Fixed costs in small countries

By Eric Crampton 27/11/2014

Yesterday’s column over at hit on some of the ridiculous self-imposed fixed costs of government policy in New Zealand. A taste:

We could argue about the ridiculousness of the implementation of the New Zealand regime, or we could ask the more important question: why does this office [Office of Film and Literature Classification] exist at all? Why does a country of four and a half million people have an office for film classification when so many neighbouring countries, similar to New Zealand in culture and norms, already have their own systems? Every rating decision involves cost to the would-be distributor: the classification fee charged by the Censor’s Office, plus the hidden cost of the time, effort, and hassle involved.

In a better world, the government could simply require that programmes distributed in New Zealand carry the classification of any other trusted country’s ratings board: Australia, Canada, America, the UK, or others. It’s pretty rare that a locally produced film wouldn’t be intended for eventual international release; if the filmmaker weren’t already seeking an international classification, self-rating by the local producers could also work well.

Worse, when a body like the Censor’s Office exists, local industry can use it to try to block competitors’ imports.

Slingshot and other ISPs’ global-modes, allowing Kiwi customers to sign up for Netflix as though they were American, is just parallel importation applied to digital content. Local rights-holders supported the Censor’s Office attempts at blocking those services, with pious appeals to protecting the children from unrated content. We should properly see the Censor’s Office as a non-tariff barrier to trade in film and literature, which locals can exploit anti-competitively.

New Zealand has rather a few of these local fixed-cost-raising regulations. If you’re a doctor with a stellar reputation in Canada, you still need to go through New Zealand registration; that requires placement in a New Zealand hospital, and placements are limited. Would you, as a tourist in Canada, be at all worried about being treated by a Canadian doctor in a Canadian hospital? No. But that same doctor cannot move to New Zealand and set up a General Practice without jumping through the hoops.

Perhaps there could be reason for a short course training foreign physicians to recognise diseases prevalent here that aren’t as common elsewhere, but beyond that, the government’s increased the cost of medical services in New Zealand by imposing an unnecessary fixed cost on the system. Similarly, I simply cannot understand why building materials that have been deemed suitable for other wet and shaky environments, like Japan, British Columbia, or the American Pacific Northwest, aren’t simply deemed to be good enough for the New Zealand market as well.

0 Responses to “Fixed costs in small countries”

  • In New Zealand the Film and Video Labelling body already uses UK and Australian classifications on any film rated below an R rating. The OFLC only classifies anything that requires an R rating or hasn’t already been classified in one of those two countries. Most of the office’s work relates to pornography, and more specifically, internet pornography – often where a court case is involved. The legislation certainly does need reviewing as it hasn’t kept pace with modern technology, but it’s not quite as inefficient as you might think.

    • Yes, I understand that the re-ratings are limited to Rs. But it’s still nuts. We pay people to watch DVDs, deem them illegal to watch with your 13 year old but ok to watch with your 14 year old, and all the while you can watch them on broadcast with no worries.