Trust

Community spirit in our neighbourhoods also increased by 39% in April 2020. This renewed sense of national unity garnered through the ‘Team of 5 Million’ rhetoric of Jacinda Ardern’s government has seen New Zealanders take collective action by making significant personal sacrifices for the common good. Above all, this has relied on the belief that others will abide by the rules as well as public confidence in the government’s assessment of the costs and benefits in determining those rules.

Even before the pandemic emerged as a common threat, New Zealand has performed consistently highly in international measures of social capital, governance and institutions – indicators underpinned by  trust. The 2020 Legatum Prosperity Index  ranked New Zealand 7th out of 167 countries, a position maintained or exceeded since 2010, based on a number of social, economic and environmental ‘pillars’ judged to contribute to a nation’s prosperity. Among these, New Zealand 5th in the Social Capital and Governance pillars in 2020 and had the highest score in those same pillars in the World Economic Forum’s 2019 Global Competitiveness Report. As these global benchmarks illustrate, trust is  associated with a wellspring of positive outcomes, not least economic prosperity. For example, institutional quality has been shown to have a significantly positive impact on foreign direct investment in developed countries.

Most recently, the Dasgupta Review on the economics of biodiversity places trust front and centre in explaining how economies have thrived in the past, albeit at the expense of natural capital. A key message of this groundbreaking review is that the mutual trust that has driven economic growth must now be geared towards rebuilding institutions that recognise humanity as part of, rather than separate to, nature.

So — how can we maintain New Zealand’s trust advantage, foster it in our institutions and communities, and harness it to our collective advantage? Research  distinguishes between trust among individuals, generalised trust, and trust in the (more abstract) institutions of democracy and government, institutional trust. Both forms of trust have different drivers, benefits and risks for New Zealand.

Institutional trust

Institutional trust underpins the legitimacy of government and its actions. It is therefore vital to the success of public policy, particularly those policies which require the participation, consent or compliance of citizens. Institutional trust is built into the Treasury’s Living Standards Framework as the fundamental building block of New Zealand’s social capital, enabling the development of pro-social norms such as tolerance of diversity, generalised trust and kaitiakitanga.

OECD research has shown that public trust in government is contingent on two main factors: government’s competence and its demonstration of the values of integrity, openness and fairness. In New Zealand, the government’s active recognition of Te Tiriti O Waitangi (the Treaty of Waitangi) principles of partnership, participation and protection constitutes a unique third determinant of the level of trust  between Māori and the Crown.

The New Zealand public’s perceptions of public sector corruption were the lowest in the world in 2019. But if New Zealanders are to continue to place trust in government to navigate the country through the myriad upcoming challenges, decision-makers must continue to uphold the values of openness and fairness. This is all the more important as we build forward better from the economic impacts of Covid-19. In practice, it means difficult policy decisions should be grounded in sound science and developed as transparently and inclusively as possible — after all, the impacts of the pandemic and of those policy decisions will not be felt equally. The 2008 global financial crisis provides a cautionary tale: in those countries’ worst hit, the rise in inequality and resulting economic polarisation were destructive of both institutional and interpersonal trust. As the Labour Government embarks on the most ambitious spending programme in recent history, maintaining trust cannot simply be taken for granted.

New Zealand’s urgent transition to a net-zero economy demands bold policy innovations, that will require careful consultation and a transparent decision-making process to be successful. Forging cross-party consensus to pass the Zero Carbon Bill and injecting it with political longevity was some achievement. But the opportunity for the current Government is  to invest and grow this political capital in the current term. For example, it is critical that the Climate Change Commission (CCC) is, from the outset, impartial and evidence-driven. If the CCC’s advice is to be accepted by all stakeholders — some of whom will be at odds with the advice — trust is the non-negotiable ingredient. The CCC’s recent draft advice front-foots the need for a fair and equitable transition in its recommendation for an Equitable Transitions Strategy that accounts for the distributional impacts of climate policy. The proposal for localised transition plans that are co-developed by communities, and emphasis on genuine partnership with iwi, will both be vital for building trust and ownership of the resulting transition policies.

Businesses are also key stakeholders in the creation of a low-emissions, climate-resilient New Zealand. Crucially, institutional trust lowers the transaction costs for businesses to operate and gives them the confidence to make investments on the basis of public policy. These investments not only stimulate economic activity, but will shape the direction and pace of New Zealand’s transition to net zero. Like public institutions, businesses rely on the consumer trust to survive and grow and are institutions in their own right. Increasingly, those that do not embrace stakeholder capitalism and embed climate risk into their business models face reputational damage and the loss of their ‘social licence to operate’. For example, the 2020 Edelman Trust Barometer study revealed that 74% of employees now expect their CEOs to take the lead on change rather than waiting for government regulation, while 73% believed it was important for CEO’s to speak out on climate change. Companies that do take the lead, building trusted brands on the basis of environmental and social credentials, can expect to reap the rewards. Generating export value from trusted, sustainably produced food products will also be vital for New Zealand’s primary sector and economic recovery from Covid-19.

Statistics New Zealand data indicates that on average, 66% of the population reported high levels of trust in other Kiwis, placing Aotearoa among the top OECD countries. Similarly, the OECD Better Life Index places us 2nd in the “community” pillar, with 96% of kiwis knowing someone they could rely on in a time of need. Membership in community groups — whether through volunteering, faith or sport — also strongly correlates to levels of trust. This certainly rings true in our own backyard, where we have among the highest rates  of volunteering in the world. These activities bring people into contact with the wider community, enabling the development of shared values and visions for the future.

This is of course not to say that there is no division within New Zealand society. The country’s domestic response to climate change — particularly the treatment of agricultural emissions — continues to exacerbate a long-standing rural-urban divide. But this polarisation can be tempered. Strong consultation processes and partnerships between industry and government such as He Waka Eke Noa have enabled a greater degree of collaboration, trust-building and co-production of knowledge and solutions. The current CCC consultation promises to do the same.

Communities with strong levels of generalised trust are shown to respond better to crises and have greater social cohesion. Connections to whakapapa within communities and the existence of trusting relationships have, in the context of New Zealand’s response to Covid-19, been described as a resilient health system’s greatest resource. But the social cohesion built in early stages of a crisis where people rally against a common threat can dissipate and be replaced by anger, anxiety and a sense of inequity. Promoting social cohesion has therefore been identified as a policy priority as New Zealand adapts to a ‘new normal’ post-Covid, requiring recognition and inclusion of the most vulnerable groups in society.

Again, inequality emerges as a threat to trust which cannot be ignored in the New Zealand context. For example, homeowners report significantly higher levels of trust in others, participate more in local activities and have a more positive sense of their local community, whereas residential instability can disrupt social networks which take time to build. The built environment and our housing policies can therefore have a powerful impact on levels of generalised trust going forward. Green recovery projects, for example through the Infrastructure Fund for Economic Recovery, should aim to strengthen long-term community resilience by providing more jobs, more housing and more shared spaces.

Aotearoa is a world-leader in trust, social capital and institutional integrity. The data might seem abstract, but the facts lay bare an important part of our cultural identity, strengthening our abilities to address the greatest challenges of our time. Nurtured right, trust can continue to be among our greatest assets for enduring prosperity and resilience in New Zealand’s journey towards a more sustainable future.