It is just over a year since last year’s general election, and nearly a year since the new coalition Government was formed. How are they going?When I speak to Rotary Club audiences and similar, I talk about the five big challenges facing New Zealand:
1) Our long-standing under-performance compared with other developed countries (and many countries we used to refer disparagingly to as “developing countries”) in terms of growth in productivity – or output per hour worked. This under-performance results in our living standards rising more slowly than those in other developed countries, with the result that many of our brightest and best leave our shores for a better life abroad while those who remain wonder why we can’t afford to pay nurses and police officers what the Aussies pay, or afford the same expensive drugs that the Australians have access to.
2) The ridiculously unaffordable price of houses, not only in Auckland but in many smaller cities such as Tauranga – so that the median house price in many cities is seven, eight or even nine times median household income in those cities, instead of the three times which is widely regarded as being the measure of an “affordable” housing market.
3) The fiscal outlook – in other words, how government books look now and in the foreseeable future. Government debt has increased sharply over the last few years, and is projected by the Treasury to continue increasing strongly if we remain on our present track as a steadily aging population affects spending on New Zealand Superannuation and healthcare.
4) Relations between Maori New Zealanders and the rest of us. This has been an important issue since the beginning of European settlement in New Zealand in the early 19th century, but has become more important with the assertion by some Maori recently that sovereignty was never ceded to the Crown and that as a result Maori New Zealanders should be looking to create a parallel government – or at very least, Maori New Zealanders should be entitled as of right to separate political representation, whether at local government by means of Maori wards or at central government by means of Maori electorates.
5) Our very uncomfortable place in the wider world, where our traditional security allies – Australia and the US – are in an increasingly aggressive confrontation with our largest export market, and largest source of imports.
There are other issues facing us as a country of course, such as the prospect of a gradually changing climate over the decades ahead. I excuse myself from talking about that issue partly because climate change is not something I am well informed about but mainly because nothing New Zealand does in terms of reducing our carbon footprint will make any measurable difference to either our climate or the world’s.
2) The ridiculously unaffordable price of houses, not only in Auckland but in many smaller cities such as Tauranga – so that the median house price in many cities is seven, eight or even nine times median household income in those cities, instead of the three times which is widely regarded as being the measure of an “affordable” housing market.
3) The fiscal outlook – in other words, how government books look now and in the foreseeable future. Government debt has increased sharply over the last few years, and is projected by the Treasury to continue increasing strongly if we remain on our present track as a steadily aging population affects spending on New Zealand Superannuation and healthcare.
4) Relations between Maori New Zealanders and the rest of us. This has been an important issue since the beginning of European settlement in New Zealand in the early 19th century, but has become more important with the assertion by some Maori recently that sovereignty was never ceded to the Crown and that as a result Maori New Zealanders should be looking to create a parallel government – or at very least, Maori New Zealanders should be entitled as of right to separate political representation, whether at local government by means of Maori wards or at central government by means of Maori electorates.
5) Our very uncomfortable place in the wider world, where our traditional security allies – Australia and the US – are in an increasingly aggressive confrontation with our largest export market, and largest source of imports.
There are other issues facing us as a country of course, such as the prospect of a gradually changing climate over the decades ahead. I excuse myself from talking about that issue partly because climate change is not something I am well informed about but mainly because nothing New Zealand does in terms of reducing our carbon footprint will make any measurable difference to either our climate or the world’s.
What progress has the new Government made on tackling what I see as the five big issues facing us?
On improving the rate of productivity growth, I would give them high marks, though of course it will take some years before I can prove that. They are taking major steps to improve the speed at which new investments can gain approval via the Fast-Track Approvals Bill and are moving to radically reform the Resource Management Act and related legislation. They are taking seriously the need to improve our schools by improving school attendance, by changing the way reading is taught and by creating at least a few charter schools. They are moving to improve our road network and have signaled their intention to radically reform the now overly restrictive regime for approving foreign investment in New Zealand. All of these measures will help productivity growth, though all will take time.
On making housing more affordable, I’d also give them high marks, indeed very high marks. Ever since the Productivity Commission did its very first report on housing affordability, back in 2011, we’ve known that three of the four main reasons why houses are ridiculously unaffordable in New Zealand are the result of local body policies and behaviour, particularly related to their policy of tightly constraining the land on which people are allowed to build houses. This has meant that tiny slivers of land – sometimes of 300 square metres (or substantially less than one-tenth of an acre in the old terminology) – sell for ridiculous prices, even when a long away from city centres. (My favourite example is the 400 square metre section, almost exactly one-tenth of an acre, selling for some $735,000 in Drury!) The Government is in the process of forcing local authorities to zone now enough land for estimated housing need over the next 30 years, thus potentially drastically reducing the land component of a house price and enabling large scale (and therefore potentially cheaper) house construction. And in the last few days, the Government has announced that the involvement of local authorities in consenting individual houses should be radically reduced, thus directly cutting costs and speeding up construction.
On dealing with the fiscal consequences of our aging population, the Government’s position is not even as good as the rather weak attempt to deal with this issue made by the Bill English Government in 2017. That Government announced that to ease the fiscal consequences of our aging population it would be necessary to raise the age of eligibility for New Zealand Super from its current 65 to 67 – but not starting that adjustment until 2037, then some seven general elections away! Unsurprisingly, those who noticed the announcement guffawed, and most of us have long forgotten the commitment. As far as I know, there is absolutely no suggestion that the Government is contemplating raising the age of eligibility for New Zealand Super, something for which we can no doubt blame New Zealand First. (The contrast with the courage of the Bolger Government, which announced that the age of eligibility for New Zealand Super would rise from 60 to 65 over just 10 years, and then delivered that – an astonishing increase for just 10 years – is stark.) So that problem, the long-term sustainability of our fiscal position, is still with us. If nothing is done, the ratio of government debt to GDP will rise from its present level of around 40% to some 200% well within the lifetime of somebody now in their early forties.
On what might be called “Treaty issues”, the picture is mixed but I would give the Government a pass mark. No, only the ACT part of the coalition Government is supporting ACT’s Treaty Principles Bill, and I think that that is enormously disappointing. David Seymour clearly sees the need to establish once and for all, by means of a referendum, what the Treaty means for New Zealand in the 21st century. He argues that the Treaty gives the Government the absolute authority to govern and that, under the Government, we all have equal rights. I strongly suspect that both Christopher Luxon and Winston Peters agree with that view but, for whatever reason, they are reluctant to support the Treaty Principles Bill beyond select committee.
On the other hand, the Government has scrapped Labour’s Three Waters programme (which gave extraordinary powers to iwi); has restored the right of ratepayers to demand a referendum before the creation of Maori wards; is amending the Marine and Coastal Area Act to reflect Parliament’s intention when that law was passed in 2011; is reviewing “Treaty clauses” in 28 pieces of legislation to assess whether those clauses are really needed; has scrapped the separate Maori Health Authority and insisted that healthcare be provided on the basis of need not the ethnicity of the patient; and so on. This is major progress and I’d give the Government a good pass mark, with the comment “trying hard but further progress needed”.
Finally, the geopolitical dilemma in which we find ourselves. After the collapse of the Soviet Union in 1991, the world entered a period of some 15 years where the US was the single dominant Power. The US invaded Iraq and Afghanistan; maintained military bases all over the world; sailed its naval vessels wherever it chose; welcomed China into the World Trade Organisation; and appeared, outwardly at least, relaxed about China’s economic and military growth.
But in recent years that has radically changed. China’s economy is already somewhat larger than that of the US (using the purchasing power parity exchange rate that most economists prefer) and, given China’s population is four times that of the US and its economic growth rate is higher than that of the US, will be very much larger than that of the US within a few years. China is already the largest trading partner of most countries in the world, not only of New Zealand. Chinese transport infrastructure – roads, bridges, rail systems, etc. – is probably the best in the world. Although China’s military spending is very much lower than America’s, in both dollar and real terms, China’s naval strength has increased markedly in recent years. And driving China is both an immediate desire to restore Taiwan to Beijing’s control and a longer-term ambition to shed the memory of a century of humiliation at the hands of European Powers and Japan, starting in 1839 with the Opium Wars and ending finally with the defeat of Japan in 1945.
Despite the fact that the US recognized Beijing as the capital of the whole of China, including Taiwan, in 1979, it is clear that there is strong opposition in the US to Beijing taking back control of Taiwan; and more generally an overt hostility to China’s economic and scientific growth, with increasingly stringent controls on the export of high tech items to China and high tariffs on some Chinese imports into the US (with more threatened if Trump becomes President).
Our only formal ally, Australia, is now itself in a formal alliance with the US, and that alliance is quite openly and explicitly aimed at China.
At the moment, the Government seems intent on also joining some kind of formal military alliance with the US, whether it be AUKUS Pillar II or some other kind of grouping.
The question which we need to resolve is whether China really does pose any kind of military threat to New Zealand. If it does pose such a threat, then clearly the Government is wise to be exploring how we can get some form of protection from the American umbrella. If it doesn’t (unless, of course, we paint a target on our chest by joining an anti-China alliance), then we should have no part of any formal American alliance, and no part of an Asian version of NATO.
In my own view, China has made it abundantly clear that it wants to absorb Taiwan back into China and wants to control the oceans in its immediate vicinity. It is not at all obvious that it has any desire to expand its military presence beyond its immediate neighbourhood – indeed, apart from its militarization of some small islands in the South China Sea, it has only one other military base in the world, that in Djibouti, designed presumably to safeguard the shipment of oil from the Middle East. And throughout its history, China has at no time developed a far-flung empire. It is not at all obvious why it would want to do so now.
So on this metric, I’d give the Government a fail mark.
Overall? Two good marks – improving productivity and improving housing affordability. Two fail marks – no improvement in long-term fiscal sustainability and abandoning our independent foreign policy in favour of a military alliance with the US. And a half mark, or somewhat better than a half mark, for Treaty of Waitangi issues – some really good measures but profound disappointment at the Government’s refusal to back the Treaty Principles Bill.
And without any doubt better than the political alternative on offer.
On improving the rate of productivity growth, I would give them high marks, though of course it will take some years before I can prove that. They are taking major steps to improve the speed at which new investments can gain approval via the Fast-Track Approvals Bill and are moving to radically reform the Resource Management Act and related legislation. They are taking seriously the need to improve our schools by improving school attendance, by changing the way reading is taught and by creating at least a few charter schools. They are moving to improve our road network and have signaled their intention to radically reform the now overly restrictive regime for approving foreign investment in New Zealand. All of these measures will help productivity growth, though all will take time.
On making housing more affordable, I’d also give them high marks, indeed very high marks. Ever since the Productivity Commission did its very first report on housing affordability, back in 2011, we’ve known that three of the four main reasons why houses are ridiculously unaffordable in New Zealand are the result of local body policies and behaviour, particularly related to their policy of tightly constraining the land on which people are allowed to build houses. This has meant that tiny slivers of land – sometimes of 300 square metres (or substantially less than one-tenth of an acre in the old terminology) – sell for ridiculous prices, even when a long away from city centres. (My favourite example is the 400 square metre section, almost exactly one-tenth of an acre, selling for some $735,000 in Drury!) The Government is in the process of forcing local authorities to zone now enough land for estimated housing need over the next 30 years, thus potentially drastically reducing the land component of a house price and enabling large scale (and therefore potentially cheaper) house construction. And in the last few days, the Government has announced that the involvement of local authorities in consenting individual houses should be radically reduced, thus directly cutting costs and speeding up construction.
On dealing with the fiscal consequences of our aging population, the Government’s position is not even as good as the rather weak attempt to deal with this issue made by the Bill English Government in 2017. That Government announced that to ease the fiscal consequences of our aging population it would be necessary to raise the age of eligibility for New Zealand Super from its current 65 to 67 – but not starting that adjustment until 2037, then some seven general elections away! Unsurprisingly, those who noticed the announcement guffawed, and most of us have long forgotten the commitment. As far as I know, there is absolutely no suggestion that the Government is contemplating raising the age of eligibility for New Zealand Super, something for which we can no doubt blame New Zealand First. (The contrast with the courage of the Bolger Government, which announced that the age of eligibility for New Zealand Super would rise from 60 to 65 over just 10 years, and then delivered that – an astonishing increase for just 10 years – is stark.) So that problem, the long-term sustainability of our fiscal position, is still with us. If nothing is done, the ratio of government debt to GDP will rise from its present level of around 40% to some 200% well within the lifetime of somebody now in their early forties.
On what might be called “Treaty issues”, the picture is mixed but I would give the Government a pass mark. No, only the ACT part of the coalition Government is supporting ACT’s Treaty Principles Bill, and I think that that is enormously disappointing. David Seymour clearly sees the need to establish once and for all, by means of a referendum, what the Treaty means for New Zealand in the 21st century. He argues that the Treaty gives the Government the absolute authority to govern and that, under the Government, we all have equal rights. I strongly suspect that both Christopher Luxon and Winston Peters agree with that view but, for whatever reason, they are reluctant to support the Treaty Principles Bill beyond select committee.
On the other hand, the Government has scrapped Labour’s Three Waters programme (which gave extraordinary powers to iwi); has restored the right of ratepayers to demand a referendum before the creation of Maori wards; is amending the Marine and Coastal Area Act to reflect Parliament’s intention when that law was passed in 2011; is reviewing “Treaty clauses” in 28 pieces of legislation to assess whether those clauses are really needed; has scrapped the separate Maori Health Authority and insisted that healthcare be provided on the basis of need not the ethnicity of the patient; and so on. This is major progress and I’d give the Government a good pass mark, with the comment “trying hard but further progress needed”.
Finally, the geopolitical dilemma in which we find ourselves. After the collapse of the Soviet Union in 1991, the world entered a period of some 15 years where the US was the single dominant Power. The US invaded Iraq and Afghanistan; maintained military bases all over the world; sailed its naval vessels wherever it chose; welcomed China into the World Trade Organisation; and appeared, outwardly at least, relaxed about China’s economic and military growth.
But in recent years that has radically changed. China’s economy is already somewhat larger than that of the US (using the purchasing power parity exchange rate that most economists prefer) and, given China’s population is four times that of the US and its economic growth rate is higher than that of the US, will be very much larger than that of the US within a few years. China is already the largest trading partner of most countries in the world, not only of New Zealand. Chinese transport infrastructure – roads, bridges, rail systems, etc. – is probably the best in the world. Although China’s military spending is very much lower than America’s, in both dollar and real terms, China’s naval strength has increased markedly in recent years. And driving China is both an immediate desire to restore Taiwan to Beijing’s control and a longer-term ambition to shed the memory of a century of humiliation at the hands of European Powers and Japan, starting in 1839 with the Opium Wars and ending finally with the defeat of Japan in 1945.
Despite the fact that the US recognized Beijing as the capital of the whole of China, including Taiwan, in 1979, it is clear that there is strong opposition in the US to Beijing taking back control of Taiwan; and more generally an overt hostility to China’s economic and scientific growth, with increasingly stringent controls on the export of high tech items to China and high tariffs on some Chinese imports into the US (with more threatened if Trump becomes President).
Our only formal ally, Australia, is now itself in a formal alliance with the US, and that alliance is quite openly and explicitly aimed at China.
At the moment, the Government seems intent on also joining some kind of formal military alliance with the US, whether it be AUKUS Pillar II or some other kind of grouping.
The question which we need to resolve is whether China really does pose any kind of military threat to New Zealand. If it does pose such a threat, then clearly the Government is wise to be exploring how we can get some form of protection from the American umbrella. If it doesn’t (unless, of course, we paint a target on our chest by joining an anti-China alliance), then we should have no part of any formal American alliance, and no part of an Asian version of NATO.
In my own view, China has made it abundantly clear that it wants to absorb Taiwan back into China and wants to control the oceans in its immediate vicinity. It is not at all obvious that it has any desire to expand its military presence beyond its immediate neighbourhood – indeed, apart from its militarization of some small islands in the South China Sea, it has only one other military base in the world, that in Djibouti, designed presumably to safeguard the shipment of oil from the Middle East. And throughout its history, China has at no time developed a far-flung empire. It is not at all obvious why it would want to do so now.
So on this metric, I’d give the Government a fail mark.
Overall? Two good marks – improving productivity and improving housing affordability. Two fail marks – no improvement in long-term fiscal sustainability and abandoning our independent foreign policy in favour of a military alliance with the US. And a half mark, or somewhat better than a half mark, for Treaty of Waitangi issues – some really good measures but profound disappointment at the Government’s refusal to back the Treaty Principles Bill.
And without any doubt better than the political alternative on offer.
Dr Don Brash, Former Governor of the Reserve Bank and Leader of the New Zealand National Party from 2003 to 2006 and ACT in 2011. Don blogs at Bassett, Brash and Hide - where this article was sourced
7 comments:
Global fact:
The key to national productivity is a solid Education system at all levels - starting with the 3 Rs and especially at Higher Education and Research (STEM, R+D+Innovation). Governments/ the economy including the private sector/ and the academy cooperate for the national good (i.e. the Triple Helix) . Cutting- edge, innovative knowledge and skilled people will unlock growth and prosperity .
Consecutive governments have ruined the once great NZ system. The Te Ao vision has dominated NZ education and now NZ is bottom of the OECD rankings . Third word status is close.
Today, a Maorification indoctrination process - based on Treaty obligations , equity, rewritten NZ history, superiority of Indigeneity, Critical Race Theory - is embedded in the Ed. Ministry and similar institutions to privilege equity = levelling down to ensure a targeted political outcome ( i.e. tribal rule /superior status for Indigeneity by 2040).
Young, qualified people are leaving in droves. Politicians, fearing political reaction, soft peddle.
NZ seems to be preparing for the post -2030 world: a global elite ( politically dominated by minorities ), a destroyed middle class, and a vast under class of diverse ethnicity, culture and religion all struggling to survive together.
A quagmire in the making.
Anthropologists and sociologists seek to drag NZ back to a primitive cultural past which - though admirable and respected in itself - cannot replace the skills for the future.
Ardern and co . put the nail in NZ's coffin for decline. The Coalition has one shot at reversing this. Citizens can back one or other option.
China may not be a military threat but is certainly doing things in this country to undermine social cohesion.
Another big challenge that I see, Don is the appalling truancy rate in our schools.
China doesn't need to be a military threat for its interests to prevail. All they need to bring us into line is to find a technical excuse to refuse to honour existing trade deals. Australia learned that the hard way. China weaponises trade without thinking twice. Fortunately Australia was big enough to push back and quickly diversify it's markets. New Zealand doesn't have that option and will cave, exactly the way we caved over the Rainbow Warrior terrorists when France threatened trade retaliation.
How are they (the corporate state government’s puppets) going?
Well, you didn’t think they were going to be our “knights in shining armour” did you.
The corporate state serves the corporate agenda, not we the people, so in that regard, they are doing great.
Anon at 6’53 is on the mark with most of his/her comments. The greatest threat to the health and prosperity of this country is internal. Until that issue is well and truly addressed this country will only continue to head for the social and economic precipice. There is now a generation ensconced in poltical, legal and bureaucratic power who seem entirely deluded. The damage they can do over their working lives does not bear thinking about.
Economists have a certain mindset on how to improve our horrible situation. As an educationalist I have mine so I reinforce the above contributors who emphasize education. Rather than tinkering a bit we need a revolution; a renaissance in education.
We need articulate people in power to learn about what has destroyed our once world class education.
Right back from the 1940s we along with the rest of the Western World , have been forced into the insidious and cunningly gradual ideology of Progressivism which incorporates constructivism and opens the door to Marxism. ( neither the words progressivism or constructiviem occur in most dictionaries.) I am a third generation educationalist in my family so have intimately absorbed the changes that have occurred in a century. Very few people have any idea of what actually happened although Briar Lipson of the NZ Initiative gave some clues in her free online book "The NZ Educational Delusion'. She is an economist and I just wish more , including Don could get themselves more knowledgeable about real NZ educational history and grasp why we are in the mess we are in now. It would for example explain mostly why Maori underachieve and our having the longest tail of underachievement in the developed world.
On a brighter note NZ could lead the way for Western Civilization back into a better future with more knowledge of what is driving our education system and standard of living over the cliff. At present the cliff has been moved only a few centimeters forward. The festering sore will not heal until we purge out the rottenness .
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