Sunday, June 27, 2010

Frank Newman: Political monopoly

The other day I had occasion to listen to the Minister of Finance the Hon Bill English speaking on the role of think-tanks in shaping government policy. I wish I could say it was a thoroughly good and enjoyable speech. Unfortunately I can’t because it wasn’t. In fact it hardly rated as a speech at all as it offered nothing of insight. Its content was largely directed to acknowledging the host, the Business Round Table (no doubt many of whom are donors to the National Party cause).

Unfortunately without questions from the floor there was no opportunity to explore the theme of the evening. That was unfortunate as amongst the bouquets Mr English did acknowledge that politicians enjoy a “monopoly on power”. I would have liked to have asked Mr English if he saw an irony that his government seems intent on restricting business monopolies through regulation, yet he sees no need to curtail their own monopoly.

It is an irony that needs an explanation. I am not suggesting for a moment that business should be able to exploit consumers through monopoly positions. We have anti-monopoly legislation presumably because business can’t be trusted to act in the best interests of their customers. Why then should we trust politicians to use their monopoly powers reasonably?

The smacking bill, the ETS, Auckland’s super city, signing the indigenous rights treaty, abolishing rights to appeal to the Privy Council, the foreshore and seabed legislation - all of these done without reference to majority opinion.

The only way to bring politicians to heel is to give people a right of veto. In my view the requires some form of compulsory referenda.


Anonymous said...

Mr Newman I would prefer the system put forward by Cactus Kate in one of her posts entitled, "Poorly Hung Parliaments".

In it she states,
"Similar happens in Singapore or Hong Kong. Business runs Hong Kong because functional constituencies get the vote. (Their legislative council) comprises 60 members, with 30 elected directly by geographical constituencies and 30 elected by functional, occupation-based constituencies. Why can't companies effectively vote? They pay more tax than individuals do. Why can't New Zealand professions and business get a vote?

At law in New Zealand a corporate is in most situations deemed to be a "person". Lets extend that definition of a person to voting in a democracy".

Details of this system are found at:

I guess the trouble is there would practically be civil war in NZ (only from affected minorities) over the implementation of functional constituencies into our democracy, as minorities argue for a place at the table.

It is perhaps too late to implement this form of democracy into what is now a de-facto socialist democratic republic that so comprehensively devalues business.

David Allis said...

Thanks Frank
Good comparison of monopolistic positions. I agree that referenda are a good way that politicians could listen - but only if they really wanted to - I doubt that most do ...
We call NZ a democracy - but in reality it is only a democracy 1 day every 3 years, when we vote - the rest of the time, the politicians ignore the wishes of the people.

Frank Newman said...

Hi David, I agree that what we have is a democracy 1 day in every 1095 (3 years). It's the only day that our electected representatives must take notice of our views.

Within business professions there is often a debate between self-regulation, with the threat of regulation by decree where that fails.

In my view politicians (local and central) have failed to demonstrate they can hold power responsibly, making referenda (in some form) necessary.

Frank Newman said...

Hi Anonymous. That proposition you raise is quite a shift from the principle of one person one vote, and I would be a little uncormfortable with that (runnign a country is a little different from running a business given the complex mix of social and economic objectives). It is nevertheless an interesting idea and I will have a closer look at the Hong Kong model.

I am reasonably familiar with the voting system in Singapore, which if I recall correctly is an elected democracy as we would know it, although with single party (PAP) dominance. Quite possibly that is because the population are satisfied with the management of their economy since Lee Quan Yu took control from the communists in the 1950s. (The manner in which he did so is quite brilliant and well worth reading.)

Owen McShane said...

The most dangerous monopolies are the monopolies granted by Councils to consultants to process resource consents etc.

CPG has a monopoly contract with Kaipara District Council. KDC has a population of about 18,000.
Two years ago during the boom CPG were extracting (via the council) about 55,000 dollars a week from the ratepayers. Now, during the recession they are extracting $125,000 a week.
That is enough to employ between 60 and 80 senior staff.
What the hell are they all doing?

Frank Newman said...

I agree Owen. Although council's have policies on outsourcing work which in theory protects against such abuse, but my experience as a councillor suggests those policy guidelines are so loose and subjective that they may as well not exist. I too know of cases where outside contractors get the inside running on jobs and no audit is done of the value to ratepayers. (For example, the Whangarei District Council paid approx $400,000 a year on legal fees - usually to obtain the most trivial advice. The contract was not subject to a ompetitive process and at no time did senior management entertain the suggestion of hiring a legal secretary to deal with the low level work - which was about 90%.)