It’s the summer break. Everyone settles down with family, books, the sun and some fishing. But the Prime Minister has a pile of briefing papers prepared just before Christmas, which have to be worked through. I haven’t seen them. Here is my guess at some of the headline items – in alphabetical order. (The identified ministers are those who were responsible at Christmas.)
I am more cautious about the prospects of the economy than much of the commentariat, who have either political agendas to sink the government or are after spectacular headlines (or both). The indications are that the economy will be less strong than last year and that there will be a sizeable group who will be markedly worse off. Unemployment is likely to be up. The election-year budget in May is going to be particularly difficult. (Minister: Grant Robertson)
The emissions regime is a muddle. The political message is that it has thoroughly alienated the entire livestock industry who may reasonably ask why they are being picked on, while the transport industry, which is a much more serious long-term polluter, is being treated much less rigorously, mainly by covering farms with forests to offset its emissions. (Minister: James Shaw)
The health redisorganisation – it is a centralisation – does not seem to be delivering on its fuzzy objectives. In any case, the main issue is the shortage of medical staff, an international problem which cannot be quickly remedied. (Minister: Andrew Little)
The housing market is in better shape than three years ago, with more houses being built, house prices becoming more realistic and some of the backlog of those with serious housing difficulties being reduced. (The improved data now available may obscure the achievement.) However, many families are struggling with higher mortgage outgoings because of higher interest rates. (Minister: Megan Woods, but the Minister of Finance, Grant Robertson also has a critical role.)
Government management of the labour market remains fragmented and poor quality. Currently the focus has been on problems with immigration which is administered clumsily and connects poorly with the domestic labour market. If unemployment rises, as it is expected to this year, the government will struggle to appear to be effective. (Minister: Michael Wood)
The most recent data indicate that reductions in child poverty are so small that the targets set in the Child Poverty Reduction Act 2018 will be missed by a huge margin. The act could have been subtitled ‘The Rogernomics Tax Cuts and the Ruthanasia Benefits Cuts Reversal Act’ since it was those policies which doubled child poverty, so it is in conflict with the government policy which ruled out tax hikes. Hence the failure by this government to threaten the Child Poverty Reduction Act’s targets. Children do not vote, so the political consequences are not great; the long-term economic and social damages are. (Ministers: Jacinda Ardern and Carmel Sepoloni)
The polytechnic redisorganisation is a centralisation without clearly stated objectives, much like the health redisorganisation. We are told it is to address the financial deficits that the polytechs were making. (No mention of the quality of the training, which presumably is what they are about.) The response reflects the fallacy that under-funding can be resolved by a redisorganisation which adds a further layer of management. (The fallacy also applies to the health, media and three-waters redisorganisations.) There is no evidence of gains, just of additional expenses. (Minister: Chris Hipkins)
The RNZ-TVNZ merger has been widely criticised as trying to mate a camel with an elephant. As in the case of the redisorganisations of the health sector and the polytechs, there have been generous outlays on consultants but little delivery. Because so little has actually happened, it will be relatively easy to abandon this proposal, but that leaves unaddressed the poorly defined reasons for the merger – platform convergence and the advertising falloff. (Minister: Willie Jackson, but initiated by Kris Faafoi)
There is a general acceptance that the Three Waters redisorganisation – of fresh water, waste water, storm water – has been badly managed, because they run underground and hardly anybody notices until something goes drastically wrong. It is another centralisation; the new (four) agencies combine very disparate areas and needs. To add to the confusion, immediately after the Water Service Entities 2022 Act was passed (just before Christmas), the government introduced the Water Services Legislation Bill, which amended the act. It is not unusual for a law to be passed, to be found wanting when implemented and then have to be amended. But to do so before it is even implemented – indicating the even the government has reservations about what it has just passed – must be unique. The bill says that ratepayers will be liable if the investments fail, even though they have no involvement in the failure. In essence it gives national bodies the power to tax locally without local representation. When people and their councils, which depend on rates for revenue and are already angry over having their assets being seized, become aware of this, their outrage will increase. (Minister: Nania Mahuta)
There will be other items in the Christmas briefing papers. There may also be a paper which explains how most of these issues are interconnected. I should love to read it.
This list suggests that the government faces numerous major technical policy challenges, compounded by severe political concerns and consequences which require major management.
One can well imagine the Prime Minister going through the Christmas briefing papers with care, then looking at the family, at the unread books, at the sun and the possibility of going fishing – and contemplating resigning.
Brian Easton is an economist and historian from New Zealand. He was the economics columnist for the New Zealand Listener magazine for 37 years. This article was first published HERE