A delegation of New Zealand businessmen and women led by Dr. Oliver Hartwich, Executive Director of the New Zealand Initiative, visited Switzerland from May 21 to 26, 2017, intent on discovering policy settings that would form the basis of reform in New Zealand.

 

Dr. Hartwich, who holds a Masters degree in Economics and Business Administration as well as a PhD in Law from Bochum University, is a former advisor to the UK House of Lords, a Chief Economist at Policy Exchange in London, and a Research Fellow at the Centre for Independent Studies in Sydney.

 

On his return from the visit to Switzerland, Dr. Hartwich produced a booklet about the delegation’s findings which, he emphasised were his “opinion” of the visit. He would leave it up to the other 38 members to evaluate their findings.

 

“Having spent a week in Switzerland, and with a dense schedule of meetings, tours and encounters, our group was inspired and impressed, wrote Dr. Hartwich.

 

“In a landlocked country with few natural resources, the Swiss have built one of the most prosperous countries on earth. Among the factors behind Switzerland’s success are its political system which is built on citizen participation and engagement: its highly decentralised nature which fosters competition for better development ideas; its high quality and flexible education system which provides tailor-made pathways for its young people; and its flexible labour market.

 

“It was interesting to observe throughout the week, all our Swiss speakers referred to these elements of the ‘Swiss success story’.

 

“Switzerland has obviously formed its own narrative in a way that New Zealand rarely has.”

 

Dr. Hartwich wrote in the introduction to his booklet that New Zealanders do not know much about the way Switzerland works – “and they understand it even less”.

 

“Switzerland’s highly decentralised system of government seems confusing; their democracy may appear archaic; and though there is a Swiss Federal Government, it is always made up of all major parties with no real parliamentary opposition.”

 

The 39–strong New Zealand delegation was based in Lucerne from where they travelled to Thurgau, Zurich, Lugano and Mt Pilatus. They met with Swiss politicians from all three-tiers of government. They talked with industrialists, business leaders, regulators, and heads of business associations.

 

They listened to people from central and private banking backgrounds and engaged with entrepreneurs, journalists and public intellectuals and Dr. Hartwich wrote that after a week, it made them “question New Zealand’s own policy settings which we often take for granted”.

 

“Our visit inspired us  to think  boldly about New Zealand’s  future.  If there is one stand-out feature of Switzerland’s system of government it is their system of direct democracy. Yes, there are other countries that have referenda As well – and over the years New Zealand has voted on its flag, asset sales,  and the electoral system, but in no other country are referenda an integral part  of the political process as in Switzerland.”

 

Dr. Hartwich included a section on Switzerland’s ‘Direct and Participatory Democracy’ and provided a little history of Swiss referenda which goes back hundreds of years. Involving the people in political questions  started  at a time when other European nations were still governed by absolute monarchs.

 

Today, Dr. Hartwich discovered, at a formal level, there is a difference between the nature of the sovereign in New Zealand  and Switzerland: “New Zealand derived its sovereignty from its British heritage. Sovereignty rests with Parliament. In Switzerland, meanwhile, the sovereign is the people. The difference is much more than a formality, it has practical implications.

 

“Because the Swiss Parliament is not the sovereign, it is not the highest instance of political power Hence Parliamentary decisions can be overturned in referenda. It is democracy in the original meaning of the word. The people rule.

 

“For this reason too, there is not the usual dichotomy between government and opposition in the Swiss Parliament. All major parties jointly form the government comprised of just seven councilors. These councilors have dual functions: they are members of the government and thereby jointly responsible for governing the country, while at the same time they they head up a government  department just as a minister would in New Zealand.

 

“As one of our Swiss speakers explained it to us, under this system there is no parliamentary opposition because ‘the opposition is the people’.”

 

Dr. Hartwich noted that the benchmark for initiating a referendum is low. For example, only 50,000 signatures are required to support a demand for a ‘facultative referendum’, which would subject a new federal Act of Parliament to a referendum vote for a final approval or rejection by the citizens. Some of the Swiss speakers explained that this provision has the effect of slowing down legislation because there is always potential for legislation to be challenged in this way, so politicians tend to be thorough and disciplined in their approach to new legislation.

 

“Though this process slows down the work of Parliament,” he writes, “it probably also means that the quality of legislation  is higher – and there is more need to make a good case for legislative change. A shoddy piece of law , passed through Parliament without a proper public debate, is more likely to be struck down in a referendum. Conversely, good legislation, especially once confirmed in a referendum will create more popular ‘buy-in’.”

 

Dr. Hartwich observed that direct democracy is not just a  feature of government at the federal level, it is practiced  at all tiers. Councils, cantons and the federation each call their respective citizens to  the polls several tines a year.

 

“What impressed us was not just the routine with which serious questions of policy are decided by the people, but also the disciplined effect this can have on government spending. For example, in the city of Zurich, referenda must be held for any proposed capital expenditure exceeding CHF 20 million (approximately $NZ28.3 million) or recurring expenditure of CHF I million (approximately $NZ1.4 million per annum).

“It left us wondering how some of New Zealand’s more controversial pieces of public expenditure would have fared if they were subjected to a similar level of public scrutiny.”

Another feature of Swiss democracy that impressed the delegation was the nature of the Parliament. Dr. Hartwich states that it functions as a part-time Parliament – the National Council, one of two chambers, meets four times a year for three weeks at a time.

“As a result, professional politicians are in the minority. In the Parliament of 244 members of both chambers, only 43 are full-time politicians. There are, however, 43 practising lawyers, 43 entrepreneurs, 19 consultants, 18 farmers, 12 teachers and 8 medical doctors. It is perfectly acceptable to be a member of Parliament while continuing to pursue one’s professional career.”

In conclusion, Dr. Hartwich acknowledged that New Zealand, for historical and geographical reasons, will never be like Switzerland but it would be worth identifying individual aspects and elements of Switzerland’s policy settings that could well work here-even in a modified form.

“We have no doubt that among them would be ideas of: high citizen engagement in democratic processes; decentralisation and tax competition to incentivise economic growth; the dual education system, which creates high quality and diversified training pathways; and a broad national consensus to keep the labour market flexible.

“We believe that it is worth engaging these ideas further. This could be done through research, further study trips and trialing them in New Zealand.”

Author: Rex Warwood