This dropped into my email inbox today from Statistics New Zealand (full release here)

The gender pay gap was 9.2 percent in the June 2018 quarter, Stats NZ said today.

This is the second-smallest gap since the series began 20 years ago. In comparison, the gender pay gap was 9.1 percent in 2012 (the lowest on record) and 9.4 percent last year.

The gender pay gap shows the difference in median hourly earnings for men and women. For the second year in a row, the gap reflected that median hourly earnings for women, from wages and salaries, increased faster than for men, up 3.2 and 2.9 percent, respectively.

“The gender pay gap is a useful measure when trying to understand differences in pay between men and women, due to its simplicity. But this measure is limited. It doesn’t account for men and women doing different jobs or working different hours. It also doesn’t account for personal characteristics that can influence pay, such as qualifications and age,” Mr Broughton said.

In other words, it is almost certainly of very little use at all.

There does seem to be an increasing trend for our supposedly independent statistics agency to be working in league with government departments championing particular causes.  This seems to be another example.  Thus on the SNZ email we read this advert

Renee Graham, Chief Executive of the Ministry for Women, discusses the gender pay on YouTube from 11am.

It is to be expected that the Ministry for Women will have a view on such data, and causes to champion.  But what is Statistics New Zealand doing promoting the views of an advocacy agency?  Doesn’t it risk compromising confidence in SNZ’s statistics?  No doubt the Governor of the Reserve Bank has a view on the CPI numbers, or indeed the GDP or employment numbers, but it would be a worry if SNZ were using their platforms to promote the Governor’s efforts to spin things his way.

But as it is, surely the chart above points to something quite important.  There is next to no difference in the average hourly wages of men and women in the under 24 age group, and even the gap in the 25-29 age group is probably barely statistically significant (look at how much the measured gaps in individual age categories can jump around from year to year). Not much sign of the much-vaunted conscious or unconscious discrimination.  It seems quite likely that the subsequent gaps mostly reflect (the lagged effect of) intra-family choices about childcare etc, which have no obvious policy implications.  In such a context neither a widening nor a narrowing of the gap is something to be welcomed; it just is.

But I guess that wouldn’t fit the desired political and bureaucratic narrative.

There was a British visitor in town yesterday, apparently hosted by the New Zealand Initiative (I might write about his public lecture tomorrow or Monday).  I got the impression he was probably a Blairite – very keen on free trade, free investment flows, and open borders for people too, but also keen on lots of government intervention to deal with what he saw as domestic problems.

The visitor seemed to be a fan of New Zealand (or perhaps particularly of the 4th Labour government –  in his 20s, he’d worked for Mike Moore at the WTO).  We were, he claimed, in some respect the “birthplace of globalisation” –  which would have been news to anyone involved in policymaking at the time.   He told his audience this curious story, bearing some – but not that much – resemblance to reality about how dreadful New Zealand had been in the early 1980s (and we can all agree that assembling TV sets here was insane) and how New Zealand had “flourished” since then.  I don’t suppose he had ever actually had a look at any data, and seen for example that foreign trade (share of GDP) is barely higher than it was back then, that the income and productivity gaps to the rest of the world are larger now than they were then, or contemplated the affordability of a first home.

But one thing you could do in the bad old days – whether Kirk/Rowling or Muldoon –  was go to a shop and expect that your groceries – for example –  would be packed in a bag provided by the shop.  Not just groceries: bookshops, clothes shops, knick-knack shops or whatever.  Those who didn’t want a bag –  perhaps for a single item –  didn’t need to take one.     Perhaps back then the bags were more often paper bags, but we now know that paper bags are not only typically more expensive but more energy-intensive than a simple plastic shopping bag.  And often harder to re-use  (things often don’t store so well in paper bags, and they aren’t very tolerant of liquids).

But, assuming the Prime Minister and her Green Party associates have their way, that simple freedom is soon for the chop.   I’ve just come back from the supermarket, having done perhaps two-thirds of the weekly shopping for a family of five.    There were 15 bags of groceries, and 16 bags with various different lots of fresh produce.  Presumably these all count as the dreaded “single-use” plastic bags, although many will be re-used.   And, of course, when I got all the groceries home and arrayed them on the bench in the kitchen, I noticed that all the “single-use” plastic bags (actually often re-usable) would squash down to a rather smaller pile than the plastic in a single three litre bottle of milk (there were several of them).  I have no use at all for empty plastic milk bottles, or containers of shampoo, or dishwasher powder.  And yet our government proposes to outlaw the simple lightweight useful little plastic bags.

But perhaps the most important thing about the plastic bags I brought home is that when I’ve finished with them (used or re-used) they will all go in the rubbish.  None will go drifting down the street, blowing across the beach or whatever. Like most responsible people, I put my rubbish in the bin, whether at home or out.   Perhaps the Prime Minister doesn’t?  Perhaps James Shaw and Marama Davidson don’t.  Perhaps they can’t trust themselves to bring up their kids not to litter?  But what right do you think you have Prime Minister – in an ostensibly free society – to tell shops what sorts of bags they can and can’t provide (give or charge for) customers?

I can quite see the case for litter laws.   And this is, from the listening to the rhetoric,  a littering issue –  at least when it isn’t just about virtue-signalling, feeling-good and virtuous, and enjoying taking away some freedom to show we hold power.

So why not tighten the litter laws?  Fines tend to lag well behind growth in incomes and prices.  Surely it is an obvious response, that deals with the free-rider issues and associated externalities (unsightliness and visual pollution).  I’m loathe to suggest more worthiness for schools to teach, but perhaps if Labour and Greens voting parents really can’t be trusted to raise their kids not to litter, schools could add that to the daily indoctrination?

There is a consultation document available on the Ministry for the Environment website.  I haven’t read it yet, so I’m not sure quite what the limits to this authoritarianism are: is the Prime Minister also proposing to ban (for example) single-use rubbish bags, or selling salads or rolls or supermarket cooked chickens in plastic wrap/bags?   But I did electronically search the document on the off-chance that it contained any serious economic analysis, let alone a decent cost-benefit analysis.  There was no sign of either.   Which probably shouldn’t be surprising –  par for the course with, for example, the climate change consultation, let alone the (unconsulted) oil and gas exploration decision. I guess it doesn’t matter.  If it feels good they’ll do it.

It is strange to think that Jacinda Ardern and James Shaw could soon have one hankering for some simple freedoms of the Kirk/Muldoon years.

As a mark of how sold-out the public service apparently now is to the wishes and feelings of the government of the day, there is also on the MfE website a cutesy little questionnaire –  of the sort I’ve seen a few times now on various agency websites. Here was MfE’s

Totally loaded one way, and no room at all for my answer: I’d change shops at present to avoid those which don’t provide packaging.  The local supermarket tried out a plastic-bag free Friday last year.  It didn’t last that long, but while it did I actively avoided the place on Fridays.

And all because the PM and her followers can’t pick up their rubbish, and won’t punish more heavily the transgressors who litter.  Or because they simply have no respect for the simple freedoms of buyers and sellers, whose choices hurt no one else.

I wanted to touch on three largely-unrelated points, two on the controversy, and one of what Don Brash was apparently going to say in his speech:

First, very briefly, much of the story has been written in terms of Massey’s Vice-Chancellor denying Don Brash the right to speak on campus.   As far as I can see, Don Brash doesn’t have any particular “right” to speak on campus, any more than you (assuming “you” aren’t a Massey student) or I do.  In that sense, the issue shouldn’t be about Don Brash –  although that is what Professor Thomas tried to make it about –  but about a Massey student society’s own freedom; the freedom to invite anyone they wish (operating within the law) to speak on campus.  That should probably be where the focus is, including  adding the question of whether Professor Thomas thinks she should also have the right to ban altogether student groups that might happen to hold views she strongly disagrees with. After all, such groups might be fora for such dangerous ideas to be uttered, not just once (probabilistically –  see the VC’s “fear” that Don Brash would utter such views) but day after day, week after week.   Both would be chilling, and especially so in a public (state-established, largely state-funded,  and with several members of the council appointed by the government) university.   Has she stopped, even momentarily, to reflect on the implications of her stance?  She’d have had no problem with anti-Vietnam War speakers –  even eminent sceptics – being banned in the 1960s?  Or perhaps speakers favouring legalisation of homosexuality in the 1970s?  And so on.  It always pays to try to look at these things the other way round, unless of course Professor Thomas’s view is “who care’s about inconsistency, I hold the commanding heights now”.    A fine standard for a university that would be.    As it is, neither Professor Thomas –  nor her Council –  will explain themselves.

Second, someone asked me last night why I made so much in my post of the fact that Professor Thomas had only been in New Zealand for 18 months or so.   Her general stance –  banning the Brash speech at the merest whisper of the threat of a few protestors, and banning it because she regarded Dr Brash’s view on some live public issues as unacceptable –  would be reprehensible from any Vice-Chancellor.

And, sadly, this stuff happens elsewhere.  La Trobe University in Melbourne last week initially tried to ban a speaker –  social commentator Bettina Arndt –  they didn’t like, then partially backed away trying to charge the organisers hefty security costs, only now to finally back down completely and adopt the only stance consistent with the values of a free and open society

But university administrators yesterday told The Australian they had decided the university would cover the cost of security, out of a desire to preserve free speech and discussion on campus. “We welcome free speech and the event will go ahead,” a spokesman said.

But if Professor Thomas banning the student society from having Dr Brash to speak would have been reprehensible at the best of times, whatever the issue, I found it more than usually unacceptable when the views Professor Thomas disapproves of so strongly are those relating to the Treaty of Waitangi, Maori wards, etc etc.    These are very specific New Zealand issues, and despite her repeated attempts to wrap herself in the Treaty of Waitangi (all that talk of being a Treaty-led organisation, whatever that means) and it ill behoves newly arrived foreigners to attempt to decree what aspects of these issues should be able to be freely discussed (hint: in a free society, any of them).  It all has the feel of a social justice warrior, rather out of her depth in a new country, having allowed herself to be captured by a particular minority.  It would be unacceptable in any public university Vice-Chancellor, but should be doubly so in one with little familiarity with the underlying issues –  and, frankly, no obvious personal interest or commitment to the future of New Zealand democracy or society.

My third point was really totally unrelated to yesterday controversy itself.  But the Herald has on its website the speaking notes Dr Brash was planning to use for his talk to Massey students about his life in politics etc.  I was struck by his final comments, particularly those on a couple of economic issues and how they have been treated under the previous government, and how things might unfold under this government.

Of the previous National government

A hugely disappointing Government:

I. They pledged to reduce the gap between NZ incomes and those in Australia, and utterly failed;

II. They pledged to make housing more affordable, and utterly failed

Hard to disagree with him on either of those.  Productivity gaps between New Zealand and Australia widened over the last 9 years, and as for housing, it became ever more unaffordable in large chunks of the country.

And here is what Dr Brash –  former leader of both National and ACT – has to say about prospects under the current Labour-led government

In my own view, the present Government is likely to do a better job in making housing more affordable, but probably a worse job in closing the income gap with Australia

I’m pretty sure he will prove right about the income and productivity gaps with Australia –  it is the sort of story I’ve been telling myself –  although bear in mind the likelihood of a change of government in Australia next year.

But what of housing?  It would be great if Dr Brash’s positive story were true, and would be quite an indictment on the previous National government.  But is he right?

I’ve been sceptical for some time, for two main reasons:

• first, any Labour-led government was going to be dependent on the Greens, who had never shown any signs of fixing the urban land market in ways that would open competition and lower land prices. “Sprawl” is, after all, one of the things they seem to detest, and
• second, whether in the year or two before the election or subsequently, there has been no mention of freeing up the land market from party leaders (Little or Ardern in Opposition, Ardern as Prime Minister –  although it was there if you went looking in the details of the housing policy), and lots of talk of policy responses since which, at best, only tackle symptoms.  There is lots of talk of Kiwibuild –  which, at its best, would do nothing about the land market.  There was –  and is –  no sign that the Labour leadership really believed what most serious analysts will be telling them is the only long-term fix.  If you don’t really believe it strongly, are never heard to openly make the case for it, it seems unlikely that you will be willing to push such reform through your own caucus, let alone get in through the Greens caucus.

In the last week or so I’ve seen a couple of bits of data which still leave me unclear about whether Labour will, finally, make much of difference in fixing the decades of dysfunction.

Whatever doubts many have about the Housing minister, Phil Twyford, it has always seemed as though he genuinely got the sort of reforms that might be needed.  The free-market people at the New Zealand Initiative certainly thought so a year or two back when they teamed up for a joint op-ed.

Consistent with that interpretation were some reported comments Phil Twyford had made recently in a vigorous debate with Environmental Defence Society CEO Gary Taylor.  I saw a copy of these yesterday, I gather taken from a longer article at politik.co.nz (for those with access)

Twyford replied that it was a question of values. 

“This is for us, for Labour, for our coalition government, this is fundamentally a social justice issue. 

“Our objective is not to build a Copenhagen of the South Pacific. 

“We could build a beautiful city with a whole lot of the policies we have talked about. 

“We could build a Vancouver of the South Pacific; beautiful but utterly unaffordable. 

“I’m interested in us fixing this totally dysfunctional urban land economy.

 “If we don’t deal with affordability we will have completely wasted the opportunity that has been given to our generation.”  

Twyford said the only way to deal with the affordability issue was to deal with the land price issue and that meant dealing with the artificial scarcity of land caused by the planning system and the availability of finance for infrastructure.

My spirits lifted when I read that. I imagine it was the sort of thing Dr Brash has in mind when he talks about a degree of optimism that Labour might change things for the better.

But then there was the Cabinet paper pro-actively released last week on the government’s “Urban Growth Agenda”.   It was really only a progress report, with full papers to come back to Cabinet next year.  And there was some good –  if highly politically contentious –  stuff around congestion charging.  Near the top of the list of recommendations (all only noting ones) were these positives

note that the high cost and shortage of housing is partly due to deep seated problems with the operation of our urban land markets and how infrastructure is planned, funded, and financed.

note the Urban Growth Agenda will deliver medium to long-term changes to create the conditions for the market to respond to growth, bring down the high cost of urban land to improve housing affordability and support thriving communities.

But then, towards the end of the paper there were paragraphs 32 to 35, which some experts (in email chains I’ve been on) have seen as undermining any hope of a seriously different and better vision of how land markets might work.

How we could see growth occurring in practice
32. Growth enabled through the UGA would likely take a phased and sequenced approach targeting growth within existing urban centres before greenfield development.

33. For example, in Auckland we will firstly emphasise urban intensification and regeneration projects in existing areas, particularly along transport corridors and urban centres. Development in already planned greenfield areas would take place alongside this.

34. Our attention will then focus on new transit-oriented development occurring within existing nodes [a few words redacted at this point] . Development opportunities will be identified collaboratively with local government and other stakeholders.

35. Finally, new leap-frog greenfield development would be enabled beyond the current Future Urban Zone with a priority towards the South of Auckland. This step would be subject to new spatial planning and cost allocation tools to mitigate risks and ensure an efficient urban growth pattern occurs. The majority of this growth would be within Auckland’s existing administrative boundary.

All of which sounds a great deal like central and local government planners trying to keep control, determine where growth does and doesn’t happen, with little real sense of the possibilities that genuine competition (among potential developers and landowners) would open up.  In the entire Cabinet paper, there is no suggestion that we might move to a model in which landowners had a presumptive right to build.

I’m left still fondly hoping that Don Brash’s favourable judgement on the new government, in this particular area, will prove well-warranted, but also still more than a little sceptical.  Nothing like a crunch decision seems to have been faced yet, nothing that would really tell us whether the government will radically transform the market  –  and it really is a social justice issue, as Phil Twyford described it.   But there is one other test: the market test.  If landowners, actual and prospective, really believed that the government was serious, that it was going to implement the sort of vision Phil Twyford talked about so eloquently, land prices on the peripheries of our cities would be falling, and falling rather substantially (just as taxi badge prices in regulated cities abroad as competition finally opened up that previously-overregulated market). I’m not aware of any evidence of such falls, but if readers are please get in touch and I’d be happy to report such an encouraging development.

In many ways, it isn’t surprising that Massey University’s Vice-Chancellor has barred Don Brash from speaking on campus at an event organised by Massey students.   So-called “no-platforming”, in response to pressure of mobs –  often threatening disorder if a speaking engagement were to proceed – has become rather too common in the United States and in the UK.  It was only a matter of time until this practice arrived here, and perhaps almost a matter of chance which speaker/group would be the first victim.  As it happened the lot falls to a 77 year old former corporate chief executive, former Governor of the Reserve Bank, former MP and leader of the National Party invited, by a student politics group, to talk about his time as leader of the National Party (the party that has led governments in the country for 47 of the last 70 years).

And what offence has this lifelong New Zealander given to Massey’s Vice-Chancellor, an Australian who has lived in New Zealand for all of 18 months?  She tells us that her concern is

Mr Brash’s leadership of Hobson’s Pledge and views he and its supporters espoused in relation to Māori wards on councils

This is the group whose website outlines a vision

Our vision for New Zealand is a society in which all citizens have the same rights, irrespective of when we or our ancestors arrived. 

It might not be your vision, I’m somewhat ambivalent about it myself, but it clearly isn’t Professor Thomas’s view of the country.  Which probably shouldn’t really matter greatly because (a) she isn’t a citizen herself, and (b) because the nature of politics in a democratic country is about conflicting views, not just about means but also about ends.

But Professor Thomas appears to regard such views –  and opposition to Maori wards on local councils (which have been defeated in most/all places where a referendum has been held on them) –  as simply illegitimate, and having no place in New Zealand, let alone on the campus of Massey University, an organisation founded and substantially funded by the New Zealand government and taxpayers.  She was terrified that Dr Brash might make some negative comment about Maori wards on campus

Whether those views would have been repeated to students in the context of a discussion about the National Party may seem unlikely, but I have no way of knowing.

And presumably no one at the university she manages could cope with knowing that somewhere on campus, an elderly former politician was expressing a view they might disagree with –  a view which, on this particular occasion, appears to be held by a fairly large chunk of the population.

In a startling display of casual inaccuracy (one hopes not deliberate) Professor Thomas is also upset that Dr Brash was part of the Free Speech Coalition, that supported the right to be heard (in public premises), of two controversial recent Canadian visitors.  She claims

Dr Brash was also a supporter of right-wing Canadian speakers Lauren Southern and Stefan Molyneux, who were due to address a public meeting in Auckland.

Had she done any research at all, she would know that Dr Brash had indicated publicly that he had little or no knowledge of the views Southern and Molyneux had espoused but –  like left-wing activist Chris Trotter for example –  did not approve of public facilities being denied to people who wanted to use them to hear from visiting speakers, however much their views might be controversial or provocative. (Disclosure: I am part of the Free Speech Coalition myself, and as I noted in my earlier post on this issue, had never heard of either Southern or Molyneux until the Auckland Council banned use of its facilities, the mayor boasting –  inaccurately – that he had done so.)

For a private university to have banned such a meeting, and a speaker such as Dr Brash, would have been unwise and generally inconsistent with the sort of ethos universities generally sought to represent (contest of ideas etc).  But, being private institutions, they’d be quite free to make that choice.

But Massey is different: it is a public institution (establishment, funding, appointments to the council).  And if the (foreign) Vice-Chancellor of a public university thinks Dr Brash  –  who has given decades of public service to this country – shouldn’t be allowed to speak on campus, when invited by students (what, one wonders, would she do if one of the professors invited him to speak to a class?), you have to wonder who –  and which views –  are next in the line for a ban.  Dr Brash is prominent enough –  even if not always liked –  that there will be an outcry against his ban, while this sort of insidious censorship can be applied more broadly to less prominent people.

Professor Thomas really should be called into line, by her own Council (her employers), by the Minister of Education (funding agency), the Prime Minister (if she is at all serious about her claims to support free speech –  to her credit, I see she has come out a little critical of Professor Thomas).  But where, one might wonder, is the Leader of Opposition on this?  It is a pretty sorry picture if the leader of the National Party won’t forthrightly defend the right of students at Massey to hear from one of his predecessors about his own time as National Party leader.   Does he believe in free and open debate, notably at our universities, or doesn’t he?

As it happens, Professor Thomas had conveniently laid out her perspective on free speech a few weeks ago when the Southern/Molyneux debate was raging (and no one was talking about university facilities). In a lengthy Herald op-ed she sought to build her argument around the concept of “hate speech” –  a concept that, fortunately, still has no place in New Zealand law.  Even Professor Thomas can sound reasonable at times

Beyond the reach of the law, however, the battle against hate speech is fought most effectively through education and courageous leadership, rather than through suppression or legal censure.

And this is where universities can take positive action by providing a venue for reasoned discussion and cogent argument.

Which you might have thought could include a lecture to a student politics society by the former Leader of the Opposition, former Governor of the Reserve Bank?  But apparently not.

Perhaps she justifies her stance this way

Given the current dominance of wall-to-wall social media and the echo chambers of fake news, universities are in many ways obliged to make positive societal interventions.

But one can’t help suspecting that in this case she means “we need to put a stop to the expression of any views we disagree with”.   That certainly seems to be the practical import in the current case, and rather at odds with her very next sentence.

Universities support our staff and students to push boundaries, test the evidence that is put to them and challenge societal norms, including examining controversial and unpopular ideas.

Ah, perhaps it is only societal norms that (recent arrival) Professor Thomas disapproves of that should be challenged?  Certainly, from her op-ed and her statement today, she seems to think no space at all should be given to any debate around how, or how best, to think about the Treaty of Waitangi and its place in modern New Zealand.  Which would be outrageous coming from any university CEO, but perhaps all the more so from one fresh off the plane.

In her statement on the Brash case, Professor Thomas made passing reference to security concerns –  even though it is equally apparent from her statement that she was just looking for an excuse to ban the meeting (having put her prejudice against Don Brash on display in that earlier op-ed.    Her approach isn’t that of the courageous leader defending freedom and debate, but rather of aligning herself with the mob to veto the ability of student groups to invite speakers (ones uttering controversial views) to campus.  That sort of mobocracy, if allowed sway, would be the very antithesis of democracy as we’ve come to practice it in countries like ours (even Professor Thomas’s Australia) in the last couple of centuries.  Thugs and bullies rule, at the expense of those who respect the ability of decent people to disagree.   Thugs and bullies can come from either side of the political spectrum.  These days, in New Zealand (and other Anglo countries) they are almost all from the far-left.

(Much as I support what should be the freedom of the Massey student group to invite whoever they wish to have to speak to them (supported if necessary by the Police to keep law and order, and allow law-abiding citizens to go about their business), I increasingly wonder at the prospects for such a world.  Process liberalism –  you do your thing, I do mine, and we leave each other alone –  is very slender reed around which to organise any society, and I rather doubt it can hold: perhaps it will prove to have been just a very brief historical interlude as society moved from one set of largely shared beliefs to another.   Human societies seem to need more than just process rules to hold them together, and that process tends to involve the marginalisation or exclusion or forced suppression of minority views.  Since most of my own more important views these days are distinctly minority ones in modern New Zealand, I hope it isn’t true, but I suspect it is.  If so, of course, in New Zealand issues around the Treaty and Maori/non-Maori perspectives could prove a very nasty and dangerous fault line.)

NB  As I imagine all regular readers will know, Dr Brash was my boss in years past, and these days I count him as a friend.

UPDATE: So the most Chris Hipkins can say is that it isn’t the decision he would have made and the most the Prime Minister can do is call it an “over-reaction”.  In context, they are little more than weasel words, washing their own hands of owning responsibility, without full-throatedly condemning Professor Thomas and calling on her to reverse her decision.  Simon Bridges has described the ban as a disgrace.

There seemed something strangely apt about the power going out on a lecture about the current Treasury/government craze for “wellbeing”

(Having said which, I expected the lecture itself would be interesting and stimulating –  Arthur usually is even when, as often, I disagree with him.  I hope it is rescheduled.)

Out of the blue the other day, I received a copy of a new book by Simon Burnett, a New Zealand journalist resident in Germany, about an episode in recent New Zealand financial history that I’d almost entirely forgotten.

Blunder: How ANZ and ING squandered 800 million dollars in a Wall Street casino—and ignited a revolt of small-time investors

As the blurb puts it

Between 2003 and early 2008, fifteen thousand financially illiterate people in New Zealand were persuaded to invest their savings in packages of hyper-speculative securities. They were told that these were safe alternatives to bank deposits. The investments crashed. The shell-shocked investors, mostly elderly and risk-averse and in no position to recover from financial disaster, banded together, formed a national committee, set up regional groups, took the battle on to the streets, and won.
The securities, known as CDOs, were packed into two mutual funds (or unit trusts) managed by the New Zealand arm of the Dutch financial giant, ING. Its joint-venture partner and half owner, the Australia and New Zealand Banking Group (ANZ), was a major sales agent. When the CDOs tanked and the funds tanked with them, the ANZ and ING began a desperate cover up, blaming unforeseen circumstances. This was baloney and the investors knew it.

and

This is the story of the biggest, most sustained, investor revolt in New Zealand history, told not by a financial expert but by one of the ANZ/ING investors who himself took part in demonstrations. The author unravels the financial complexities that neither the ANZ nor ING apparently were aware of.
The scandal was regional, but the lesson is universal: it illustrates just what can happen when financial institutions do not check what they are investing in and pass on the risks to unsuspecting customers.
Financial commentator and economist Gareth Morgan wrote that, “For anyone investing their savings with the financial sector in New Zealand—especially with some of the biggest brands in the business—I commend this book to you as a good background on what you can expect if you do not do your homework.”

I haven’t read the book, but hope to.  Too few of the episodes in our economic and financial history are well-documented, and if this book makes some contribution to such a literature I welcome it.

Gareth Morgan has written the preface to the book.  There are plenty of things I disagree with Gareth about, notably financial regulation.  But he has been around, and his willingness to write the preface suggests there is something to the book, as a story, even if you don’t go as far as he does on policy.  Here is some of Gareth’s view.

And in New Zealand there is a sequel. In a flurry of belated regulatory responses to events here—not just the ANZ/ING debacle, but also the mass destruction through the finance company sector—a licensing regime is being brought down on financial advisers and a rewrite of the Securities Act is being attempted in order to rein in the malfeasance.
But industry’s capture of the regulator is so complete that the financial adviser
regulations are little more than window dressing. Not one of the offences committed by this sector during the GFC would have been prevented under the licensing requirements that are being implemented —indeed the worst offenders have been exempted most of the qualifying requirements the Code Committee for Financial Advisers has implemented.

There are no grounds whatsoever for the public to increase its confidence in this sector, no chance the new regulations will ensure it has a duty of care to it, and the book “Blunder II” will be required in a few years to outline why the malpractice has continued.

And were the FMA to ever investigate such an episode, we were reminded again this week that they can arbitrarily slap suppression orders on, stopping people talking about thet directly affects them and their customers –  even stop them talking to parliamentary committees.

I’m pretty ambivalent on Nicky Hager too, but here is some of his endorsement

“This is why Simon Burnett has done a great service in writing this book: explaining an important New Zealand story as part of the world-wide crisis, distilling the lessons and holding ING, ANZ and their senior staff to account. He has done a huge amount of work to piece the story together and to make it into an interesting, readable book. It is also pleasing that he tells the story of the ordinary investors who complained and fought and protested, in the face of misleading information and resistance from the respectable sounding companies involved, until they found out the truth and got some justice. The book is a fine piece of investigative journalism.”

The book looks to be well-documented, and from the bits I dipped into seems to read easily enough. I suspect I would probably part company from the author on any policy implications, but probably not on the ethics of what went on.

UPDATE: In a comment below the author notes:

At the moment, the book is exclusively on Amazon as an eBook. A paperback is scheduled for the end of August. Anyone who wants to can get a PDF copy from me free. Just email me at frozenfunds08@googlemail.com.

My post the other day, about the Treasury paper on “Women in economics”, was mostly about the apparent waste of (probably quite expensive) staff resources –  diverted from the real and substantive economic challenges Treasury should be addressing.  It seemed to be about virtue-signalling and feel-goodism more than focused analysis, made all the worse because the authors weren’t new graduates repeating an honours project (sometimes the basis for NZAE papers by young economists); indeed one of the authors is the chief economist of The Treasury, a deputy secretary no less.  Of course, that paper in itself was just a small example of what has gone wrong at The Treasury under its current leadership (facilitated by both the past and present government).  The Living Standards Framework, and the coming Wellbeing Budget, are the more prominent examples: a “well-meaning wafflefest” is the best that is likely to be said for that.   The quote is from Pattrick Smellie’s column today –  he seems slightly more optimistic than I am, noting the “intellectual grunt of The Treasury” (perhaps his memories of his time as Roger Douglas’s press secretary in the days when Treasury had intellectual grunt –  agree with them or not), but clearly a bit uneasy that it might all come to nothing much.

As I noted in comments to the previous post, I spent a couple of years working at The Treasury, and although it was getting on for a decade ago now, one of the things that struck me then –  recall, I was coming from the Reserve Bank – was the much higher proportion of women in economics, policy, and core management roles.  Frankly, I found it refreshing, and it was the only time in my working life when I sometimes went to economics/policy meetings at which there were more women than men.  I was struck then by the openness of The Treasury to part-time work, and to job-sharing arrangements, which seemed to make the place more attractive to women, especially those with young children (including several who had moved from the Reserve Bank to The Treasury).  The situation is also self-reinforcing –  when some (future) parents see flexible arrangements in an institution genuinely working for other people, it gives them more confidence it can work for them.  My own children were very young at the time, and my wife was considering going back to work, so they were issues that I paid attention to.

Perhaps it has all gone downhill again, even in these areas, in the last few years.  But I doubt it.   Which is partly why I struggle to take seriously Gabs Makhlouf, Tim Ng, and the rest of them whipping themselves about not meeting self-imposed quotas –  or indeed giving more attention to such issues, including in their Annual Report, than to lifting analytical excellence and the quality of their policy advice.   It just isn’t clear that they are addressing a real problem in The Treasury –  perhaps exemplified by them discovering that the institution had been using a tool that would have discouraged the use of words like “analysis” in job adverts, because they were somehow male-dominated words.

By contrast, I think there probably is a real situation that needs addressing at the Reserve Bank.  Here is how I described my assessment of the situation at the Bank in a comment on a post a few months ago

I agree that sex is not, and should not be, a relevant criterion in the selection of a Governor. But I also recognise that in a powerful public sector institution, with a high public profile and pervasive impact, in this era it isn’t necessarily inappropriate that questions should be asked to understand why, after 84 years there has never been a women appointed to a policy or operational senior management position (Governors, or heads of economics, financial markets, macrofinanancial stability, prudential regulation, or even notes and coins). For years, I defended those outcomes as mostly reflecting preferences (far more men end up doing macro and finance – and far more women do health and social economics etc), and I still think there is something to that story, but I’m no longer convinced it is enough of an explanation – substantively or politically. After all, Janet Yellen has just stepped down, and the RBA has two pretty impressive female Assistant Governors.

A commenter on my Treasury post drew my attention to an article from a couple of months ago, quoting the new Governor, that I hadn’t seen.   In it, Adrian Orr says

“I’m disappointed that it is as imbalanced as it is. We will be working actively. We are just going to have to be far more aggressive at getting the gender balance balanced,” Orr said in a recent interview with BusinessDesk.

Consistent with my comments in that quote just above

At the Reserve Bank, 36 percent of its 252 staff were women, although that dropped down to 20 percent of management roles – including managers and team leaders and senior positions of influence – and 26.2 percent of senior specialist roles. The Reserve Bank’s website shows just two of 13 senior managers are women: chief information officer Klarissa Plimmer and human resources head Lindsay Jenkin.

To its credit, the Bank is now being a bit more open with some of the data

In the year to June 30, 2017, the bank tried to hire six mid and senior management positions, attracting 101 external applicants, of which 19 were women. Of the four external hires, only one was female.

In particular, the data around applications for the position of Governor.    They initially refused to release this data, only relenting after the (surprisingly quick) intervention of the Ombudsman.

In the same vein, the hiring process that appointed Orr attracted 48 applicants, of which just six were women. Only two of those women made the final short list of 25.

But in a sense, the data on applicants for the position of Governor highlight that whatever is going on, isn’t a simple and straightforward story about (eg) institutional bias.

After all, anyone is free to apply, and in applying to be Governor you are backing yourself to be able to make a difference, including if you had heard that the Bank wasn’t (say) very welcoming to capable women.

And who got to make the decisions?  Well, the Minister of Finance was the final decisionmaker, and even he had to take the nomination to Cabinet (chaired by a woman).  But the real decision on the appointment of the Governor was made by the Reserve Bank’s Board.   And at the time, late last year, of the six Board members, three were women (including the deputy chair).  I only know one of the three, but none looks like the sort of person who would be pushed around by anyone, let alone consciously or unconsciously biased against female candidates.

Successful organisations mostly end up promoting from within.  It is a mark of the Reserve Bank’s failure as an organisation that 1982 was the last time an internal candidate was appointed as Governor and, perhaps even more so, that currently three of the four most senior positions (including Governor and Deputy Governor) are held by outsiders.  The failure of the Reserve Bank to have women in senior core functional positions (top advisers or senior managers) is, to a substantial extent, a failure of history, the failure to develop and maintain a culture and working arrangements that made it attractive for the very many female economics (and related) graduates the Bank has recruited over the years to stay.  Of course, most of all the graduates the Bank hires go on to do other things, but not one of the many female hires has stayed. I look around Wellington and see various women who once worked for the Bank in economics roles now holding relatively senior positions in other agencies.

The Bank itself has made this point.

The Reserve Bank admitted as much during a Parliamentary review of its 2017 annual report in February, with then acting governor Grant Spencer saying the bank hired a lot of women graduates, but struggled to retain women in senior and management roles

It is the single biggest difference between the Reserve Bank of New Zealand and the Reserve Bank of Australia: both of the two (impressive) female RBA Assistant Governors (in core areas –  economics and financial system) have spent the bulk of their careers at the RBA.  There has been nothing similar at the Reserve Bank of New Zealand.

To be sure, the Reserve Bank of New Zealand is a smaller organisation.  And no organisation can compel an individual to stay.  And I –  and probably most people –  am firmly opposed to so-called “positive discrimination”.  But our central bank should be the sort of place –  interesting work, reasonable prestige –  that plenty of able people (male and female) would want to stay at.

I wrote earlier about my observations of flexible working arrangements at The Treasury.  There was, in practice, nothing similar at the Reserve Bank; few or no examples of it working successfully, even if on paper the rules allowed it.  In my observation, it wasn’t that senior managers were in any active sense discriminating against women, but they just didn’t have a mindset that focused on creating an environment where women (in particular) who wanted to be parents as well as economists would find it most attractive to work.  That was still my observation, as part of the Economics Department management group, just a few years ago.  And, as a result, decades on the Bank seems to have not many more women in senior policy or analysis roles than it did when I started there 35 years ago.

Is the quality of the Bank’s work poorer as a result?  Probably not much, but probably a bit –  I seriously doubt there is a distinctive female perspective on macro or financial stability or bank regulation, but some of those very able women who didn’t stay might well have made a stronger contribution than at least some of the men who did.  We’ll never know.

There are probably aren’t any wise quick fixes.  As the pool of applicants for Governor suggests, there aren’t currently many women in New Zealand with a strong interest and/or the skills/experience for the very top roles in the Bank.  And, as the Treasury paper noted, the number of people doing economics to an advanced level at university is falling, and the proportion of women among them seems to be falling away a bit too.   Absent token appointments (which would be bad for everyone, except perhaps the appointee, and perhaps even her) fixing the Bank is likely to be the work of a decade or more –  most worthwhile things probably are.  But it still needs to be treated as a priority, for both substantive reasons, and because the Bank is a high profile and very powerful institution and questions will (and should) be asked.

What worries me a bit is that the Governor often shows signs of appearing to favour the quick win and the rather-too-glib answers, rather than digging more deeply into issues.  He has, after all, lots of turf battles to fight in the next few years, and a government that is all too keen on quotas.  In the article my reader linked to there was a private sector example of the sort of questionable responses to external pressures

ANZ Bank New Zealand has a policy that any short list for a position must be 50:50 gender split and the interview panel must also be equally split.

And yet, if honours graduates in economics are roughly one third female and two thirds male, a shortlist requirement of 50/50 male and female will (by construction) often not mean that only the best candidates are on the list.

And keep an eye out for appointments from the Governor in which he chooses to positively discriminate (while no doubt denying it).  I was a bit puzzled recently to see who the Bank had appointed an acting head of its Macro-financial Department (to fill in for a substantial period while the permanent head is on secondment leading the review of the RB Act).  The Macrofinancial Department is responsible for producing the Financial Stability Report, and for analysis and policy advice on macro-stability and macro-prudential issues. It also happens to include the Bank’s statistics unit (which doesn’t naturally fit in any of the core departments).  The acting head of the unit has no background at all in financial stability, regulatory policy or anything of the sort.  I gather she is quite well-regarded as manager of the statistics unit, but is hardly a natural fit for leading the entire policy-focused department.   Perhaps she really was the best available option, but when the Governor is out promising to be “aggressive” in rebalancing the statistics, it is inevitable (and sadly appropriate) that the question will have to be asked.

Change needs to come, but it needs to be done well and wisely.