Well frankly it has nothing to do with exams - since when did an intimate knowledge of the inner workings of an INS platform make you a better pilot - and everything to do with the CAA safety culture and it's implementation.
The CAA believe that safety is ultimately not their responsibility, and pass that buck on to the operators. You can see this philosophy at work in the recent crash at Christchurch airport, the subject of a just-concluded enquiry.
I was once offered a job with the NZ CAA as a flight ops inspector, and this philosophy was explained to me there. Basically, if an operator has up-to-date manuals, it has fulfilled all its obligations to the CAA, and is then responsible for its own conduct. I asked if, as an inspector, I could be rigourous in my examination of an operator, and told "no- just make sure their manuals are up to date".
It is a safety culture unique in the world, a product of the Swedavia Report which most aviation authorities see as seriously flawed.
The problem will not go away until the NZ CAA actively involve themselves in the promulgation of safe and effective testing.
It is no surprise to me that the NZ flight schools seem to have a record of passing on sub-standard pilots to the industry. As long as checking and training is profit-led, this will continue.