Muriel Newman: Remembering Owen McShane

I had the privilege of knowing and working with Owen over many years, but since establishing the New Zealand Centre for Political Research in 2005, we had a particularly close association. Owen frequently provided expert commentaries for our weekly newsletter and this blog, and was extremely generous with his time, advice, and expertise.

Owen McShane: Why so much Dissent?

There is a wave of dissent spreading throughout the Western World in response to the failed experiment in central planning at the local and regional level of Government. For some reason we have suffered decades of top-down local planning in spite of the total failure of central planning in economies as diverse as the Soviet Empire, Maoist China, and North Korea.

This wave has now become a flood and is attracting attention in all quarters. During the property boom, triggered by the planners’ excessive regulation of land markets, and powered by the speculative bubble and lending, the rapid inflation in land prices allowed the planners to fund their excessive interventions and compliance costs, and of course their own salaries and fees, because the “speculators” and developers could absorb the costs.

Owen McShane: Who do we Think we Are?

James Belich’s remarkable book “Replenishing the Earth: The Settler Revolution and the Rise of the Anglo World” (2009) certainly challenged the conventional version of the early settlement of New Zealand. We had grown used to being labeled “colonizers” extending the powers and reach of the British Imperial Empire. But Belich declared New Zealand was nobody’s “colony” but was settled by people determined to create a new world – a world of their own design and choosing. My father’s Irish forebears settled here in the late 1830s. My mother’s Welsh forebears arrived in the early 1900s. Both my parents were atheists and Fabian Socialists. I never heard either of them suggest their families were here to promote the interests of the Brittish Imperial Empire.

Owen McShane: Why We Must Learn to Love Asset Sales ... part one

There is a general consensus that New Zealand must develop more innovative and internationally oriented businesses. Innovation is a prime driver of economic development and can also support higher wages. Yet the election campaign has further locked in place a set of beliefs that deprive innovative companies of the capital they need to fund their forays into international markets.

The campaign promoted wide-ranging capital gains taxes and promoted “No Asset Sales.” Capital gains taxes can be a serious disincentive for venture capital investors because they can make it more difficult to achieve the targeted rates of return required by investors. We should avoid imposing fines for success.

Owen McShane: Unwinding the Sustainable Development Mindset

I am frequently reminded of Richard Prebble's commentary on the wonderful TV Show “Yes Minister” (still running on SKY). He said “The public thinks that “Yes Minister” is a comedy, the civil service knows that it's a documentary, and the Cabinet Ministers know that it’s a tragedy.”

I last quoted Prebble’s comment in an essay “Can a New Government Actually Change Anything?” written just before the last change in government. Maybe it is time to re-visit it.

Owen McShane: The Best News this Year.

The fault in the Maui Gas Line is the best news we have had this year. I am confident that most people in New Zealand had no idea how dependent we all are on natural gas as a fuel and energy source and how much benefit the Maui Gas Field provides.

The only long term answer to this problem, caused by a leak in a single pipeline, is to have several gas wells distributed around the country (some of which will be off-shore) all supplying gas into a "gas grid" like the electric grid, which would mean every location would have alternative sources of gas should one link in the network fail.

Owen McShane: Let’s Get Close to the Water.

In his seminal work of 1996 “The Mythical Conception of Rail Transit in Los Angeles”, Jonathan Richmond explained that the powerful myths and symbols surrounding rail allow convictions to displace rational analysis. Once rail is adopted as a solution to urban problems any proposal that appears to promote the viability of rail will also be adopted. Unfortunately, these downstream policies are almost always destructive to the general urban economy.

 Randal O’Toole’s 2004 book “Great Rail Disasters – the Impact of Rail Transit on Urban Liveability” argues that such rail-supportive policies have damaged the larger urban economies and that contrary to the mythology, recent heavy investments in rail have reduced the urban “liveability” of New World Cities.

Owen McShane: The Passion for Rail

Local government issues seldom stir the passions of the public, or the media, or anyone else –except maybe the politicians and officials directly involved. Rubbish collections and footpath maintenance rarely generate widespread passions beyond their immediate locality. Sports stadia are an exception to the general rule, as we have seen in Dunedin, and the choice of the Auckland venue for the Rugby World Cup.

However, the world-wide exception to the general rule is the construction and operation of rail systems – including light rail, heavy suburban rail, freight rail, inter-city rail, high-speed rail and tourist or heritage rail. All of these generate large numbers of passionate advocates – and a few skeptics.

Owen McShane: When Plans Prevent Planning

The housing shortfall in the Auckland Council area – which generates an employment shortfall in the area – is now a crisis. Given the impact on the whole economy, and on accommodation costs in particular, one would think that this would be the top priority for the whole of Council, its Local Boards and its staff.

You would be wrong. Council does not seem to be concerned and is instead busy on activities that will only make this shortfall worse – and indeed is doing so already. For example the new Auckland Plan confirms the use of MULs (Renamed the Rural Urban Boundary – now there’s the RUB.) The Plan also confirms that Development Contributions will be a major source of financing for the planned projects. These two policies are incompatible with affordable housing (land) (Refer to the two pairs of graphs comparing US States with Prescriptive land use regulation and those with Responsive land use regulation) They guarantee that the massive housing shortfall in Auckland will extend well into the future, and volatility will continue to be the norm. A city is unlikely to be liveable if it is short of houses and jobs and the available housing stock is unaffordable to working and middle classes.

Owen McShane: Let’s Unleash Auckland and aim for 10% Growth

Sometimes it takes severe external shocks to free us of the constraints that limit our ability to take advantage of our opportunities. Could the financial shocks now being played out in Europe and the US actually help unshackle our thinking so we can truly “seize the time”? Some of us are optimistic about our prospects because of the World Cup and the Rebuilding of Christchurch. My instinct is to remove both these eggs from the basket. The track record of major sporting events is not good – the hosts often wake up with a hangover. The rebuilding of Christchurch is a cost – repairing all those broken buildings diverts capital from newly productive enterprise.

Owen McShane: Maori at the Crossroads

A group of Maori organizations and Iwi leaders are sending some clear signals to other Maori, and to Government in particular, that they are standing at a crossroads.

One road will take Maori into a future in which they participate in the modern world, and contribute to economic growth and development, driven by technology development and employing people on high wages. They may also benefit from growing dividend streams as a result of significant investments in state owned enterprises.

The other road locks them into the world view of tribalism, and in particular enforces the religious beliefs of pre-European times, such as mauri, and taniwha and which regards science as the enemy – being the “latest force of colonization”.

Owen McShane: What is it with Bovine Eructation?

Imagine an atom of carbon floating around in the atmosphere just above a farm. That is one atom of C in the air – but packaged in the gas called carbon dioxide or CO₂. (If it was an atom of carbon it would be either diamond or graphite powder and would be lying on the ground.)

The molecule of carbon dioxide gets captured by a nearby blade of grass and gets turned into a useful protein or carbohydrate by photosynthesis, and helps build the blade of grass. (There is a chance it will be exhaled as CO₂ by the process of respiration but let's ignore that.) Then along comes Daisy the Cow who eats the blade of grass and starts digesting it in her rumen, and in other parts of her intestinal tract. Some of these atoms of carbon will be stripped off the oxygen and ingested into the cow, turned into protein, and finally turn up on your dinner plate as steak or whatever.

Owen McShane: Housing Affordability – A right wing Plot?

The Government has announced the formation of the promised Productivity Commission. Some people have criticised Finance Minister Bill English and Regulatory Reform Minister Rodney Hide, for declaring that one of the Commission's first two inquiries will be into housing affordability. However, the topic is squarely on target. A collection (still in progress) of the negative impacts of excessive land use regulation on productivity currently contains well over twenty items such as:

• Increased inequality and reduced social mobility.
• Loss of international competitiveness.
• Reduced “churn” of land use.
• Diversion of capital from productive uses, to land-price bubbles.
• Reduced business start-ups.
• Reduced efficiency of urban form and transport patterns.

Why would any Government want to inflict such damaging policies on its people?

Owen McShane: Let's build on Auckland's brand

The Auckland Policy Office, led by the Ministry of Economic Development, has released the nine reports generated by its three-year research programme on Auckland’s social and economic development.

These reports openly challenge many of the assumptions behind the discussion document “Auckland Unleashed” and provide substantial data in support of the Ministry of Transport’s skeptical response to the current proposal for a mono-centric, high-density, public transport dependent, Auckland Council.

Owen McShane: New Layers of DURT (Delays, Uncertainty, Regulation and Taxation)

One of the main reasons for unaffordable housing, and an overall shortage of supply in New Zealand, is the multitude of planning documents that have to be dealt with by applicants even when making the simplest of applications. 

There is a natural tendency for these layers to grow because the environment is essentially infinite and hence finally requires an infinite number of plans. So we need to check out any set of proposals as to whether they will require further layers by legislative fiat. Similarly, if we want to encourage innovation we need to keep the patent, copyright, and trademark processes as simple as possible and compatible with international intellectual property law.

Owen McShane: The Gender Wage Gap and Communication Connectivity

The gender wage gap may seem unconnected to development economics, the RMA and local government. But the connection is real, if only because the recent debates remind us that when society experiences a rapid rate of social change, then many individual attitudes are likely to depart to some distance from reality.

While the gender wage gap may not be closing enough for some, the very idea of a wage gender gap has been a matter for social concern only since the sixties. And indeed I feel as though I am trapped in a dinner party of some forty years ago. Of course, gender wage gaps do exist.

Owen McShane: A Post-Budget thought for the Week

The budget is based on Treasury forecasts of 4% annual growth in the economy. They must be dreaming.

First. Rebuilding Christchurch does not add to overall growth – investment is simply transferred from the rest of the country to Christchurch, and hence puts a damper on growth everywhere else. (The broken windows fallacy.) 

While this transfer is partially offset by overseas insurers these overseas funds are only a partial offset against total costs. And future insurance premiums, paid to those same overseas insurers, will rise, and increase costs, in the longer term.

Owen McShane: The Role of Soils in the Roadblocks to Productivity

Now that I live in the countryside I tend to listen to “Rural Report” and similar programmes on radio. A few Saturday mornings ago I was intrigued by a “Country Life” interview with Ian Kerr, who raises hydroponic lettuce near Lake Karapiro in the Waipa District. It seems to be a nice little business, and a demonstration of how knowledge and skill contributes to productivity and efficiency. As I recall, Mr Kerr grows ten crops of about 10,000 lettuces a year within his hydroponic greenhouse – obviously a highly productive operation on his 60 acre farmlet.

Unsurprisingly, towards the end of the interview the reporter asked if Mr Kerr had plans for expansion. He obviously had plenty of room to expand, both on his land, and in the market place. Mr Kerr explained that while he had plans for all manner of activities, including expansion and diversification of his hydroponic farming, he could not realize them because of the rules in the Waipa District Plan. 

Owen McShane: Oil Prices and Public Transport

Since the oil spike in the early seventies enthusiasts for public transport have predicted that these high prices for petrol would trigger a public transport revolution as people finally broke their "addiction" to the motor car and changed their travel mode to buses and trains. And in the short term their predictions appeared to be true as public transport use increased and motor car mileage decreased.

However, it was not long before the trend towards increased motor use was re-established and the public transport share either stabilised or even fell.

Owen McShane: Why isnt the economy doing better – Part Three

This column presents some of the actions available to councils to reverse the declining residential build rate. If councils do nothing we shall continue the drift into ongoing recession. Central Government action is not enough.

Many Local Authorities’ Annual Plans claim to promote economic growth and development, yet their RMA Plans tend to regard growth as something to be avoided. Indeed, any pockets of growth are assumed to be “out of control” and requiring interventionist “ growth management” to restrain them.