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.