Tuesday, March 26, 2024

Professor Robert MacCulloch: PM Luxon & Seymour forgot their own commitment to cost-benefit analysis

PM Luxon & Seymour forgot their own commitment to cost-benefit analysis when talking about the SailGP-Hector Dolphin Furore

A nice feature of NZ is that, in spite of our problems, whether they be homelessness, crime, or inflation, the fate of stranded whales or endangered Hector dolphins awakes our passions often more than tiresome political & economic debates.

On that note, whether the Christchurch SailGP race should have been cancelled due to dolphins on the racecourse has stoked furious debate in news & social media. ACT leader, David Seymour, said he agreed with Sir Russell Coutts that NZ was "handcuffed by unprecedented layers of bureaucracy & red tape". "There's no question about that," he responded. "It's a tragedy for the 20,000 fans, for all the sailing teams, for all the people doing business and trying to make money out of this event." Seymour said the situation isn’t about "dolphins" but rather "red tape & bureaucracy." Meanwhile PM Luxon said the cancellation of SailGP racing in Lyttleton following dolphin sightings speaks to NZ’s “obstruction economy” and level of “red tape”.

There is no need to agree or disagree with the two of them, other than to note that their answers fly in the face of their own Coalition Agreement. It states that when rules are imposed in NZ they now must be: "Principled - making decisions based on sound public policy principles, including problem definition, rigorous cost benefit analysis (CBA) and economic efficiency". Both leaders bizarrely missed the opportunity to state their mutual commitment to their own new agreed regulatory principles. What makes CBA controversial is that it can involve putting a value on lives. Last year, for example, "NZ Transport Agency quietly hiked the value it places on a human life to $12.5 million, in a far-reaching decision that resets how much government will pay for road and rail infrastructure, and much more", which probably should be read as trying to justify speed bumps. In the case of SailGP, if one is to take the Coalition Agreement seriously, the answer as to whether the race should have gone ahead would be based on the chances of running over Hector multiplied by the value of his or her life & comparing that cost to the benefit of not cancelling.

The point we're making is that the PM & Seymour should've answered in terms of the deal they both signed, not invent an answer & argue it was a mistake to let red-tape prioritize the environment over making money, which makes them look like pro-business, not pro-market & pro-high social welfare leaders. This blog takes no view on the matter - other than to say the New Coalition swore by a new procedure to justifying, or not, red-tape, but then its leaders go shooting off their mouths about whether they personally thought the race should have been cancelled.


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.


Anna Mouse said...

The SailGP have there very own well thought out Marine Mammal Protocol that deals with these types of issues. You do not sail around the world in differing marine environments and not realise that this sort of protocol is expected.

The promblem with Lyttelton was the additional DOC, Harbour Master and Iwi demands that cost additional money that basically replicated the SailGP Marine Mammal Protocol.

That is the level of additional unwaranted, unneeded and outright rorting red tape that Coutts et al were describing.

Anonymous said...

I agree with your argued clarity but in a sense they agree with you also, they think everything is based on the "cautionary principle" which it tends to be and is faulty.

Anonymous said...

the fundamental role of any government is to support a justice system that 'enforces contracts'. did sailgp sign a contract giving authority to iwi/doc etc. to call off the event? if so, tough luck. if not, they should be allowed to go to court and claim just compensation - government should support that.

i assume sailgp played the gamble, but don't like the result. i'm all in favour of cba, but that should have been done before the contract was signed!

Allan said...

Realistically, how many dolphins would have been put in danger had the racing gone ahead, and how does this compare the the danger they face every time a large ship comes into/leaves port.
I say that the dolphins had come into the harbour to watch the racing and test their speed against the boats!
Someone prove me wrong.

Anonymous said...

"..endangered Hector dolphins"

It was mentioned before by Russell Coutts, the Hector dolphin is not an endangered species.
The Maui dolphin, a subspecies of the Hector dolphin is.
And Māui dolphins are only found off the west coast of New Zealand's North Island, nowhere near Christchurch.
More fake news from the media that shouldn't be taken for gospel by trusting people.