Why is the Deputy Prime Minister going to Istanbul?

The government seems determined to do its utmost to assist in the election campaign of the odious Turkish President Erdogan.  It surely cannot be their conscious intention, but how else to read what they are doing?

There are local elections in Turkey next weekend. The Financial Times reports that the ruling party is facing the possibility of losing control of the capital city, Ankara.  The economy –  which has done remarkably well in recent decades (as I’ve noted here, real GDP per hour worked is now almost equal to New Zealand) – is currently in a sharp downturn.

Erdogan appears to be trying to bolster his local appeal by wrapping around himself some sort of self-acquired mantle as a leader among Islamic states.

And thus, although no Turkish citizens were killed in last Friday’s dreadful attacks in Christchurch, suddenly the Turkish Vice-President and Foreign Minister are in New Zealand.  There are motorcades in Christchurch and even a meeting with the Governor-General.   What was the government doing agreeing to even this visit?  Didn’t their advisers tell them how this would most likely be used?  And, to add insult to injury, this is a Turkish government that –  like all Turkish governments – actively denies (and threatens states that say otherwise) the active involvement of Turkish authorities in the Armenian genocide, one of the most hideous events in an awful war.

And that was before we learned of Erdogan using clips from the shooting video in his election rally, amping up the rhetoric with talk of Gallipoli and how the landings in 1915 had been anti-Muslim in nature, and talking of sending people (New Zealanders and Australians) home in coffins.  Perhaps it played well to his base, but not only was it irresponsible and inflammatory, it wasn’t even remotely historically accurate.  Turkey –  or its predecessor the Ottoman Empire –  actively chose to enter the war on the German and Austro-Hungarian side.  Right up to the outbreak of war the British had been helped develop the Ottoman navy.  I’m not relitigating the rights and wrongs of the First World War, but it was their choice.  The German establishment at the time was firmly Protestant.   The New Zealand government history site tells us

Enver grew impatient. On 25 October 1914, without consulting any of his ministerial colleagues, he ordered Admiral Souchon to take the Ottoman fleet, including the German-crewed ships, into the Black Sea to attack the Russians. The fleet carried out surprise raids on Theodosia, Novorossisk, Odessa and Sevastopol, sinking a Russian minelayer, a gunboat and 14 civilian ships. On 2 November, Russia declared war on the Ottoman Empire. France and the British Empire, Russia’s wartime allies, followed suit on the 5th. Enver Pasha had succeeded in bringing the Ottoman Empire into the First World War on the side of the Central Powers, Germany and Austria-Hungary. Whether he would be as successful in achieving his principal war aim – pan-Turkic expansion into Central Asia at Russia′s expense – was another question.

Erdogan can play domestic politics all he likes.  That is his problem, and that of his people/country.   But we should hold our officeholders to account for their (in)actions and words.

We are told that our Foreign Minister has had a quiet word to the visiting Turkish politicians.  But we’ve heard nothing from our Prime Minister.  By contrast, Scott Morrison has openly demanded an apology from Erdogan.  I’m sure he won’t get one, but at least he has put his cards on the table, and stuck up for his country.

What is our government doing?  Well, a press release yesterday told us that the Foreign Minister (Deputy Prime Minister in this coalition government) is off to Turkey, of all places, accompanied by another government minister.

“Our current intention is then to travel onwards to Turkey, at the request of the Turkish Government, to attend a special ministerial meeting of the Organisation of Islamic Cooperation being held in Istanbul.

“This important event will allow New Zealand to join with our partners in standing against terrorism and speaking up for values such as understanding and religious tolerance.

So, late in his election campaign, having insulted New Zealanders –  past and present –  Erdogan summons a meeting and our government comes running.   How does he supppose the state-dominated media in Turkey is likely to present that?  As if New Zealand has anything to answer for to Turkey.

And that is before we get to even consider this meeting of the Organisation of Islamic Cooperation.  This is such an odious organisation that just recently they issued a collective official statement endorsing the treatment of Muslims in Xinjiang by the People’s Republic of China.  I’ve been critical of our government for saying and doing nothing on that issue, but not once have I supposed that the Prime Minister and her Foreign Minister think it is all just fine (they leave that stance to Todd McClay). To his credit, Erdogan has actually been a rare leader to criticise the PRC over Xinjiang, but this is a meeting of the OIC itself Winston Peters is to attend.

And what messages does he envisage?  They will jointly speak out against terrorism –  no problem with that –  but they will also, we are told, speak up for “values such as…religious tolerance”.   Really?     It would be great if they both did it and meant it, but a significant proportion of the member countries of the OIC have apostasy laws on the books.


And a significant proportion of those countries actually provide the death penalty as the punishment for leaving Islam.  I’ve listened to church leaders talk about the extreme courage of (rare) converts.  Tolerance in these countries means if you are born and raised Christian, Jewish or whatever you can stay that way, but no one is allowed to convert out of Islam.

It isn’t true of all countries.  Turkey is pretty good on the religious freedom score.  But  –  given the laws on their own statute books, freely chosen – any talk of religious toleration by the OIC is almost certain to be less than entirely honest.  And Winston Peters will be giving them cover by attending this meeting, just as he’ll probably be grist to Erdogan’s election campaign by turning up in Istanbul at all at a time like this.

Perhaps he will use the visit to make a strongly-worded call for an apology from Erdogan and for (too much of) the Islamic world to embrace genuine religious freedom –  the right to adopt or to leave a religion.  But I’m not holding my breath.

Looking at the regional GDP numbers

Under this government money from the Provincial Growth Fund has been being flung round like confetti (this was last week’s example), with very little sign of any rigorous evaluation.  It isn’t clear to me whether things are worse under this government than they were before (recall the 13 bridges Simon Bridges was promising in Northland as Minister of Transport, to try to win a by-election) or whether this lot are just “better”
at the branding.   “Regional development” –  with no disciplined sense of what actually shapes economic performance – has certainly been a cause dear to the heart of all recent governments (and their MBIE bureaucrats).

SNZ yesterday released the annual regional GDP numbers.   As ever, these  numbers aren’t perfect –  nominal not real, and prone to revisions for several years –  but they are lot better than nothing, which is what we had until almost 20 years ago.

The Provincial Growth Fund seems to have been particularly concentrating its confetti in Northland, Gisborne, and the West Coast.  The Northland and Gisborne regions are estimated to have the lowest average GDP per capita in New Zealand (at about 70 per cent of the national figure).  As it happens, the West Coast doesn’t do too badly, with average GDP per capita 84 per cent of the national average in the year to March 2018.  Manawatu-Wanganui and Hawke’s Bay round out the bottom five regions (with average GDP per capita less than that on the West Coast).

The regional GDP data have been available since the year to March 2000.  Over the period since then, three of those five regions have had faster growth in per capita GDP than the national average (and by very substantial margins in Northland and the West Coast).  All five have recorded faster growth than Auckland and Wellington.  And if one goes back to 2000, one of the poorest five regions then was the Bay of Plenty, but it has recorded such fast (per capita) growth since 2000 that it has overtaken not just Hawke’s Bay but also Tasman-Nelson.

The picture is a bit less positive if one takes just the last decade, but even over that period growth in per capita incomes is estimated to have been stronger in Hawke’s Bay and Gisborne than in the country as a whole.

As a matter of interest, I also had a look at the unemployment data.  The regional data from the HLFS arem’t reported for the same groupings as the regional GDP data, but here is one chart I constructed.

regional U rates

Even at its worst this decade, the gap between the two lines wasn’t as large as it was 20 years ago.  Last year, it was almost as low as it has ever been.  Involuntary unemployment is a blight on lives wherever it is found, but these particular regions don’t seem to have been doing too badly.

Meanwhile, any guesses as to which regions had the slowest growth in average GDP per capita over the entire period from 2000 to 2018?

Wellington was worst, followed by Auckland as second-worst.

akld wgtn shares

The two regions combined have recorded a material increase in their share of national population, and yet their share of total GDP is unchanged (actually down very marginally).

What about Auckland alone?  If the picture is less dramatic than for Wellington, Auckland matters much more, due to sheer size (and population growth, actual and projected) Here is the latest version of a chart I’ve shown in previous years.

akld gdp pc to 18

It certainly isn’t monotonic.  There are reasonably good phases (which look to coincide with building booms in Auckland) and really bad ones, but there is no sign of the longer-term trend reversing.   An even-greater share of the population is in Auckland, and average output per person in Auckland is growing more slowly than in most of the rest of the country.  In high-performing economies –  at least those relying on something other than really abundant mineral resources –  the picture is typically the other way round.  Big city GDP per capita is typically much higher than in the rest of the country, and in most cases that margin is widening.  But not in Auckland.

Any why is Auckland’s population growing so rapidly when its economic performance has been unimpressive (to say the least).  That’s down to immigration policy.  That isn’t really a debateable point: the data show that (net) New Zealanders have been moving away from Auckland.  This chart was taken from a Treasury working paper I wrote about last year.

tsy akld popn

Our large-scale non-citizen immigration policy –  with targets not exceeded in per capita terms in any other OECD country –  is a practical centrepiece of the economic strategy of successive New Zealand governments.   You don’t hear the phrase now, but it is only a few years ago that MBIE openly talked of the policy as a “critical economic enabler“.  With the best will in the world no doubt, “critical economic disabler” would be a fairer description of the role immigration has played for decades (probably going back all the way to the post World War Two period).  It isn’t the fault of the immigrants –  simply looking for the best for themselves and their families –  but of successive governments and their officials.  They are particularly culpable as the evidence has mounted that their strategy simply is not producing the desired economic results.

The story in Wellington is different of course, but probably no less telling.  Here, local government likes to talk up the idea of a city built on high tech industries.   Central government likes that talk, and also throws (lots of) money at the film industry.    The information in the regional GDP tables doesn’t give a full picture, but there is a line for the component of GDP labelled “Information, media and telecommunications and other services”.  Here is the share of that sector in Wellington’s GDP.

wgtn ICT

Even in Auckland, the share of that sector has been falling –  so there may be something structural around, say, the falling real price of telecommunications going on  –  but nothing like as steep as that fall in Wellington.

New Zealand does macro policy reasonably well –  fiscal policy and (for all my various criticisms at the margin) monetary policy – but our structural policies are set for failure, and in delivering continued underperformance, are doing just that.    The immigration policies pursued by successive governments simply take no account of either our experience (70 years of ongoing relative decline) or our most unpropitious location.   If –  as I noted yesterday –  this is a bad place for basing outward-oriented business (and revealed preference suggests that is so), it is a bad place for governments to engage in “population planning”, importing large numbers of people.  One of the fastest population growth rates in the OECD combined with one of the poorest economic performances should be telling anyone with ears to hear (not our politicians) something important.  The specific relative failure of Auckland just makes that message more stark.