It is time for action on inequality and the environment, according to Chartered Accountants Australia and New Zealand.

The industry body has released a report "The Quest for Prosperity: How can New Zealand keep living standards rising for all?" written by international think tank the Legatum Institute.

New Zealand tops the Legatum Institutes Prosperity Index for 2016 - primarily due to its scores for its open economy and strong social capital.

But while it recognises strong economic progress the country has made since 2007, it concludes that inequality, particularly in education, is the biggest issue facing the country.

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It also highlights concern about housing affordability and the degradation of the environment.

"We think it is important that we engage on these broader social issues as well as on classic areas like tax or financial regulation," said Peter Vial, New Zealand country Head of Chartered Accountants ANZ. "If we're not sharing prosperity then we are all the poorer for that."

It was important that business and business leaders addressed these issues, he said.

"The paper shows New Zealand is, by world standards, in a good position to deal with inequality - the fundamental economic, business and governance settings are all strong, as is the country's social capital.

"However, as a starting point, everyone needs to recognise that inequality makes us all poorer.

Measured against its 2007 index rating, New Zealand had improved in terms of business environment, macroeconomic performance, governance and health, the Legatum study showed.

But it had dropped sharply on access to education and natural environment.

"Those two areas are particularly worrying because we are slipping further behind other countries that we like to compare it to," Vial said.

Based on the results, Chartered Accountants ANZ had identified three education housing and the environment as the three key challenges.

Although Vial notes it is an apolitical organisation the body does put forward some broad policy suggestions for Government.

On education these include raising the school leaving age, investing in alternate streams of tertiary education that teach non-academic skills and enhancing the focus on skills that reflect disruptive technology changes.

On housing affordability they recommend reform of the resource management act to ease building restrictions, more infrastructure investment, further schemes to help those priced out of the market and a review of the tax settings for property.

On global competitiveness and the environment they advocate for strengthening New Zealand's green credentials and moves to reduce barriers to service sector exports to widen New Zealand's export mix.

This was not just a job for Government, Vial said.

Education was an example where business had to be in engaged and involved in ensuring the workforce had the right skills for the future.

"We' re moving into a very different era and technology is being massively disrupted."