And then I'm leaving something for
them for the future and their kids
for the future.
Although Maori had been fishing
these waters for 1,000 years,
the Quota Management System
initially didn't include them.
So they turned to the 1840 Treaty
of Waitangi and took legal action.
In 1989, Maori were granted 10% of
the total allowable commercial catch.
In 1992 Maori were further provided 20%
of new species brought into the QMS.
Through the settlement of treaty rights,
and through some very good
business decisions,
they're probably now in a position
of more than 30% of the industry
that either own or have control over,
so they're major players.
I can tell that you we own about 35
to 40% of the commercial fisheries,
even though our population is maybe 12,
13, 14% of the national population.
So for me, for instance,
I'm a registered member of the
Ngati Awa tribe.
As I've aged I'm moving towards my
roots a lot more.
It's becoming more and more a key
part of my life.
How the impact that I make on not
only the fishing stocks,
but on other people as well,
that people are starting to look at
me and say,
"Roger, you've been successful.
You're a Maori fisherman."
Before that I didn't used to think
much of it.
But now I'm thinking a lot more of it,
but I still like to think of myself
as a fisherman foremost.
Today, Maori maintain their language,
traditions and the Marae,
an important meeting ground for
each tribal community.
And much of their culture has been
integrated into general Kiwi culture.
Amazingly, the Treaty of Waitangi is still
being used today as a guideline to
help settle disputes.
It's unusual in Western
civilization that a 19th century
treaty with indigenous people is
still relevant today.
Some young Maori who seek a
connection to the past,
study the old traditions.
The meaning of Haka,
the "Ha" and the "Ka",
so the "Ha" is the breath of life.
The "Ka" is the energy that we burn.
Through high school I found a
strong passion for not only Haka,
but for the culture as well.
The design is sort of planning to
show off a bit of cultural beauty.
Usually the girls will just get
their chin done and the boys would
get either a half-face or the full face.
Traditionally, the Haka was performed
by Maori warriors to intimidate
their opponents.
Today, performing the Haka is an
embodiment of a centuries-old
Maori tradition,
and it's claimed an imprint on a larger,
cross-cultural New Zealand identity.
In fact, New Zealand's rugby team,
the All Blacks,
ritually performs the Haka before
each match it plays.
I'll just back it down, Robert.
Remember Roger Beattie,
who said losing his farm was the
best thing that ever happened to him?
He began diving for abalone,
or as Kiwis call it, paua,
and a new business was born.
I started diving around that '84
period and we'd go out and dive
off the shore.
And I can remember we were getting
$1 a kilo at the time.
Before the reforms,
there were only 5 licenses to
export canned paua.
But, with the new QMS,
the market opened up and Roger
jumped in as a harvester.
True competition came into the
marketplace and our price came up
to the world price.
It was onward and upwards from there.
Then I bought more and more quota.
I could see that the abalone game
was a good one to be in.
But Roger always had an eye out for
new opportunities.
The abalone, like the oyster,
is capable of producing pearls.
They're very rare in the wild,
and we did a bit of experimentation.
This is an abalone, paua,
New Zealand paua,
and we've got a couple of pearls in there.
The natural product doesn't suit
most jewelry manufacturing,
they like a uniform size.
Roger experimented with a new
technique to induce farm-raised
abalone to produce smooth,
symmetrical pearls that can be
made into jewelry.
It worked.
So we nucleate them with a half-round,
it's a half-round mabe,
and we put it against the shell and
then three years later we harvest it.
So it takes a long time to lay that
nacre down.
Okay, what I'm doing here is I'm taking
off the paua where you've got to be
very careful with it.
We started off with two barrels in
the water and then moved up to 10,
and then we manufactured
our own barrels,
and then we moved up to
50 barrels and then to 100,
and then several hundred;
and just got better and better at
it all the time.
I'm putting it back in the water.
It'll go back in the water for a
week and then we will bring them
out and feed them again.
Over the next five years,
Roger's business grew,
just as many other small
entrepreneurs were able to adapt
and thrive during the rapid changes
in the New Zealand economy.
But, this wasn't an easy transition
period for everyone.
By 1990, Roger Douglas and the
Labour Party had shaped the economic
landscape here for six years.
Changes had been difficult,
and the Labour Party had fallen
out of favor.
After the 1990 election,
the National Party came back into power.
Another no-nonsense finance
minister is appointed.
She is Ruth Richardson.
It's like a passing of the baton
in a relay.
I was able to do a sprint that he
wasn't able to with the reforms.
So in some sense it was a 1-2 punch.
In both cases,
reforms moving in the direction of
greater openness,
greater transparency,
greater government accountability,
and better incentives for the
private sector.
So take our agricultural sector,
and take the meat industry
and the slaughterhouse.
So, you had a closed shop- and I say
this as a feminist as much as a
finance minister- you had a closed shop.
The boys had all the good jobs;
they stopped the women doing the
jobs that really paid well.
You had to belong to the union,
and the union said who worked where
and for what wages.
There were 25,000 people working in
the railways.
You know 25,000 people only needed
to be 5,000 people.
So when you disrupt 20,000 people
who are in pretend work,
how are they going to re-enter the
workforce if you've got all of
these closed shop arrangements?
All those things was a form of
privilege that helped a few people
who were employed in that industry,
but cost every other New Zealander-
including the low-income- a lot of money.
And in 1994 the job growth exploded.
People were free to work.
New Zealand, I think,
got the combination right.
They reformed the private sector,
and they reformed the public sector,
basically at the same time.
New Zealand also started applying
private sector accounting
disciplines and transparency
to the public sector.
This is not the case in the vast
majority of countries around the world.
In fact, if private businesses were to
report their financial books
according to the same standards as
government accounting,
it would be deemed illegal
in most countries.
In New Zealand,
government officials could no
longer get away with a lower standard.
Roger Beattie discovered there was
potentially a large international
market for the kelp he was
feeding his paua.
He used the QMS to increase his
quota to harvest the seaweed,
and started yet another business.
Okay, so this seaweed
here is macrocystis.
This is native to New Zealand.
I have quota for this species,
and we feed this to our paua.
We developed a brand called
Valere Kelp Pepper,
and it looks like kelp,
looks like pepper.
It's got a salty taste.
We dry it slowly,
we don't cook the goodness out of it,
and we retain the color.
So we retain all the essential
nutrients that the kelp has.
New Zealand has fundamentally changed.
If you went out to farmers before
the reforms of '84, and said,
"Would you do away with subsidies
and exports incentives?"
Most of them would say,
"Hell no." If you asked them now,
they would say,
"Why would we want to have subsidies?"
Because the beauty of our current
system of no subsidies is if
there's a world change in thinking,
or the marketplace,
or something happens overseas,
New Zealanders change overnight.
So we are adaptable,
and why would you want to go back
to a system that just protects old
dying industries?
As Roger's ocean-based enterprises
began to thrive,
he and his wife, Nicki,
were able to fulfill the dream they
had started out with,
to own their own farm.
We wanted to buy a farm on the
coastline that had abalone farming
potential and had a native bush on it,
and hill country to keep me fit
since I wasn't diving anymore.
I have a very supportive wife.
She does roll her eyes when I try
and get into a new business,
but she's very heavily involved in
what we're doing.
She does a lot of the stock work on
the farm now,
and I joke with people that I'm now
a farmer's husband.
If you took a static snapshot the
day after the reform,
yes there would be people
displaced, of course,
if you just froze it in time.
But the world's not frozen in time,
there's a dynamic.
What does it unleash by way of the
human spirit,
the opportunity,
the new economic confidence?
The Douglas and Richardson years
resulted in a massive
reorganization of the government.
Civil Service reforms
streamlined productivity.
Many industries were taken out of
government hands and reorganized as
for-profit companies,
including the railway, airline,
telecom, and banking.
It's about getting rid of privileges,
it's about empowering the normal people,
it's about sweeping away all of the
special favors for the powerful.
Most of the big companies had
lobbyists who'd lobby the government
to extend to them this privilege,
or some other privilege.
Three years after
we were in government,
most of these companies no longer
had lobbyists, they'd save their money.
The life of the lobbyist,
it's a terrible,
venal breeding ground.
So you disintermediate the lobbyists.
You don't give them a reason to
face the government.
And not blinking is really important;
because if you blink,
then all the lobbyists will
come back to you,
and try to get you to change your mind.
Reform is not a one-night-stand;
it has moved New Zealand
unambiguously into a much more
competitive position.
We're one of the most open,
free countries in the world.
Because it wasn't just an economic
reform in response to a crisis,
they sat down and thought about
basic principles.
And indeed,
a whole bunch of new industries
have grown up in the country that
no one would have predicted.
One of the many new industries no
one would have predicted is organic
clothing made from New Zealand
Merino wool.
Here in New York City,
and in more than 40 countries
around the world,
people are buying Icebreaker.
So we're 100,000 acres in size,
or 41,000 hectares.
Here we farm merino sheep;
they're farmed specifically for
their wool rather than anything else.
I had this dream of living in New
Zealand and being involved in
something that was international.
I met a wool farmer in 1994,
and he gave me a merino wool
t-shirt to wear,
and that changed my life.
The feeling against the skin was a
total surprise.
Their wool is fine and soft and
pliable and it can be turned into
lots of beautiful products that you
can wear close to your skin without
feeling any kind of itch or scratch.
So I thought "maybe this is it."
So the question was: how can we
find a way to get other people to
experience this, right?
To do that, you just build a business.
So I just locked myself in my
bedroom for about three months,
and dreamed.
And then Jeremy Moon
created "Icebreaker."
His idea was to make outdoor
clothing from natural wool,
and sell it worldwide.
The first step was to get the wool.
And he came and saw mom and dad
when he first thought up the idea,
and wanted to have a go at it.
He had just finished university and
he had an old leather suitcase that
had been his grandfather's and he
had some samples of the types of
garments he wanted to make.
This is actually the very first
Icebreaker I ever wore that got
thrown to me by a merino farmer.
It didn't look very good but it
felt amazing.
So it was really about the feeling
and what we could do with it.
Even in New Zealand,
everything was synthetic.
It was the big irony of the
outdoor industry.
It's like, go into nature,
but wear plastic against your skin.
And he asked if we'd sell him some wool.
So we said yup,
we would give it a go.
He left and Dad sort of said to Mom,
"He was a nice young fellow,
but I don't know whether we'll ever
see him again."
Well, I, in particular,
was a bit dubious about his ability
to do very much.
Nevertheless, Jeremy forged ahead.
In 1995, starting out with just a
handful of products,
Icebreaker was born.
I raised $200,000 from eight
investors and I invested about half
of that money in design,
product design...getting our story clear.
And really trying to unlock really
what the spirit was behind the product.
In the first year we made a profit of $531.
I remember one of the directors said,
"This is the first company I've
been involved in where you can
drink the profits and still remain sober."
Then Sir Peter Blake,
winner of the Whitbread Round the
World Race as well as two-time
winner of the America's Cup,
put Icebreaker on the map.
Peter Blake took a pair of
Icebreaker underpants on the
ultimate road test, the sea.
He wore the same pair of long johns
for 43 days and 43 nights.
Part of the Icebreaker strategy was
to sell the story and the ethics
behind the clothing.
Sustainability is at the heart of
the business.
It doesn't make sense to be a
crusader for nature and natural
fibers without taking
responsibility for all of the
choices and how product is built.
Our fiber goes to a German
spinning-plant, based in Shanghai,
the highest tech lowest emission
plants in the world,
which then goes to a Japanese-Chinese
joint venture textile plant,
the best I've ever been in.
That means we can get access to the
newest technology,
the best innovation,
and the cleanest, highest
quality environmental standards.
So it's very, very different.
After a couple of years,
it was pretty obvious that he was
on to a good, good thing.
Icebreaker now buys merino wool
from over 140 farms,
covering two million acres.
Most recently,
the company signed the largest wool
contract in New Zealand's history.
Pre the reforms,
Icebreaker could've survived for a
period of time and we would
have then died,
because we would've been forced
into being less competitive than
the people that want to copy us.
And ultimately would've been a demise,
there's no way we could've
built Icebreaker.
We have had a long-standing
relationship with Jeremy.
Twenty years later he is still
buying the majority of our wool.
He always saw it, I think,
as something that was global and
something that would appeal to
people all over the world.
Here on this island nation of four
and a half million people,
Kiwis rewrote the book on how an
effective government and a free
economy can work together.
New Zealand has shown that a healthy,
sustainable economic system can
lead to a healthy,
sustainable environment.
The New Zealand experience I think
should resonate and is relevant for
big countries.
You don't need to live with
lobbyists and earmarks.
Just start with decent public accounts.
Just start with fiscal responsibility
codes that really matter.
So it was a huge upheaval,
the speed was tough for a little
country like New Zealand to handle,
but I don't think anyone would
debate it wasn't the right thing to do.
New Zealand has really pioneered a
system that I think the rest of the
world should look at very carefully.
The QMS system is by far the best
fishery system in the world today.
You can fish year round and know
that you're going to make a good
living knowing that the fish are
always going to be there.
The reason is that they got the
rules and the incentives and the
rights in order,
and instituted property rights,
in fish, and it worked.
We have no doubt we've got a really
great fishery out here.
What an environment, you know?
It's actually a privilege to fish
in a natural resource in New Zealand.
Good weather, bad weather,
we're outside doing it and loving
every minute of it.
In some ways, the pace of change
forced some radical
changes in farm management,
radical changes in how we marketed
and did things,
but the pain was over and we moved
forward- relatively quickly- in hindsight.
At the time it wasn't too much fun,
but we got through it,
now we're strong, you know.
So in America you have constant
controversies about whether agriculture
can really run on a free market;
whether farmers can survive
without subsidies.
New Zealand showed that they could.
I think that New Zealand is an
enormously different New Zealand to
the New Zealand of the 70s
and the early 80s.
It's a far more-worldly,
vibrant, open place.
I think Roger Douglas will be remembered,
and his work will be studied for a
long time.
He realized that the country was
going to go down the drain if he
did not propose something.
And he had the courage to do it,
and I think that was really
quite remarkable.
It's been a great story of Kiwi
ingenuity and not being afraid to
do something different,
and I think also having a real
global vision.
You know, it's wonderful...I couldn't
think of a better place to live.
New Zealand's reforms restructured
the government itself,
but also the government's relationship
with industries and banking,
ultimately creating job opportunities,
growth and accountability on all sides.
Since the agricultural reforms of 1984,
New Zealand's food exports
have doubled.
One area where land was
poorly-suited for sheep,
is now a thriving wine producing region.
Economics and the environment are
not mutually exclusive.
In fact, the two need to be married
together for the success of both.
Strong economies lead to the most
sustainable environments.
New Zealand has left behind the
stagnation of the past.
People here take great pride in
being a small country,
filled with enormous trailblazers.
After all, this is the country that
invented bungee-jumping!
Major funding for this program was
provided by:
The Donald and Paula Smith
Family Foundation.
Additional funding was provided by:
Donors Trust Incorporated.
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