• A Well-being Budget

    The announcement by the Minister of Finance that the budget he presents next year will be what he described as a “well-being” budget may have been dismissed by Simon Bridges as of no interest and little consequence but it represents, on the contrary, an important break with what has gone before.

    Political announcements about budgets may lead to eyes glazing over for most people, but this one is different. We have had years, not to say decades, of budgets that have focused on the state of the government’s books rather than the health of the wider economy in which we all live and whether that economy is delivering what it should for the people as a whole.

    It was always a curious misapprehension that the main responsibility of a Minister of Finance was to balance the government’s books. The government’s finances are only one part – an important one admittedly – of the total economy; it is perfectly possible (and indeed has been, over a long period, par for the course) to see a preoccupation with the government’s bit of the economy being accompanied by a disappointing performance by all the other bits, the totality of which matters greatly.

    There is little comfort to be gained from a government surplus (so loudly trumpeted over recent years) if at the same time the country is failing to pay its way (as evidenced by a perennial trade deficit). And the point becomes even more telling if the indications about future performance, such as a sluggish growth in productivity, suggest that there is little chance of the real economy shifting up a gear.

    It is therefore a welcome and refreshing change to see a Minister of Finance taking account of how the economy is performing in a wider sense and being willing to look beyond the accountant’s obsession with the financial out-turn in just one part of the economy.

    What, under the new approach now announced, is meant by a “well-being” economy? The first point to register is that it does not imply, as some critics are bound to proclaim, that the government is about to let go control of the government’s finances. On the contrary, the latest Treasury report shows the government’s finances in very good shape, with a healthy surplus.

    What Grant Robertson is saying, however, is that there are other measures of economic performance that should also come into the reckoning. In his willingness to take this wider view, he is, incidentally, reflecting an increasing international interest in measurements other than Gross Domestic Product to tell us about how well we are doing. Many countries are beginning to look at various forms of what might be called “happiness” indices as an alternative to GDP and as a guide to what economic success really means.

    But Grant Robertson has gone further, and has spelt out what he thinks are the important elements of “well-being” that should be taken into account in framing his next budget – and he focuses particularly on those elements that he believes have received inadequate attention in the past.

    He cites, for example, the mental health of our people, particularly young people, and he looks specifically at how we are responding to the environmental challenges we face. He also points, more orthodoxly, to the standards of service delivered by public services such as education, health care and public housing, and indicates correctly that child poverty is a major negative when assessing the economy’s performance.

    A “well-being” budget will, he says, focus on outcomes, and not just on inputs and outputs. It will take a “whole of government” approach to issues such as the skill training of our workforce, the regional disparities we suffer, and the particular needs of Maori and Pasifika – all of which have been neglected to the general detriment for far too long.

    A “well-being” approach promises a welcome change in the way we identify and focus on our economic goals; that change may be the key to doing better than we have so far managed. More power to Grant Roberson’s elbow – his commitment to well-being may well prove to be a welcome New Year present for us all.

    Bryan Gould

    24 December 2018

     

     

     

  • Public Television

    Around the turn of the century, I had the privilege and pleasure of serving on the board of Television New Zealand for a period of about ten years. I enjoyed the experience enormously and welcomed the chance to make my small contribution to the state of television in this country.

    Television was not exactly an unknown world to me. As an MP in Britain, I had been interviewed often for British news and current affairs programmes. And I had, while out of the House of Commons for a period, had some experience on the other side of the camera, when I was employed for a few years as a presenter and reporter on a top-rated and nationally networked weekly current affairs programme.

    During the time that I was on the board, TVNZ was faced with growing commercial competition from Sky Television and with the emerging threat, and competition for advertising dollars, from the internet. It was able, however, to gain some competitive advantage through its role as the national broadcaster – and it operated in terms of a Charter which spelt out its particular responsibilities and opportunities in this capacity.

    The Charter required TVNZ to go beyond the purely commercial; it was still required to produce an annual dividend for its government shareholder, but it was expected to act more like a mini-BBC than would have been the case for a purely commercial operation. Our excellent Chief Executive at that time, Rick Ellis, would proclaim from time to time that the Charter was “in our DNA”.

    All that changed, however, with the election of a new National government in 2008. The Charter was scrapped and TVNZ was required then to maximise profits like any other commercial enterprise, which meant that they could show only those programmes that would attract the advertising dollar. The concept of “public” television was lost.

    This is not to say that TV does not today do a very creditable job with its news, political and current affairs programmes. But those programmes do not cover the full ambit of what would normally be regarded as “public” television.

    Public television would normally be expected to deliver a thoughtful treatment of issues of wide public concern – issues like climate change, the quality of our water, New Zealand’s place in the world, social issues like poverty, homelessness and inequality, hot topics in economic and trade policy, health issues such as mental health and suicide, our constitutional arrangements, and so on.

    Despite the efforts of socially aware programme-makers such as Bryan Bruce, issues such as these scarcely receive the attention they need and deserve; the national debate is the poorer for their neglect.

    The good news, however, is that “public” television is back on the agenda, courtesy of none other than Bryan Bruce himself. Bryan has established a new website, called New Zealand Public Television. The new site, which anyone can access for nothing at www.nzptv.org.nz, has a dual purpose.

    First, it identifies programmes, from both New Zealand and around the world, that explore issues of interest to New Zealanders, whether living here or overseas, and makes them available to a Kiwi viewership. The site, although primarily provided for a domestic audience, will undoubtedly be of great value to ex-pat Kiwis and to those on holiday or living overseas who may miss programmes about issues that are making waves at home.

    Secondly, it offers a platform to programme producers with excellent ideas for compelling programmes that would not ordinarily appeal as commercially viable to television companies. Because the new site is now visited by sufficient numbers, it is funded by New Zealand on Air, and New Zealand Public Television can therefore find funding that will allow a good programme idea on a serious topic to get off the ground; programmes will be made that would not otherwise have been made.

    Those interested – as both programme makers and viewers – in television programmes that go beyond the normal commercial diet (which I won’t attempt – as a concession to popular taste – to define further) now have somewhere to go. New Zealand Public Television promises to lift the level of debate on those topics that matter so greatly to so many of us.

    Bryan Gould
    9 December 2018

     

  • Fads and Fashions in Economic Polcy

    Fads and fashions in economic policy come and go; they invariably reflect the self-interest of those who propound them, and since the “haves” tend to have louder voices and more influence than the “have nots”, it is often the interests of the former that prevail when economic policy is formulated.

    A couple of relatively recent examples will show what I mean. When the Global Financial Crisis struck, the response decided upon in many countries (and the UK in particular) was to tighten belts and slam on the brakes – such policies became known as “austerity”. The theory was, presumably, that governments had to steady the ship, and that they could not afford to go on spending when there was so much uncertainty.

    But austerity, as a response to what threatened to be the worst recession for decades, was the very worst step that could have been taken. The great economist, John Maynard Keynes, had shown in the Great Depression that the only cure was to spend more, not less – that a depression or recession occurred because there was not enough demand (or, in other words, spending power) and that the proper remedy was to inject more money into an economy that was about to close up shop altogether.

    The lessons learnt in the 1930s counted for little, however, when faced with the prejudices of those who decide these matters. For the holders of assets, there were two drivers – they wanted the value of those assets maintained, and they wanted to be sure that if anyone had to pay a price to put things right, it would not be them.

    As a result, governments found large sums of money (usually by printing it – the polite term was “qualitative easing”) but they used that money not to boost economic activity, but to shore up the banks, with the result that the value of financial assets was boosted. At the same time, they cut spending; the spending cuts bore heavily on the poor, weakening the public services on which they depended, such as health and education and housing, and holding wages and benefits down.

    It is only now, after nearly a decade or more of such policies, that a consensus has begun to emerge, supported by agencies like the Word Bank and the IMF, that austerity was a mistake, and had done much unnecessary economic and social damage.

    Another example was the fashionable theory that, as the rich grew richer, their good fortune would “trickle down” to make everyone better off. The theory was used to justify tax cuts for the rich and other policy initiatives designed to boost profits, and to allay concerns about the growing gap, in both wealth and income terms, between rich and poor.

    Sadly, the theory was revealed to be no more than wishful thinking. The growing riches of the haves did not “trickle down” but were hoarded or used to buy income-producing capital assets (which had the effect of widening the income gap still further) or spent on various forms of conspicuous consumption.

    The other side of the same coin has been the refusal to recognise that the economy is likely to benefit much more from an increase in the purchasing power of the poor than of the rich. Every extra dollar for the low-paid (as for the recent increase in the wages of hospital cleaners) will be spent and will lift the volume of sales, thereby benefiting profits.

    The conventional wisdom, however, not only ignores the social benefits of lifting people out of poverty, but also chooses to see higher wages as simply an increased cost and therefore to be resisted. We need look no further for an explanation of the paradox that business confidence remains low although the economy is doing well.

    There must be a suspicion that, sadly, for some people it is staying ahead that matters – maintaining their advantage over others is more important than simply doing well themselves.

    It is time we – the voters – recognised that self-serving fads and fashions – not to say prejudices -are not a workable basis for a sensible economic policy. Doing what is right in social terms will often be the best economic policy as well.

    Bryan Gould
    27 November 2018

  • Picking Up the Pieces

    The news that the government is to find $80 million to repair Middlemore Hospital should come as no surprise. This is just the latest instance of the new government having to pick up the tab to make good something neglected by its predecessor.

    It s not just a matter of restoring to an acceptable condition a single long neglected rotting and crumbling hospital. There are, in the health sector alone, other buildings with identical problems, and right across the public sector, wherever one looks, there is evidence of the spending now needed to remedy the failings and omissions of the last National government.

    We are told, for example, that our drinking water is hardly safe to drink – a shocking state of affairs for a supposedly developed country – and that it needs substantial investment if it is to be brought up to standard – and that is to say nothing of the condition of our rivers and waterways. And there are other major parts of our essential infrastructure that are in similarly urgent need of attention and improvement.

    The new government, we learn, has also been able to find the millions needed (but hitherto not made available) to step up the effort to save our native flora from kauri die-back and myrtle rust – problems that were barely addressed by the previous government who seem to have learnt little from the PSA debacle in the kiwifruit industry under their watch.

    At the same time as these infrastructure and environmental issues are demanding attention, our schools are struggling to find enough qualified teachers, carrying an obvious threat to the standard of education enjoyed by our new generation; if that situation is to be remedied we need to find the resources to train the necessary recruits. And teaching is not the only occupation where we have neglected to look to the future; in the construction industry, we have failed to provide the apprenticeships that are needed, and business as a whole identifies the shortage of skilled workers as the greatest impediment to their progress.

    In the public sector, we find that even those who have been trained and are currently working, especially in essential occupations – teachers, nurses, midwives, court staff, civil servants more generally, and many others – have seen their salaries fall in real and comparative terms, all victims of the drive to cut costs by a government giving priority to “producing a surplus”. The current rash of strikes is a direct result of earlier neglect and irresponsibility by those holding the purse strings.

    When spending is cut in this way for ideological purposes, the consequences are all too predictable. The standards we expect in our public administration (and for which New Zealand is renowned worldwide) begin to slip and we find that we can no longer rely on public agencies to do their jobs properly. These consequences are not limited to the big-ticket items, such as health care and education. So, for example, inspections of articulated vehicles are not properly carried out so that potentially dangerous vehicles are let loose on our roads, and warrants of fitness are issued without any real inspection, with possibly fatal consequences for some drivers.

    Services starved of resources become vulnerable to cutting corners, turning blind eyes, and accepting inducements for doing so, so that even our hard-earned reputation as the least corrupt society in the world is placed at risk.

    We have done ourselves an enormous injury in allowing cost-cutting to take priority over maintaining reliably high standards. And, sadly, by the time the day of reckoning has arrived, those responsible have long gone and it is left to others to carry the can.

    It is the successors to the “cut at all costs” brigade who must pick up the tab for past neglect. They have the task of somehow finding the resources that are needed – and they must endure the complaints of those who, in the aftermath of the cuts, now find themselves under-paid and under-resourced, and – in some cases – not employed at all.

    There is of course a lesson to be learned from this sad saga. It is that a government that is hostile to the public sector and to public spending can do enormous damage to our economy and to our country as a whole. Voters, however, are often surprisingly reluctant to cut any slack for a successor government that tries to pick up the pieces and put them together again.
    Bryan Gould
    22 November 2018

  • Good – But Could Be Better

    Labour was, not surprisingly, in good heart at its annual conference last week in Dunedin, as Jacinda Ardern celebrated her first anniversary as Prime Minister.

    The past year has not been without its difficulties for the new government, but the coalition has encountered fewer problems than might have been expected. Winston Peters has performed well in his sphere of expertise – foreign affairs – and has proved to be, as some of us expected, a steadying influence, bringing the voice of experience to the consideration of complex issues.

    The Greens have offered exactly what might be expected of a helpful partner – a distinctive and constructive approach to the green issues that matter most to them, and steady support for the government’s wider agenda.

    Labour has handled its role as the senior partner of the coalition with good sense and diplomacy and a strong and identifiable sense of purpose. Most of the crises which the Prime Minister has had to handle have been relatively minor and have flowed from the deficiencies of individual ministers. The missteps of Clare Curran and Meka Whaitiri, and even of Iain Lees-Galloway, have reflected inexperience rather than incompetence, and pale into insignificance by comparison with the internal travails that have racked the National party.

    The new government’s main difficulty in its first year has been in grappling with what seems to be a long-standing strategy developed by their opponents and one that always poses real problems to an incoming Labour government. It can be simply described.

    When National is in government, it makes a virtue for ideological reasons of cutting public expenditure, preening itself on producing “surpluses” and warning that a change of government would threaten that achievement. When the voters finally decide that the cost – in the form of weakened public services – is too high and a less ideological government is elected, the second stage of the strategy is put in place.

    The new government finds that it has to pick up the bill to meet the backlog of all the essential spending not made, and to make good on its promises to re-build our health services and education and defence capability and environmental protection and economic infrastructure and all those other parts of public provision which have been run down.

    The struggle to reverse the failures of its predecessor and to do so overnight disappoints the new government’s supporters – and their public demonstrations of dissatisfaction (teachers’ strikes and the like) and the consequent inconvenience to the public make it more likely that those responsible for the problems in the first place will be returned to power and the cycle can begin again.

    How well is Jacinda Ardern’s government doing in breaking that cycle? It is too early to say, but Labour have not made it easy for themselves. Their self-denying ordinance to the effect that they will manage the public finances within a monetary and fiscal framework defined by their predecessors has limited their options.

    If the framework of policy remains unchanged, there is an obvious limit as to how much can be achieved by individual decisions taken within (and limited by) that framework.

    Labour’s supporters will be happy in the main with what has been achieved so far, in terms of individual commitments such as the increase in the numbers of teacher aids for pupils with special needs, but there will be some disappointment that there is not more new thinking as to how the shackles of right-wing orthodoxy can be cast aside.

    The great achievements of past Labour governments – such as the building of thousands of state houses by Michael Joseph Savage in the midst of the Great Depression – required a willingness to challenge orthodoxy. Such courage brought great benefits to those who gained jobs and homes they would not otherwise have had, but also cemented Labour’s standing and support, and at the same time strengthened our economy and our social cohesion.

    The acid test for Labour will come in 2020. The task is to persuade voters by then that a different approach pays off, that breaking new ground makes us all better off, and that the real risk lies in returning to the failed policies of the past – so that the cycle starts all over again.

    Bryan Gould
    5 November 2018