Robert MacCulloch: The Ministry of Social Development's Managers Take a Leaf from George Orwell's "Ministry of Truth"

The Ministry of Social Development is going to great lengths to sell Kiwis its version of "the truth", regardless of where that truth lies. Yes, its managers are furiously burning public money to crush those of us trying to expose mistakes in the design & implementation of the wage-subsidy scheme to protect their reputations, as well as the Finance Minister & PM's.

Stung by critiques that half of the wage subsidy scheme funds were paid to medium & large sized businesses that were not eligible and never needed the money, throwing our country into tens of billions of dollars of debt, fueling our high inflation rate and economic woes, the Ministry is now waging war against those of us who disagree with its views.

First, it attacked South Islander Grant Nelson's Integrity Institute for putting prominent ads in newspapers highlighting the view that the wage subsidy was a rort by referring the Institute to the Advertising Standards Authority (ASA). I read the ASA's Report. The only thing it proves is that the lay-people who wrote it didn't understand how the wage subsidy scheme worked so were in no position to decide upon whether or not the ads were misleading.

That scheme was described by the Finance Minister as "high trust", meaning funds were taken relying on recipients to act in good faith. Those asking for public money were required to first sign a declaration they were "taking active steps to mitigate the impact of COVID-19 on their business activities (such as engaging with their bank)". What baloney. How could it ever be proved or disproved Fletcher Construction, for example, which took $68 million in wage subsidy, was "engaging with its bank" to cover costs on its own without recourse to the public purse? The company did have credit lines & reserves to cover lock-down costs. Nonetheless, Fletchers could still argue it had "engaged" with its bankers during those times. By the way, its share price is up 50% since the subsidy scheme was first announced.

The point is that neither the Ministry of Social Development nor Integrity Institute can ever prove this case one way or the other. But that means the Institute is entitled to exercise its freedom of speech by expressing the opinion that $10 billion was mis-paid to big firms which never needed the money - and even knew so at the time - just as the Ministry is entitled to hold a different opinion. Breach of the "trust" upon which Grant Robertson said the scheme relied is something that could only ever be revealed by getting into the minds of a bunch of corporate execs - and so will forever remain unobservable.

Second, the Ministry has commissioned expensive reports written by consultants like Motu in Wellington, of which I am an Affiliate Member, for which it paid big bucks. Newsroom state "MSD’s parliamentary review for 2021 / 2022 lists a .. Motu researcher for the outcome component .. as a $378,560 cost". Other consultants were also hired. The reports say the wage subsidy was a roaring success and "Value for money". However, Motu relies a great deal on funding from government departments. Here are the research contracts listed in its annual report, 2021-2022:

Ministry of Social Development; Ministry of Social Development; Ministry of Social Development; Ministry of Social Development; Ministry of Social Development; Ministry of Social Development; Ministry of Business, Innovation & Employment; Ministry of Business, Innovation & Employment; Ministry of Business, Innovation & Employment; Ministry for Women; Ministry of Transport; Ministry of Transport; NZ Productivity Commission; Energy Efficiency & Conservation Authority; New Forests Asset Management; Aotearoa Foundation; Otago University, Waikato University & Massey University; Te Puni Kokiri; Allen & Clarke

Robertson should stop the vastly expensive wage subsidy Orwellian "truth" campaign being orchestrated by the Ministry of Social Development - which is geared up at protecting his reputation and MSD's, funded by tax payers, whilst homeless suffer on the streets. Why try to silence those of us who have a different opinion? Why stamp out academic and intellectual freedom? If folks like me & Grant Nelson, based on our assessment of the evidence, believe the wage subsidy was a rort, why should we be gagged by the new Ministry of Truth?

Sources
https://theintegrityinstitute.org.nz/the-wage-subsidy/

https://www.workandincome.govt.nz/online-services/covid-19/wage-subsidy-declaration.html

https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/covid-19/wage-subsidy-scheme-evaluations.html

https://www.motu.nz/our-research/population-and-labour/firm-performance-and-labour-dynamics/covid-19-wage-subsidy-outcome-evaluation-value-for-money/

https://www.newsroom.co.nz/verdict-on-19b-wage-subsidy-lands-a-year-late

Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.