For a small place a long way from anywhere, New Zealand has a fine history of leading the way with radical experiments in economics. While we were battling over Thatcherism, and the Americans were debating Reagan-omics, the Kiwis had “Rogernomics”, created by the Labour finance minister Roger Douglas. What had been a very 1970s, state-dominated mixed economy was swiftly transformed under Douglas into a laboratory for free market ideas. Financial markets were deregulated, the money supply was brought under tight control, the currency was floated, and industries were privatised. It was a mix that was to become orthodoxy by the 1990s, but Douglas was implementing it while our Labour Party was still planning to nationalise the top 100 companies.

Now it is doing it again – except this time without any encouragement from the US or the UK. Ever since the financial crash of 2008, even centre-Right governments have followed a very narrow path, buying into high taxes, and near-zero interest rates, and allowing budget deficits to balloon, even when financed by printed money, to keep the economy afloat. No one has strayed far from the orthodoxy. Except, that is, New Zealand.

In 2010, with the global economy still reeling from the crash, New Zealand started shifting taxes from earnings to consumption. Sales tax was increased from 12.5pc to 15pc. But the top rate of tax was reduced from 38pc to 33pc, and taxes were cut along the income scale. Corporation taxes were cut by two percentage points. There were some cuts in spending to accompany the package, but it was mainly a bet that lower taxes would create faster growth; a risky assumption at the time.

It worked. New Zealand has witnessed one of the most robust recoveries in the developed world, and one that was hardly helped by a major earthquake in Christchurch in 2011. This year, the economy is forecast to expand by 3.9pc, a faster rate than the UK or US. Higher revenues, and tight control of public spending, means it is one of only three OECD countries expected to balance its budget since the crisis of 2008. Switzerland and South Korea are the other two.

Unemployment has fallen to 5.6pc, lower than this country, and the lowest level in five years. In March, the central bank started raising interest rates, making it one of the few in the developed world to take a step that both the Bank of England and the Federal Reserve are still too nervous to attempt. Since then, it has pushed up rates four times to 3.5pc, far higher than the 0.5pc that the UK is stuck at.

That economic success has converted to electoral popularity. In the election last weekend, Key’s party scored 48pc of the vote, taking it close to the first outright majority for a single party since the country switched to PR in 1996. The Labour Party got 25pc, with the Greens on 10pc. With a faltering global economy, and with real wages stagnating across the developed world, incumbent governments have been getting pummelled everywhere. Not this one. Labour was promising tax rises, while the National Party was pledging more cuts, as well as a programme of paying down the debt. It was clear which voters preferred.

David Fuller's view

I went to New Zealand with TCS and also sponsored speaking tours, on a number of occasions from the 1970s into the 1990s.  Mrs Fuller joined me on a couple of those trips and we also spent some sporty holiday time in this beautiful country – swimming in the wonderfully deep, cold and long Parnell baths;  walking near the tip of the South Island; river surfing the rapids near Queenstown,  and of course the spectacular Pipeline bungy jump.  We even have a video of that memorable event for both of us and I would love to do it all again. 

New Zealand was a declining socialist economy until Roger Douglas, mentioned above, finally grasped the nettle in true Austrian School fashion. The country experienced close to a depression for nearly a decade but emerged with a much stronger, creative and self-reliant economy which persists today.  The New Zealand 50 Index (p/e 15.49 & yield 4.44%) has been a strong performer since mid-2012 but currently shows a broadening pattern, indicating that supply and demand are closer to being back in balance than we have seen for several years.  Nevertheless, a decline beneath 5000 would be required to indicate a potentially significant loss of form.