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28 replies to a ‘neo-neoliberal’ think tank’s 28-point plan for the future of New Zealand

The first manifesto of the election has been declared and it doesn’t even belong to a political party. ‘Manifesto 2017: What the next New Zealand government should do’ is the work of think tank the New Zealand Initiative. Simon Wilson, worried as ever about Auckland, searches for some goodness within.

They’ve got well organised minds at the New Zealand Initiative, which is more than you can say for some political parties. Still, strange but true, rational thinking doesn’t always produce useful ideas. NZI is what you might call a neo-neoliberal think tank. That is, it believes in the neoliberal fundamentals of smaller government and the value of market-driven solutions, but it doesn’t pretend we have seen only triumphs and no tragedies under the economic orthodoxy of the last 35 years. It wants to reposition itself as a force for the future.

It must be tough, being a neo-neoliberal. You can’t keep channelling Roger Douglas, arguing that a bright future exists if only we “do the job properly”, treating the welfare state as a quagmire out of which we must determinedly climb, before we concrete it over, set out the deckchairs and start in with the g&ts. To make anyone listen, you’ve got to atone.

That’s because we’ve learnt two big things since the reforming days of Douglas, Margaret Thatcher et al. One is that overly centralised planning and conservative social prohibitions together create a stultifying society we do not want to live in anymore. Fair enough, that was a deserved victory for the neoliberals and the concept remains their most sacred tenet.

The other is that the government has a special duty to protect the vulnerable from the rapacities of unbridled capitalism. For neoliberals, that sounds like anathema. So to establish their credibility they must demonstrate they have come to terms with this. That they are not merely wolves come back to the paddock wearing trendy Ponsonby clothing.

So now, along comes the manifesto of the NZ Initiative, divided handily into six different sections and 28 different proposals. Is it the future, in handy digestible chunks? Or is it just those wolves from the past banging on the door and refusing to go away? Turns out, it’s quite a bit of both. The subheadings and the quoted statements are all theirs:

Housing and planning: restoring the great Kiwi dream

  • “Abolish all rural-urban boundaries.” It’s Labour policy! But not the Greens’ or National’s, and it’s a bad idea. Rural-urban boundaries are problematic but they are essential to contain urban drift into the hinterland. That, in turn, prevents a return to the nightmare 1960s policy of building dormitory suburbs in the middle of nowhere, and it also preserves the hinterland itself. That’s fine rich cropland in Pukekohe, you know.
  • “Abolish all height and density controls.” Tempting but no. Yes there should be more flexibility in the rules – we know good developers are crying out to use inventive solutions and we sympathise. But abolition tilts the balance too far in favour of unscrupulous builders out to make a quick buck. Why would Auckland ever again want to give free rein to bad developers?
  • “Introduce a presumption in favour of development into the Resource Management Act.” Are you kidding? It’s the same as above. Yes, the RMA needs reform. But this is a none-too-subtle code for gutting it, and the arguments that should be done are not evidence based but ideological.
  • “Let councils capture the GST component of new buildings.” Brilliant! New Zealand has one of the highest ratios of central:local government expenditure in the OECD (over 90 percent, against an OECD average of 66 percent). Auckland has suffered enormously from this, especially in housing and transport. Yet it is very hard to see central government willingly giving up any power. Handing over some GST is an almost pain-free way to move in the right direction.
  • “Introduce Community Development Districts.” This is code for “outsourcing infrastructure development”, which means in new housing areas developers could raise capital with special bonds, pay for all the services themselves and make their profit by taxing the new residents. The great advantage is that it ring fences the cost of the development, so the new homeowners pay for it, not the rest of us. The downside is that it would work very well for exclusive upmarket communities but it might not be so good for others. But it’s certainly worth a deeper look.

Education: returning to world class

  • “Create an attractive career structure for teachers.” Totally right. Imagine a world where teaching attract the best and the brightest students.
  • “Provide tailored professional development for teachers.” True that too.
  • “Monitor teacher performance and introduce performance-based appraisals.” The problem here is not theoretical: there’s no intrinsic reason why teachers, like so many of us in other jobs, cannot have their work assessed and their pay adjust to reflect the quality of that work. But there are two practical issues. First, how is the government going to do that assessment when it has manifestly failed, despite great effort, to create valuable, widely accepted mechanisms to assess the progress of children in schools? National Standards tells us far less than was promised on the packet and it would be downright absurd to use it to judge the quality of teachers. Second, if teaching is made more attractive and at the same time it became easier to move poor teachers out of the profession, the need for performance pay would diminish markedly. Principals know who the poor teachers are; we should empower them to fix that problem first.
  • “Evaluate the impact of interventions on school performance.” NZI believes that when schools are given extra help and even when a commissioner is put in to run them, there is no good method to assess how well it all turned out. If that’s true it certainly needs fixing. But is it true? When schools get intervened in all sorts of outcomes are measured – we know this because the schools themselves are invariably very keen to tell us about it.
  • “Expand school clusters as a means of sharing best practice.” Absolutely. School clusters, where schools in a vicinity share teacher skills and help each other, are one of the great leaps forward in modern education. More please.

Foreign direct investment: open to the world

  • “Abolish the Overseas Investment Act.” Well, instead, why don’t we make the OIA a real thing? New Zealand, like every other country, needs rules around foreign investment. That’s not to say we shouldn’t have any: foreign investment is a necessary component of economic development. But this is not a difficult country to invest in now and the current rules clearly don’t materially limit worthwhile investment.
  • “Subject all investors, domestic and foreign, to the same rules.” Why? Sovereignty means being able to favour your own people if that’s judged advantageous.
  • “Protect New Zealanders’ property rights including the freedom to sell to whoever they wish.” Again, investment is not a field for carte blanche market rules. It’s hard to think of a country anywhere in the world where that is the case. There’s way more ideology than sense in this section.

Better regulation: costs and benefits

  • “No new law without a cost-benefit assessment.” It sounds too absolutist but the principle is a good one. And yet, see next point.
  • New laws should “demonstrate real gains for the public [with the] costs fairly shared”. Hang on, shouldn’t circumstances prevail? Parliament can look for evidence of the likely practical gains from new laws, but many laws are designed for outcomes that are hard to measure. Government is not simply a mechanical process.
  • “Regulatory reform cannot be delegated to a junior minister but needs real commitment from the prime minister down.” Special pleading? It’s true, but it’s also true of conservation, the arts, consumer law, Maori development and every other portfolio currently in the hands of a lowly minister. Regulatory reform might be inadequate in this country but it is not one of our crisis areas – or anywhere close to being one. Settle down, you economists.
  • “The regulatory culture should shift from one of ticking boxes and managing risk to encouraging greater flexibility and innovation.” That’s so true! I’m back to liking these guys again.

Social policy: investing in success

  • “Social policy is not a silo and should be regarded as a whole of government task.” Sing it louder. Shout it out!
  • “Fixing the housing affordability crisis is crucial to addressing both income-related poverty measures and inequality concerns.” Hallelujah! We’re on a roll now. Elsewhere NZI says: “Housing costs aside, inequality has not risen in the past 20 years.” And, “In 1990, all income groups were relatively close on housing costs to income. Only 10 percent of top income earners spend more than 30 percent of income on housing. For the poorest households, it was 20 percent. Today, the top income households are practically where they were at the beginning, but not the income-poorest households. More than 40 percent of all low-income households now spend more than 30 percent of their incomes on housing.” These figures are plain. One of the most significant effects of property being the favoured option for investment has been to make poverty worse. And by the way, as NZI says (quoting Ministry of Social Development figures from 2008), while 15 percent of Pākehā children were living in poverty, the figure was 39 percent for Māori and 51 percent for Pasifika children. Over half.
  • “To provide all New Zealanders with good life opportunities, special attention needs to be paid to education. More targeted support for students from lower deciles should take precedence over untargeted programmes such as interest-free student loans.” Woah. Right there you have it, the conundrum that is the agony of the Labour Party. Interest-free student loans, introduce by Labour 10 years ago, is a vote magnet that even National did not dare to undermine, despite John Key calling it socialism. But targeting disadvantaged students for special help in education? What’s Labour for if it doesn’t want to do that? So who’s more progressive: the neoliberal group that wants to preference the most disadvantaged, or the centre-left party that won’t do that so much because it believes in universal assistance?
  • “Taxes and incentives should not choke off employers’ incentive to create jobs for the available skills or deprive those with those skills with the incentive to work.” What? The goal should be a high-wage economy. Is this policy designed to help achieve that or is it just weasel words to help push wages down?
  • “The government’s plan to trial new ways of delivering social services such as social bonds is laudable.” Is it? Bloody hell. Funding social services through “social bonds” means inviting private investment to pay for welfare, because guess what? There’s money to be made. Who doesn’t smell a rat? And there’s an even bigger issue at stake. The government has a revolutionary plan with social services, called social investment, which means identifying those most at risk and targeting assistance to them. Social bonds could be used to fund it, but they’re not intrinsic to the concept. Is social investment a good idea? It has some blindingly good elements and some very dangerous ones. If NZI was thinking deeply enough about this, they would front up to social investment and provide a cogent argument about the way forward. Focusing on social bonds avoids the big issue while encouraging private enterprise to make a few bucks.

Local government: incentives to grow

  • “Local communities should share the benefits that accrue to central government from extractive industries … Local government should receive financial benefits for creating economic growth.” This is more code, in this case for allowing councils to benefit from mining. Councils should not be incentivised to benefit from mining, they should be rigorously impartial and very careful about it.
  • “Central and local government need to better define their responsibilities to preclude cost-shifting and blame games, and enhance accountability.” Oh my god, this language. Bear with me. The important issue buried underneath that sentence is that the prime minister keeps saying Auckland Council is the cause of all Auckland’s problems and the mayor keeps saying nah, it’s the govmint. Sure it’s not helpful, but it’s politics. It’s what they do. The NZI doesn’t need to build a policy platform around it.
  • “Social economic zones” would help. That’s true too, provided they were not free to ignore New Zealand laws related to wages, health and safety, environmental protections and the rest. Would they be?

A platform for growth

  • “Instead of ruining the environment, economic growth helps manage and preserve it.” Does it? That’s a great goal but it’s nonsense to take it as an article of faith. It happens when we make it happen.
  • “Instead of making us unhappy, economic growth enables us to lead longer, healthier and more fulfilling lives.” Although, as Louis C.K. said, it’s also true that right now everything is amazing and nobody is happy. It is not very helpful of the NZI, as we edge towards the second quintile of the 21st century and the floods ravage Queensland while the largest famine of our lifetimes lays waste to South Sudan, simply to repeat the old mantras about growth. We need a much smarter world view than that.
  • “Instead of depleting our resources, economic growth helps us find alternative ways of satisfying our needs.” What? The corporates that are depleting our resources so furiously you’d think there will be no tomorrow, actually because they know perfectly well there will be no tomorrow, they’re doing it for us? That’s laughable.

Fundamentally, that’s the problem with neo-neoliberalism. Strip out the fancy words and far too much of it, still, is about trying to rescue the old neoliberal way so money can be made before it all goes tits up.

But we’ve had the global financial crisis. We know about the devastation that caused and we also know the entities that survived the best include most of those that caused it in the first place. And we know, on a daily basis, about the disasters caused by climate change. Yet what does neoliberalism have to say about any of that? It devotes far too little effort to seriously proposing how we might undo the catastrophic mess we’ve made of things so far.

The New Zealand Initiative has many good ideas. It could be a force to be reckoned with, this election, especially as we look for fresh ways to break the old deadlocks that cause so much failure. But it will need to find the courage to let go of the old neoliberal idiocies first.

Still, I’ll give them this: they don’t believe cutting taxes is the cure for all ills and they don’t bang that old privatisation drum much either. For neoliberals, both those things are revolutionary. Credit where it’s due.

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