2. Economy—Legatum Institute 2016 Prosperity IndexBARBARA KURIGER (National—Taranaki - King Country) to the Minister of FinanceEconomy—Legatum Institute 2016 Prosperity Index2. BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Finance: What reports has he received on New Zealand's prosperity?Hon BILL ENGLISH (Minister of Finance): Last week the Legatum Institute in the UK released its 2016 prosperity index measuring 149 countries and rated New Zealand No. 1. Among the subindices New Zealand rated first in the world for social capital first for economic quality second for its business environment second for governance and third for personal freedom.Barbara Kuriger: How is New Zealand's social capital supporting higher prosperity in New Zealand?Hon BILL ENGLISH: We have to keep in mind that all these so-called well-being measures have a degree of subjective judgment about them. In this report the social capital index measures a country's strength of social networks social norms and civic participation. For instance in this case it asked New Zealanders whether they have family or friends whom they can rely on in times of need and 99 percent of New Zealanders say they do—one of the highest proportions in the developed world.David Seymour: Does the Minister agree with the report's attribution of New Zealand's prosperity to free markets and free people."?Hon BILL ENGLISH: Yes I do because it is certainly this Government's view that when people take responsibility for themselves their families and their communities and have the opportunity to participate in a market economy the results are that they can realise their aspirations.Barbara Kuriger: How does New Zealand's wealth and prosperity compare with other countries?Hon BILL ENGLISH: The point of the index is simply to demonstrate that prosperity is about a wider range of indicators than wealth. For instance the United States has around 50 percent more wealth per person than New Zealand but ranks 16 places below New Zealand. In fact 26 countries have higher wealth per capita than New Zealand but are ranked lower than us on the index. Of course we cannot be at all complacent about this kind of rating because many New Zealanders still want better opportunities to realise their aspirations.Barbara Kuriger: What are some of the other factors supporting New Zealand's prosperity?Hon BILL ENGLISH: The common links among those countries that are rated higher tend to be free markets lower non-tariff trade barriers more competitive regulation and a more flexible labour market. For instance over the last 6 years on this index Australia and New Zealand have been moving in opposite directions with New Zealand tending to rise and Australia tending to drop back a bit.Grant Robertson: On the subject of that last answer of Australia and New Zealand moving in opposite directions can he confirm that the wage gap between New Zealand and Australia has increased since September 2008 to June 2016—now being a 27 percent difference?Hon BILL ENGLISH: That may be the case; I have not checked the figures recently. Actually I thought it was 30 percent which I think makes it even more remarkable that the outflow from New Zealand which was about 40000 per year to Australia of New Zealand citizens is now down to about 3000 a year. There must be some reason why Kiwis are deciding to stay here when wages on average in Australia are significantly higher."