There was a not overly good article in the Financial Times yesterday marking the first anniversary of the Labour/New Zealand First (and Greens) government. Among its odd features was the final sentence which reported the suggestion from political scientist Bryce Edwards that the Prime Minister “is now seen as an icon of good family values”. Really? By whom? The FT’s journalist also claimed that the Prime Minister had achieved “near-celebrity status” abroad. If that were true I’m not even sure it would be a good thing, but is it? I read pretty widely internationally and I don’t see much sign of it.
But the primary focus of this blog is still economics, and what really caught my eye was this comment from a former ANZ chief economist:
“I’d give the coalition an A grade for aspiration due to their ambitious reform agenda,” said Cameron Bagrie, founder of Bagrie Economics. “But the problem is they haven’t got an economic plan in place yet.
I’d certainly agree with the second sentence (no plan). But Cameron Bagrie seems to be far too charitable is his talk of an “A for aspiration”, let alone the puzzling talk of an “ambitious reform agenda”.
Sure, ministers occasionally run the line about building a more productive and sustainable economy, with occasional suggestions of shifting the “growth engines” of the New Zealand economy. But after only a year it has already become nothing more than a cliche, recycled in speeches and press releases, signifying almost nothing, and with no sign of any passion or serious aspiration underpinning it.
And it really doesn’t mark them out from most of the decades of governments that have gone before them, since the problems – and underperformance – of the New Zealand economy first started to become apparent, back in the 1960s. All of them talk about producing something better and then, after they’ve been in office long enough, start pretending that there really isn’t a problem after all (John Key, you may recall, resorted to talk of “quality problems” – dreadful congestion, and unaffordable house prices.) There is talk of a more outward-orientation to the New Zealand economy, of a stronger productivity performance, of closing the large gaps that have opened with the older OECD countries. And then, in most cases, almost nothing happens. Governments occupy office, and then leave it, and the fundamental failures aren’t addressed. Housing is a more recent utter failure than productivity – only really dating back 25 to 30 years – and again governments talk about how things will be different, but do little of much substance, and never show any evidence that they care much. To date, the current government doesn’t look materially different on that count.
Has anyone heard rhetoric from the Prime Minister or her ministers about getting house prices back down again – to perhaps three times income that looks to have been a longer-term norm? They won’t even say the words, let alone suggest that have a well-researched carefully thought out plan (economic and political) to make it happen. There is nothing specific either to their talk of a more productive economy – no benchmarks to which we can hold them to account, no nothing (and indeed things like the oil and gas exploration ban, and net-zero targets that will likely make it much harder to pursue such goals – if the government were actually serious about them). There is no sense of open alarm (which a new government could afford, responsibility for those outcomes not yet resting with them) at five years of very little productivity growth – even though productivity growth almost alone underpins prospective improvements in material living standards – let alone the decades of relative underperformance that has helped give the outcomes the government probably does care about more (eg child poverty), and the decades-long exodus of New Zealanders to Australia. If there is “aspiration” – as Bagrie suggests – around economics it seems to involve using just enough of the right words to get and hold office.
I wrote the other day about the vacuous nature of the new Business Advisory Council (and a Herald columnist had some other criticisms which mostly rang true). The Prime Minister talked up the Council when she first launched it, but which seems more likely to be a sop to the (upper end) business community than a sign of, or source of serious ideas for, any serious commitment to a much better economic future. There isn’t a plan – that much is obvious. But there is also no sign of a serious aspiration – the sort that shapes how the government operates in its determination to give concrete form to a better future – either. Sadly, that doesn’t mark them out from their predecessors.
What if they really were serious? Well, of course, then they’d have used the long years in Opposition rather better. That is water under the bridge now. But even now they could be looking seriously for some better, more compelling, answers.
Business leaders aren’t typically the place you would be looking to find those sorts of answers – an economy is, in crucial ways, not like a company. Economists, for all their faults, are much more likely to be able to help in getting to the bottom of the problem, and identifying policy measures that have a serious prospect of making a real difference. There are stories and proposed solutions around. I’ve been developing one, and arguing it here, for some years, but I’m not alone. Paul Conway at the Productivity Commission has also developed sustained analysis and arguments about the productivity failure – in some areas, his analysis overlaps with mine and in others not. If the leadership of the key government agencies – Treasury and MBIE – is beyond hope, there are still individuals in Treasury (in particular) who have thought hard about, and written on, some of these issues. There are people like David Skilling, now based offshore but formerly at Treasury and the New Zealand Institute, and the academic Phil McCann. There would, no doubt, be others who would invest in the hard thinking and analysis if a government were to show signs that it was really serious about New Zealand doing better.
I’ve argued for years that what is needed is a serious contest of competing narratives – credible, well-documented, stories, well-grounded in the specifics of New Zealand’s situation and experience that explain New Zealand’s underperformance and how any policy proposals fit in to such a narrative. Probably no one story or set of proposals will get everything right, but the active contest of ideas and arguments is a big part of the way in which we could make progress towards a deeper, and shared, sense of what has gone wrong and what could – and should – be done in response.
But, of course, there is no sign that the Prime Minister or the Minister of Finance, or the leaders of her coalition/support parties, care. There is no sign that they have anything like the sort of aspiration – on matters economic (including housing) – that the Financial Times reports Cameron Bagrie suggesting they have. That is beyond a shame, and more like a disgrace – like their predecessors, people who hold office and yet do little or nothing, presiding over a continued relative decline of a country once the most prosperous on earth, that once – and not that long ago – had affordable housing for its people.
13 thoughts on “No plan, but not much sign of aspiration either”
More and more Taxinda Ardern is showing her true colours, a marxist communist intent on wealth redistribution. Even Michael Cullen has said that the Tax Working Groups recommendations are not quite a Robin Hood tax but pretty close to a Robin hood tax. The difference is that Taxinda will take it from the masses rather than just rich folk through a hefty petrol tax, through a capital gains tax regime that applies to businesses, share portfolios, holiday houses and investment property.
Today, Taxinda Ardern is promising no new regional fuel taxes while she is Prime Minister and is accusing National Leader Simon Bridges of spreading “utterly, incorrect, false” information about a Wellington fuel tax.
Tommorrow she will say, “A Regional Fuel Levy is not a new Fuel tax, dumb people of New Zealand”
GGS: all government redistribute taxes. From N Korea to Hong Kong taxes are collected and distributed. The only places with no taxes are countries where the government has no authority such as Somalia and this total anarchy is usually hell on earth.
NZ is a fairly typical middle ranked country with nothing particularly unusual about its taxes or it welfare benefits. The amount of tax collected and how it is being used has changed very little since I came here in 2002. I doubt anybody including Jacinda Ardern herself would expect a Labour govt to reduce taxes; the discussion is whether NZ will significantly increase taxes and whether we will get value for money.
I suppose the relevence of your comments may relate to a belief that increased taxes is bad and in context bad for the economy of NZ. Excuse me for being prissy but I think it would be better to refer to our prime minister by her correct name in comments on this website. The subject of this article is extremely serious for anyone concerned about the future of children growing up in New Zealand.
My interpretation of Ms Ardern’s promise of ‘no new regional fuel taxes while she remains in power’ is concern that she has made a promise about a matter she cannot predict. Who knows what the world may be like in two years. It is reminiscent of John Key’s promise to not change the age for superannuation.
When you blatantly lie and get elected on the basis of “No New Taxes”. Then on the first 100 days of government she announces a whole bunch of new taxes and tells everyone that these are not new taxes is just utter nonsense. Taxinda Ardern is just so blatant a liar it is rather irritating every time she opens her mouth. Her high approval rating at 41% suggests people are more interested in her baby stories than to acknowledge she is a highly skilled liar.
Asked at Monday’s Leaders Debate whether she would resign rather than raise the age, Ms Taxinda Ardern replied with a steadfast “yes”.
“We’ll keep it at 65 and we’ll start putting contributions back into the Superannuation Fund so we can afford for Kiwis to retire,” said Ms Taxinda Ardern.
Bob, not sure why you would call it a John Key moment when Taxinda Ardern made the same call not to make any changes to the age 65 NZ super entitlement.
There is no plan. This is especially evident in the energy sector after the frankly stupid, self indulgent and futile ban on offshore exploration for oil and gas. New Zealand is now importing Indonesian coal to keep the lights on and when the gas runs out in a decade or less there is unlikely to be anything locally available to replace it. The ban will increase greenhouse gases as we are forced to import energy supplies and it will drive domestic energy prices through the roof affecting all parts of the economy and hurting the poor hardest. Some celebrity you’ve got there!
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Just out of curiosity, what were John Key’s report cards at the 1 year and 2 year marks?
Hard to tell (or remember). At one year, it was six months after the trough of the global (and NZ) recession. They had taken one brave (but) inevitable call to not proceed with promised tax cuts, and had the Jobs Summit – which delivered us little more than a few rural cycleways. I met him a few times that year (as a Treasury official) and was a bit more impressed than I expected – until, almost on the one year anniversary, he dumped the 2025 Taskforce’s report before it was even released, with no real alternative plan or evidence of any more serious aspiration.
I think there are probably about two voters who care about productivity in the entire electorate. If I were in Government, I would do as many things as possible to increase productivity, without telling anyone about them. I would make up some cock and bull story about education to give the media something to write about.
Not saying this is what the govt is actually doing, but there are the occasional glimmers of hope like this story: http://economicsnz.blogspot.com/2018/10/ive-tried-to-stop.html
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Re your first sentence, yes but many people care about material living standards. A smart popular pm leading a reform agenda probably wouldn’t use the p word much, but would find resonant ways to talk about what was being done and to what end.
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Blair, easy to say you would do as many things to increase productivity. Try a thought experiment and actually write down what you would actually do.
As far as i can observe the ball remains firmly in the court of economics to actually demonstrate its relevance here. The main suggestion here is for a story telling exercise followed by trying a bunch of things and hoping this materially improves productivity. But you don’t need to be an economist to engage in story telling and neither has the economics profession (at least on average) proven its policy perscriptions are consistently effective. On that basis i agree with the governments greater weight on public consultation for the same.
There is also the troubling open question of, is productivity a measurable real variable. Do we even know what is the goal here?
Looks like the Social Democrats in Denmark are coming a full circle: rediscovering a shared identity and it’s role in reciprocity (as a foundation of social democracy).
Makes you wonder then why “diversity [was seen as being] of immense benefit” in the Burke Review of immigration in the first place?
I’m still unsure of the implications of this piece but I wonder if beyond just being “interesting times” there will be meaningful political implications of policies which have valued diversity over a common identity. The economic of immigration we discuss (and hide under the mat)?