Industry infrastructure and the value of good government

There is a necessary tension between an industry and government. Too close and there is a risk of coddling, capture, and even worse. Too distant and producers and consumers suffer from the neglect of industry infrastructure.

What do we mean by ‘industry infrastructure?’

These are the systems, practices, laws, and regulations that collectively set up ‘how we do things in this industry.’ In some cases, they are legal and regulatory frameworks - such as licensing of insurers by The Reserve Bank of New Zealand, and regulation of financial markets by the Financial Markets Authority. Sometimes they are literal services - for example, collection of contributions to KiwiSaver by Inland Revenue.

Establishing these and getting them right-sized is difficult. For all our gripes about new regulation, most New Zealand insurers and financial advisers that look at the Australian approach feel our regime is far better. KiwiSaver managers have identified that there is a missing piece of industry infrastructure in their world: a common standardised method for establishing whether a hardship withdrawal should be permitted. I think it is an excellent example of where government can help a sector, which means customers first and foremost but also includes product providers and advisers. Read this article to find out more: “Heartbreaking” hardship applications a challenge for KiwiSaver providers - Good Returns