The two coalition agreements (ACT and NZ First) and the ministerial list, that is.

First, the ministerial list with its 28 ministers and 2 under secretaries, in a Parliament that at standard size has only 120 MPs. Yes, it is one fewer undersecretary than Ardern had in 2017 (meeting the ambitions of three parties as well) but…..this was supposed to be the government of busting public sector bloat, not simply matching previous excess (Luxon was quoted yesterday defending his numbers by reference to Ardern). Supporters of the government will pop up on Twitter suggesting there is a big agenda and they may all be very able people, but……it is far from obvious why (for example) we need an undersecretary to the Minister for Media and Communications, the entire job of one NZ First appointee (this parallels a 2017 appointment when one Labour person had the entire job of being undersecretary to the Minister of Ethnic Communities, a portfolio itself barely a job in the first place). The reforming governments of 1984 and 1990 didn’t seem to need executives of 30 or 31 people to get their jobs done.

And then there are all the portfolios: 76 of them by my count (up by five, I think, from the previous government, and 68 in the first Ardern ministry). If I read the table on Wikipedia correctly, the 1984 governments had only about 45 portfolios. It seems to have become a cheap form of pandering (pure portfolio labels themselves don’t cost much, but over time portfolio labels probably tend to beget activities and expenditure) to almost conceivable sector and population group.

It is almost as if your existence isn’t validated until the government has created a ministerial portfolio that covers you. (It is not as if none of these portfolios has any useful substantive content but…..why do we need a minister “for” manufacturing, or “for” hunting and fishing” or “for” hospitality, let alone for something as basic and individual as “recreation? I’ll go further – taking for granting that the Racing portfolio is absurd – and suggest there is no need for a Minister for Tourism either, even if we have had one for more than a hundred years. And that is before starting on the plethora of population ministries, for not one of which one could really mount a serious case for (notwithstanding there may be bits and bobs of real needed stuff in places like Maori Development). None of it speaks of a government that is serious about shrinking the public sector and back-office bloat. The amounts involved of course aren’t individually large, but the pennies add up, and people look to actions at least as much as words.

What of the coalition agreements. The preambles made interesting reading (basically the same, but here I’ve used the ACT one) for what the parties wanted us to believe they were about.

I was struck by the two highlighted bits.  First, I wasn’t sure –  even though all parties talk it up –  why “social cohesion” was thought to be a good thing (seemed to be talked about eg by people wanting “hate speech” laws or the dodgy Disinformation Project people).  There are real and deep divides among people, and values differ very deeply –  I (for example) regard most of the parties of the further left as repugnant (on multiple grounds) and am not any keener on David Seymour’s moral vision.  Much of the country now, on the other hand, regards orthodox Christianity as repugnant (governments even legislating to outlaw some of it). We all have to rub along in some form or another living in a common space, but that is about it surely?  And second, that bit about being a “world economic and social leader”.   It was bit puzzling for two reasons: first, there is no way what is in these agreements is at all consistent with that stated ambition (and, to be fair, National in particular never suggested otherwise in the campaign) and second, when New Zealand was regarded as a “world economic and social leader” wasn’t that primarily under the pre-war Liberal governments that were relentlessly extending the role of the state?  As for “export powerhouse”, well I suppose it sounded good when they wrote it down.

For those who haven’t dug into the coalition agreement documents themselves you might not have seen mention of the “Ongoing Decision-Making Principles”. These are them

I take them with something of a pinch of salt, but I was pleased to “rigorous cost-benefit analysis” in there twice. Let us hope so. It would certainly make a change, and not just from the most recent previous government.

Consistent with the pinch of salt approach, there was a telling item in the ACT agreement. It starts “when evaluating government expenditure it should be assessed on the extent to which it is delivering public goods [here I’m going “tick”], social insurance [another “tick”, perhaps a little less enthusiastic], regulating market failure [“tick”, I suppose, although “being cognisant of government failure” would go nicely with that] and [………..wait for it] political choice”.

You have to wonder why they bothered. It was going quite well with that list, until the “and anything else we happen to want to spend money on at the time” was added. It is realistic I guess, but not exactly inspiring or even very aspirational.

The bigger question across all these documents (which incorporate, when not specifically excluded, the things in National’s 100 day plan, their 100 point economic plan, and their fiscal and tax plans (“plan” in some cases being a generous description)), is to what extent the new government’s programme mostly unwinds some of the bad stuff the previous government did and to what extent it genuinely sets a pathway to a much better future. Whatever you think of the state of things when National left office in 2017 – and at least there wasn’t a fiscal deficit – our average productivity performance was then as poor as ever, business investment lagged that in most OECD countries, and no real progress was being made towards abundant and easily affordable housing. And, for example, the Wellington City Council still wasn’t well-run and was still prioritising ideological vanity projects over basics (water, most notably).

There is a long list of stuff in the documents outlining the new government’s programme that I like. But it is long on things (small and large) undoing the last government’s agenda, most of which I put big ticks next to.

But it seems (and I’d like to believe I was misreading it, but I don’t think I am) short on making for a much better future relative to 2017.

Take the business side of things. National has long talked about encouraging foreign investment, but…..there was never much in their campaign, and the ill-conceived attempt to ease the foreign buyers housing ban proved stillborn. There seems to be a commitment to make it easier for overseas investors to engage in build-to-rent housing projects which sounds positive. But there isn’t much beyond that. The one item I spotted was this

which sounds as though it should be positive, but also seems quite limited. Presumably all the screening requirements and other current restrictions remain in place.

New Zealand has one of the highest company tax rates in the OECD, and not only is there nothing in the agreements to lower that rate – which bears most on foreign investors – but they are proceeding with the same distortionary policy Labour also proposed to remove tax-depreciation provisions for buildings (offices, factories etc). It is a step in the wrong direction.

There are some positives, including provisions around consenting for renewable energy projects and infrastructure projects, ending the oil and gas ban, encouraging minerals development and exploration, and to the extent that they are followed through on and work a focus on better schooling should produce some economic payoffs a decade or more hence (which isn’t a criticism just a reality). I’m all for school choice, but it is mostly about choice (good in its own right), and it isn’t yet clear how far the parties will be willing to go. The talk of a new RMA sounds good on paper, but with minimal detail, and huge uncertainty about specifics and then how courts might interpret things, who really knows how much it will amount to.

Could the new Ministry of Regulation end up being a positive? Quite possibly (although we once hoped for that from the Productivity Commission), but conducting reviews – worthy as they may be – is different from getting a three-party Cabinet to agree on substantial material regulatory and legislative changes, and National in particular did not campaign for a mandate of major change. And it isn’t clear either that the parties have a clear idea as to what it would take to once-again be a world-matching economic performer, or that they are going to supported by an officialdom with the intellectual leadership etc to produce top-quality advice equal to the challenges.

As for housing, the parties have committed to keep in place the outgoing government’s “highly productive” land restrictions, which functionally have the effect of making it harder to get the sort of competition in land around cities that really could drive down house prices. On the positive side, “automatic approval for appropriately certified building materials from the US, Europe, the UK, and Australia”.

Some are lamenting the agreement to make the Medium Density Residential Standards voluntary. I’m not – as on their own they were never going to materially contribute to lowering house prices, and represented something of a central government overreach that never dealt at all with real externalities, even if some of those involved had good intentions (others – like too many councils – just had a vision of urban form they wanted to impose). I am sorry that the government did not pick up the idea of allowing easy localised (ie own group of properties only) opt-outs from the new rules, and is not doing anything about a presumptive right to build. Overall, in combination, and in combination with an immigration policy which seems to be even more “big NZ” than late Labour, it is a recipe for house prices in New Zealand to continue to be ruinously unaffordable for huge proportions of the population.

Oh, and National’s (very weak) NZS policy has been kicked for touch, so that there is not even a pretence of beginning to face the fiscal implications of the continually ageing population and growing life expectancy (themselves both good things), all of which might seem a trifle less bad if we were starting with fiscal surplus and very low debt, rather than with big fiscal deficits and debt levels rapidly converging on OECD medians.

Time will tell. But for now I’m not much more optimistic than I was before the election. There is a reasonably encouraging list of things to unwind (although many more things could have been added), but having done the unwinds little in the agreements suggests any sort of full-throated seriousness about actually reversing decades of economic failure or the scandal that is house prices in land-abundant New Zealand. I doubt we will even hear again that stuff about once again being a world economic leader: with such an unambitious forward agenda, and weak policy capability, the gap between rhetoric and reality would quickly just be too sad, inviting head-shaking and some derision.