Friday, October 30, 2020

Dr Oliver Hartwich: We Don't Know How Unlucky We Are In NZ

All eyes are on New Zealand.

In the lead-up to the election, Time magazine admired our "calmer democracy." The World Health Organisation once again praised our Covid-19 management. And in its latest issue, The Economist revealed that our Prime Minister is now the global leader with the highest approval ratings.

If the world had a choice, its people would either migrate to New Zealand or at least swap their political leaders for Jacinda Ardern. Kiwis went from “world-famous in New Zealand” to simply “world-famous,” and we love it.

But reports of New Zealand’s stellar performance are greatly exaggerated.

What Kiwis need is an honest conversation with themselves. Frankly, if there is one thing New Zealanders are pathologically unable to do, it is an honest national conversation. Not even close.

Our small population size has fostered a social conformity that makes it hard to speak one’s mind. With two-degrees-of-separation, you cannot afford to burn bridges. And given our latent inferiority complex, we don’t publicly admit to our problems.

The international media’s positive obsession with New Zealand plays into all these issues. Most of us no longer dare question if it is grounded in reality and anyone who does is called unpatriotic and petty.

So, at the risk of being torn to pieces, let me do it anyway.

But, in a typical New Zealand way, let me begin with a positive: I love this country so much that I recently applied to become a citizen. I did not have to. Being a permanent resident grants me every right to live and work here indefinitely.

Having spent eight years in New Zealand, my commitment to the country is exactly why I am so critical of it now. And, just so we understand each other, I do not want New Zealand to be any other country. I only want it to be the best it can be. Right now, it is not.

New Zealand could be where families can easily afford their homes. Overlaid on a map of Europe, it fits between Denmark and Southern France and is almost the geographical size of Italy but with less than a tenth of its population. If there is anything New Zealand has in abundance, it is space.

Despite this, our housing market is the most expensive in the developed world. For each house, we typically pay about two-thirds to three-quarters of the price, not for the bricks and mortar but for land.

As a result, house prices are rising so fast that an abode in a good Wellington or Auckland suburb now “earns” more yearly income than any teacher, nurse or policeman. To add insult to injury, we say the housing market is “doing well” even as it becomes more unaffordable. If that were happening anywhere else, we would call that inflation.

Commentators keep excusing the core failure to build enough houses. They say it is just the Kiwi psyche, or that property is our traditional retirement nest egg. Actually, it is just a policy failure. Encumbered by byzantine planning laws, aggravated by a lack of fiscal incentives for councils and hindered by building regulations, New Zealand has simply stopped building enough to keep up with demand.

The social consequences of this policy disaster are visible everywhere: from households drowning in debt to young adults delaying starting a family and unable to chase better opportunities. On top of all that, the average poor quality of housing makes a complete mockery of the high prices.

Another policy disaster is the 30-year erosion of New Zealand’s once world-leading education system, reformed and dismantled under various governments.

In no other country has the pendulum swung so far from traditional school knowledge towards more esoteric “21st century skills.” Today, while nearly every school leaver gets a certificate, many of them – about two fifths – are functionally illiterate and innumerate.

The dumbing down of our school system is a scandal. And while those responsible probably had the best intentions, the bigger scandal is that they now try to explain away this poor performance.

It frankly baffles me that when someone points out our poor education results, they are routinely criticised of elitism, Eurocentrism or other such nonsense. The truth is that teaching a broad, knowledge-rich and stimulating education would help precisely those children without elite or privileged backgrounds.

The education system’s pursuit of noble and progressive goals has tragically sacrificed the future of Kiwi children. In doing so, it is not just cementing but widening ethnic and class divides.

Housing and education are just the most obvious policy failures, and both main parties must accept responsibility. But the hidden policy disasters require more of an economically-trained mind to see.

New Zealand’s negative international investment position is key here. This means we collectively owe the world a lot more than the world owes us. We also do not produce goods very efficiently and must work much longer hours to make up for it.

Many other failings in this “rock star economy” have been hidden for some time. Actually, for the past quarter century all we ever did was welcome migrants, increase house prices, borrow against them and stay longer at the office.

Even before Covid-19, the wheels were coming off this strange business model. Unfortunately, the Prime Minister’s stellar PR reinvigorated New Zealand’s belief in its own spin – and now the world has fallen for it, too.

Following this path of least resistance will not make our housing market more affordable, make schools teach proper qualifications or help boost productivity.

Our policy sclerosis threatens to turn New Zealand into a highly indebted, unproductive and uneducated backwater. It will become a country bereft of good schools where Kiwis struggle with a soft dollar that buys ever-more-expensive-but-poorly-built housing. The overall standard of living is bound to slip.

No international commentator will write about that because it does not fit their narrative and, in truth, international media organisations know vanishingly little about New Zealand.

But we do – and we must demand better from our political class.

It feels nice to be admired by the world. Yet I would rather live in a country that has honest conversations with itself. Conversations about turning around decades of underperformance to once again deliver superb living standards to all Kiwis.

Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative think tank HERE. 


Charles said...

I cannot find anything much to criticize in the article. My generation was educated quite well. I came from a 'financially challenged' background and was told quite firmly by my teachers that if I wanted a comfortable life I would need to compete with many others who often were better adapted than I. There's no free lunch in life and it isn't fair. As for our problems with down through the centre of the North Island and look down at the terrain. One can sharpen a pencil on those ridges. We need to keep our population small and only enough houses should be erected for that. Destroying our productive land and wilderness spaces for people to have a square of grass to mow is not particularly useful. Auckland is a classic example of appallingly bad planning and a reluctance of those in power to do the bleeding obvious.

Ian said...

What a timely comment.
The dumbing down of New Zealand education was evident in the 1960s when Merv Wellington was minister of education. It has continued unabated ever since.
Housing has been growing in value at 7 to 10% annually since the Norman conquest of England. The current rate of 'value' are still in this range.
For example I was in Germany in 1985 where a plot of land cost the equivalent of $NZ1,000,000 and the house $NZ60,000.
For me the rate of inflation is the growth in housing values. Just check your recent grocery payments to confirm this.
Yes the problem is productivity and the answer is decent schooling then real education can begin in the workplace.
Ian S

integrity said...

Spot-on analysis. Excellent!

Unknown said...

Well said Oliver and just as well said Charles.

I am a retired farmer in the Bay of Plenty, who went to a small country school in the fifties and sixties, but the education we received was sound, and set us up well for the future.


TOBY said...

Much sense spoken here, but I would like to make two points:
First, your assertion "I recently applied to become a citizen. I did not have to. Being a permanent resident grants me every right to live and work here indefinitely", really requires the addendum "unless your medical condition becomes such that it may cost the Health Service some money"; then you will find how permanent your residence rights are - not very!
Second, Given how much of the country is uninhabitable, either because of terrain, or the insistence of the green lobby to keep it 'pristine' or the underdeveloped infrastructure we have here, our country is well on the way to being well overpopulated.
All that's needed now to utterly ruin it is to permit hordes of rich Americans to move here to escape the consequences of their own foolishness at home.

Kerry said...

Thanks for this excellent commentary. After 25 yrs as a permanent resident I became a Kiwi citizen and share your love for my chosen country. I arrived during Muldoon's rein. I witnessed the transformation from medieval 1980: Car-less days, late night shopping (once a week only!), no margarines, $1000 14" TVs, Lada station wagons. A mere 10 yrs later Douglas had opened up the economy and NZ was hosting America's Cup. Restaurants and retail flourished.
Kiwis did it once. We can do it again. Will the next Douglas, Prebble, Richardson please stand up! Please, please, please!

Unknown said...

A great article and comments I share (in print) often with a group and I upset them regularly.
Sadly NZ will never change. It is actually becoming worse as the ideologs like Ms Adern gather followers and the silent majority stays ... silent!
Those who have lived overseas/traveled widely know we are a repressed backwash. A country rich in resources which are unutilised due, in main, to propaganda spread by green supporters. An underpopulated, hugely expensive country to build on (our roads are the most expensive per km to build and are still rubbish) and we are extorted daily by duopolies which dominate markets.(which we have allowed)
Add to that a group of immigrants who wallow in self pity and hold this country back daily and are a substantial reason for the dumbing down of our education system.
Top all this off with the worst political system in the world. MMP allows the party which came last to determine who governs and enables "false promises politics" to dominate elections.
A great article but good luck getting this country to have a mature conversation about anything. The minorities will not just dominate the conversation with noise but they will win due the complacency of the majority.
Sad but true.

Lesley Stephenson said...

Yes....yes....yes....but when will the NZ media have the balls to broadcast such thinking. They are the most PC establishment going.... too afraid to engage in any conversations of any depth.