The Post: This best-selling book on ‘abundance’ has got it wrong

Read the original article in the Post

A minor coincidence this week: Wednesday, New Zealand’s official “Earth Overshoot Day”, was also the day I finished Ezra Klein and Derek Thompson’s best-selling new book Abundance.

Earth Overshoot Day marks the date at which Kiwis have, per capita, consumed more resources than the planet can regenerate in a year; globally, humankind would need 1.8 Earths to sustain its current patterns of consumption (and this is, if anything, an underestimate).

Such facts sit in curious contrast to the Abundance book, which blithely argues that if we just build more essential infrastructure – renewable energy and inner-city housing, in particular – we will solve all our environmental problems.

Sitting atop the American bestseller charts, Abundance has grabbed attention in part because it bracingly confronts a left-wing doomer mindset that can seem to offer only defeatism and negativity in the face of climate change. Thompson and Klein posit instead an apparently positive vision of untrammelled abundance, available immediately if only we seize the opportunities offered by renewable energy and technological innovation.

One colossal drawback in Klein and Thompson’s argument, though, is that they never seriously contemplate its environmental flaws. Other than demolishing the strawman argument for massive economic retrenchment to protect the climate, they don’t deal with the fact that – for one thing – most construction materials must first be dug out of the ground, often at massive cost to the environment.

Rare-earth-mineral reserves, and even potential wind-turbine sites, have a nasty habit of being co-located with precious wetlands and the last remaining populations of endangered species.

Construction itself is environmentally damaging: concrete production alone generates up to 8% of all global carbon emissions. Klein and Thompson speculate hopefully about “green” concrete, but even if – optimistically – its CO2 emissions could be halved, the overall benefit would of course be wiped out by a doubling in concrete production. (Every two years, China consumes more cement than the US did in a century.)

There are echoes here of the so-called Jevons paradox: advances in energy efficiency get wiped out by people increasing their use of the more-efficient thing. Got a car that does more kilometres per litre of petrol? You drive it further.

Of course people can and should switch to electric vehicles. But although they are a marvellous invention, they will – experts estimate – across their life-cycle remove 70% of a traditional car’s emissions – not 100%.

Globally, three-quarters of energy is still produced from fossil fuels. Just replacing that with renewables will be daunting, let alone keeping up with population growth, and increased expectations of affluence, which could easily require twice as much energy. Do we seriously think that can be done while reducing emissions at sufficient speed?

Climate change, what’s more, is only one dimension of the wider environmental crisis. We are in the midst of the sixth mass extinction of species, and breaching most of the planet’s ecosystem limits.

Klein and Thompson vaguely acknowledge these crises, suggesting that if – for instance – we grew synthetic meat in skyscraper factories, we could re-wild vast areas of farmland. But even if feasible, this will never happen quickly enough to address the biodiversity crisis.

So-called “sustainable” aviation fuels and carbon capture and storage, meanwhile, are fine ideas, but currently unproven – and incapable of delivering the 50% emissions reduction by 2030 that’s needed to avoid climate change’s worst effects.

Although asking people to massively curb their lifestyles is political suicide, a more feasible alternative to abundance may lie in a combination of two unsexier words: sufficiency and efficiency.

Psychologically, going backwards is hard, but it might be easier to accept that – at least in the West, and in America in particular – people on average already consume enough material things. Then, greater efficiency could rapidly deliver genuine reductions in energy use, emissions and planetary impact.

When I lived in the UK, I remember officials estimating that an entire power plant could be retired if every Briton making a cup of tea boiled not a full kettle but only the water they needed.

Here, state agencies estimate that, if we just had the will and the technology to use energy off-peak – charging EVs overnight, for instance – we could build far fewer power plants (and save billions of dollars).

These are, of course, big ifs: even this modest behaviour change has long eluded Western societies. But it is the shift we need.

Klein and Thompson are not entirely wrong: there is a role for optimism, for renewables and housing intensification, and for whatever technology can realistically offer. There is, though, something almost arrogant about the intensity of their belief in abundance.

We need, instead, to rediscover our connection to the earth, to live on it more lightly, to be more content with what we have. That reconnection need not be scourging or self-denying: it can be joyful, as when we find delight in nature.

But it relies on a recognition that not everything is abundant, or can be made so. Some things are just plain scarce.

The Spinoff: A stocktake of all the policies rolling back workers’ rights in New Zealand

Read the original article in the Spinoff

Frogs, it turns out, do notice when they’re being boiled. For years the favourite metaphor for people’s insensibility to slow change has been the amphibian that, as the temperature increases imperceptibly, fails to clock that it’s being cooked. Recent research, however, has shown that frogs do in fact jump out of an increasingly hot pot.

So a new metaphor will be needed for what this government is doing to workers’ rights, as it deploys a strategy that is unmistakably based on incremental attacks. Eschewing a full-blown confrontation with labour, the government is subtly chipping away at pay, conditions and many of the other things that make work life-giving. And because no one policy in isolation is world-changing, few people have understood the full extent of the rollback. Here, then, is the long list of the coalition’s anti-worker policies, whether already implemented or in the works.

Implementing real-terms minimum wage cuts

Last year, the minimum wage went up 2% when inflation was 4%. This year, it increased 1.5% when inflation was 2.5%. Minimum-wage workers’ pay packets, in short, buy significantly less than they did in 2023, something economists call a real-terms (that is, inflation-adjusted) pay cut. The Council of Trade Unions calculates that a full-time minimum wage worker is cumulatively $2,438 worse off (again, in real terms). 

Removing the living wage in government

Finance minister Nicola Willis wants to remove the requirement that government contractors have to pay the living wage. This is likely to mean that, over time, parliament’s cleaners, caterers and security guards drop from the living wage ($28.95 an hour) to the minimum wage ($23.50), a pay cut of nearly one-fifth.

Repealing Fair Pay Agreements

One of the government’s first moves was to repeal the Fair Pay Agreements Act 2022, which would have established industry minimum standards across low-paid industries. This would particularly have helped workers just above the minimum wage, who don’t directly benefit from its increases and who have seen pitifully small salary rises in recent decades.

Extending 90-day trials

Under Labour, only small employers could impose 90-day trials, which allow them to dismiss an employee for no reason within their first three months of work. The government has allowed employers of all sizes to impose the trials, despite detailed research showing they do not increase hiring, even though they do cause terrible instability for new staff.

Removing union protections for new workers

The government wants to remove the rule that for the first month in a new job, an employee’s pay and conditions must be as good as those in their workplace’s collective agreement (where one exists). This rule gives new staff time to settle, a taste of the terms and conditions negotiated by the union, and protection against being pushed into an inferior individual agreement on day one. Removing this protection will also make it easier to impose 90-day trials on new staff (as above). 

Reducing workers’ redress

Even when employees win personal grievance cases, they will no longer be able to get reinstated, or be compensated for hurt and humiliation, if they have “contributed to the issue” in any way – no matter how minor. This, unionists argue, will encourage employers to “go on fishing expeditions, trawling for any tiny errors a worker has made in their job or their application for justice”. 

Enabling questionable payouts

A select committee is considering an Act Party member’s bill that would let employers offer employees cash in return for the latter agreeing that their employment is terminated. The offers could be made even when there is no evidence of an employment relationship problem, but where – in the bill’s vague stipulation – “the demands of the business mean that it is imperative to dismiss the employee”. The offers would be “off the record”, meaning that if bullying behaviour occurred during negotiations, the employee could not cite it in a future personal grievance. Staff often feel vulnerable, moreover, and experience fear and stigma about being fired. In practice, then, employers would feel emboldened to “giv[e] the employee an ultimatum – accept what is being offered or be fired”, says employment lawyer Susan Hornsby-Geluk. The bill “would create an unbridled ability for an employer to present an employee with a fait accompli, under the cloak of ‘legal privilege’”, she argues. “This is likely to result in unjust outcomes for the most vulnerable.”

Limiting unjustified dismissal claims

The government plans to prevent employees earning over $180,000 from raising an unjustified dismissal claim. Cry me a river, some might say – but why should, for instance, a senior manager on $181,000 not be able to take a claim if they have been sacked for no reason? There are also many reasons to think the change will be “gamed”.

Limiting contractors’ rights

The government plans to prevent employees incorrectly classified as contractors from contesting that status in court. New Zealand courts have repeatedly found in favour of four Uber drivers who argue that, whatever their written agreement says, they are effectively employed by the ridesharing firm and should have all the protections of employees. The government wants to remove these workers’ ability to pursue their rights in court, arguing that if they have signed an agreement saying they are contractors, that’s all that matters. This flies in the face of standard New Zealand legal practice, which rightly allows the courts to effectively set aside written agreements if the actual working relationship is otherwise (and thus protect employees from the consequences of being bullied into signing something inaccurate).

Cutting public sector jobs

While the final scale of the government’s public-sector job cuts is not yet known, it is clearly in the thousands. Staff could have been redeployed to new priorities, or asked to carefully find efficiencies. Instead a hasty and blunt process has seen thousands of often highly skilled workers made redundant.

Disestablishing the pay equity taskforce

The government has disestablished the six-person pay equity taskforce, arguing – in essence – that public bodies have got so good at settling pay equity claims that they no longer need centralised support. This argument got short shrift from people like Nurses Organisation chief executive Paul Goulter, who said the move represented “a huge loss” of knowledge and skills that were “of huge benefit to both employers and the unions representing their employees in sorting pay equity issues”.

Watering down health and safety

The health and safety minister, Brooke van Velden, has announced that small businesses won’t have to manage things like psychosocial or ergonomic risk. But mental health and musculoskeletal disorders are the two main causes of workplace harm, and smaller firms have higher rates of injuries than larger ones. Meanwhile van Velden has talked vaguely of a “first principles” review of the 2015 Health and Safety at Work Act, despite everyone from Business New Zealand on down pointing out that this would be a bad idea.

Implementing pay reductions for partial strikes  

The government has introduced a bill that would allow employers to reduce workers’ pay by at least 10% when they carry out “partial” strikes, such as refusing to perform all their duties. Hornsby-Geluk argues that this “does not seem unreasonable”, but unionists believe that, given most employees have very limited ability to win better terms and conditions, partial strikes are a valid form of action and should not be penalised.

The Post: The challenge Trump’s tariffs pose for the progressive left

Read the original article in the Post

The list of victims of Donald Trump’s incipient trade war grows with every passing second.

Global prosperity, the Chinese economy, American consumers, even the approval ratings of the man himself: all have been hit. Trump’s popularity is tanking, his billionaire backers are revolting (in the active as well as passive sense), and young voters seeking economic stability are fleeing him in droves.

Such chaos understandably elicits schadenfreude among the Donald’s opponents. But this trade war also has the potential to harm the progressive cause – by succeeding, or, to an even greater extent, by failing.

To unfold this apparent paradox, one has to understand the modern American Right, where the political energy has long since shifted away from a purely “neoliberal” – that is, market-led – approach. It embraces instead pro-statist positions that sound weirdly left-wing. State action to protect local manufacturing, and domestic production more generally, is in; untrammelled free trade is out.

What’s driving this shift? Thinking along similar lines to Trump, albeit with slightly more sophistication, American conservatives have clocked the decimation of local communities as steady, high-paying manufacturing jobs have gone offshore, to countries like China with vastly lower labour costs (and, indeed, rampant modern slavery).

Such is their newly rediscovered love of 1950s-style community that some conservatives have even come to embrace trade unions, a key post-WWII force for limiting working hours and – consequently – freeing up time for communal life.

The prospect of more pandemics, and greater armed conflict, has also led conservatives to question whether America should rely so much on foreigners for vital supply chains, and whether – therefore – the nation wouldn’t be more secure making those things at home.

In another world, then, the Trump tariffs, by hammering foreign firms and encouraging manufacturers to shift Stateside, could strengthen both national security and local communities, cementing his appeal among voters abandoned by the left.

But this is not the world that Trump is creating, as economists have been explaining ad nauseam. Because the tariffs change with the president’s passing moods, no sensible foreign firm will invest the billions of dollars needed to relocate production to Pennsylvania or Vermont. No-one builds on shifting sands. Nor would American consumers enjoy the resulting sticker shock: an iPhone built in Chicago might cost twice as much as one built in Shenzhen.

It could, in fact, be the failure of Trump’s trade war that harms the left. Not in an immediate sense: currently the tariffs are a gift to the Democrats. The damage, rather, could be to a recently re-energised intellectual cause among progressives: industrial policy.

In the last decade or so, global thinkers have challenged the 1980s orthodoxy that governments mustn’t attempt to meaningfully shape their economies. Attempting to do so, market fundamentalists have long argued, would simply result in a disastrous attempt to “pick winners”, wasting resources and leaving countries poorer.

But, in an important 2023 paper, “The new economics of industrial policy”, the brilliant Harvard economist Dani Rodrik and his co-authors show just how much the tide has turned on that worldview. The debate about the “East Asian” miracle has been settled, they argue: recent research confirms the view that the astonishing post-WWII acceleration of the Taiwanese, South Korean and other economies was driven by activist governments.

As influential economists like Mariana Mazzucato have argued, well-functioning national governments, with their long time horizons and mandate to pursue the public good, can sometimes see or exploit opportunities that individual firms cannot. Mazzucato has shown, for instance, that the iPhone’s 12 key technologies – lithium-ion batteries, touchscreens, GPS and so on – were all developed or funded by blue-skies public-sector researchers.

National “missions” – America’s drive to put a man on the moon, or Germany’s 1990s push for renewable energy – can also mobilise public and private investment behind new technologies, driving innovation and job growth.

As Rodrik’s paper points out, innovation often depends on clustering – cutting-edge firms locating themselves close to each other – which governments can encourage in various ways. Economies can also get caught in a situation where, for instance, a potential exporting opportunity requires a particular piece of local infrastructure, but no firm will provide either element without the certainty that the other will also be provided.

Governments, Rodrik and co argue, can step in to provide that certainty, pushing the economy onto “a superior equilibrium”. Tariffs can even have their place as a strictly temporary measure, sheltering infant industries until they are ready to complete globally.

Doing industrial policy well is, of course, supremely difficult, requiring thoughtful strategy, total transparency about government-business linkages, and disciplined leadership. But this is not – to state the blindingly obvious – the way that Trump does things.

His erratic, vengeance-based approach to trade and economic development will, in precisely the way that conservative economists predicted, create all manner of problems. And, along the way, tarnish the reputation of a policy that should have much to offer progressives – and indeed the world.

The Spinoff: Is political trust ‘in crisis’? It depends

Read the original article in the Spinoff

A few years ago, trust in New Zealand’s government was higher than at any other time in the last 35 years. Why, then, do we hear so much about a “crisis” of political trust? Obviously, trust matters: it is the glue that holds society together. Communities become dysfunctional when people cannot, as a rule, rely on their neighbours to behave predictably. Business transactions become near impossible without a basic assurance that others will follow ethical norms. And a populace can become ungovernable if it no longer trusts those doing the governing. This is not to say that full trust is desirable: surveys showing 100% confidence in government are a mark of authoritarian, dissent-suppressing dictatorships. Some measure of distrust is healthy. But very low trust is corrosive.

To see what that looks like, cast your eyes over the calamitous decline in the number of Americans who trust their government, now numbering just 20%. No wonder so many Americans are willing to back Trump.

New Zealand’s situation, however, is very different. In a master’s thesis published in February, Victoria University student Oliver Winter compiled data from surveys dating back to the early 1990s. What they show is a long-term increase in trust.

Note: the surveys graphed here are the World Values Survey (WVS), International Social Survey Programme (ISSP), New Zealand Election Study (NZES) and the Institute for Governance and Policy Studies (IGPS) trust survey

By 1999, New Zealanders were – as other surveys at the time make clear – reacting to 15 years of often undemocratic change carried out by governments intimately entwined with big business interests. But the introduction of MMP, and Helen Clark’s ability to hold corporate interests at a greater distance, helped restore some measure of confidence.

A slight decline in trust may have occurred under John Key, before trust spiked – as it did in many other countries – during the early days of the pandemic. The equivalent charts for parliament and the courts – equally important political institutions – show a similar, indeed slightly more positive, long-term trend.

This story comes, however, with two big caveats. The first is that the rise has been from a low base. The second and more serious caveat concerns the last few years: a return to pre-pandemic levels of (dis)trust can be seen even by 2023, and the data since then has only worsened.

The Edelman Trust Barometer survey, carried out late last year, shows a continued decline in trust. Relatively little weight should be placed on New Zealand’s underperformance versus the rest of the world, as Edelman surveys just 28 countries with wildly varying political setups.

More worrying is the fact that, as indicated by the circled numbers at the base of the blue bars, trust has continued to fall in all major institutions, and in the case of government is now below 50%. The slight downward trend detected in Winter’s work appears to have accelerated.

What is going on? Scholars in this area distinguish between weather and climate: changes in trust can be short term, transient responses to current events, or they can represent a shift to a permanently different environment.

It is plausible that New Zealand’s current decline in trust is just a form of weather. Evidence for this argument would include the lingering effects of the pandemic (which may well fade with time), the cost-of-living crisis (already easing, though certainly not over), and the confidence-sapping decline in the performance of our education and health systems (serious but eminently solvable problems).

Much angst has also been created by successive governments’ failure to fix apparently intractable economic problems, including crumbling infrastructure, rampant house price inflation and unchecked oligopolies. But current moves – including tentative steps towards bipartisan infrastructure investment, rezoning of large swathes of land for housing densification, and threats to break up the supermarket duopoly – hold out the promise of these problems being addressed.

We would not want, however, to put too much faith in such arguments. Distrust is not driven solely, or even mainly, by governments’ failure to deliver. Research suggests it is greatly amplified by economic disparities, which rightly lead the poor to believe that the rich have everything locked up, and people’s sense of not being heard by decision-makers. This entwining of poverty and political exclusion can be corrosive.

In a 2022 OECD survey, trust in parliament was 60% among financially secure New Zealanders, but only 40% for people struggling to pay their bills. Relatedly, just 35% of the poorest New Zealanders felt they “have a say” in political decisions. Across the whole country, barely one-third of us believed that if we took part in consultations, state agencies would listen. 

So what would ensure the weather of distrust doesn’t become a climate of toxic disaffection? As a recent OECD report put it: “People need to feel trusted by the government in order to trust it.” The same report produced evidence that the most trust-enhancing reforms are those that ensure citizens’ voices “will be heard”.

That requires us to tackle the corrosive intersection between poverty and political exclusion: lifting living standards for the worst-off, clamping down on the channels (notably lobbying and political donations) that allow vested interests to convert money into power, and – above all – doing government differently. We need to bring politics closer to the people, giving citizens greater opportunities to be meaningfully engaged in shaping political decisions.

That could be as simple as doing consultation better – early enough that people’s input can shape the final result rather than being a tick-box exercise, and with officials going to the venues – shopping malls, sports clubs and so on – where people already are, rather than expecting people to come to them. It could also involve things like citizens’ assemblies, where representative groups of ordinary people are brought together to debate and find solutions to issues on which conventional politics has become logjammed, or participatory budgeting, in which local councils put up a proportion of their infrastructure budget for the community to discuss and allocate.

Either way, there is no need yet to panic about trust. We start from a much higher basis than many other democracies. We do not yet have hard evidence that we are in a permanently new climate of distrust rather than just a localised depression, to use the meteorological term. As the economist Shamubeel Eaqub has said in a recent report on social cohesion, we are “fracturing, not polarised”. But that still points to a country heading in the wrong direction, even if not yet arrived in the darkest place. We cannot be complacent.

The Post: Rearranging the road cones while workers are dying weekly

Read the original article in the Post

In New Zealand one person is killed at work every week. In the same period, 10 people die from work-related illnesses like asbestosis. A further 700 sustain an occupational injury so severe that they’re off work for at least seven days.

Thank god, then, that the minister for health and safety is maintaining a laser-like focus on road cones.

Brooke Van Velden, who doubles as ACT’s deputy leader, announced this week that the regulator, WorkSafe, would oversee a hotline where the public could report “overzealous” road cone use. This shift of resources, from preventing deaths to monitoring orange cones, feels like a grotesque joke, the sort of thing even satirists couldn’t invent.

Van Velden’s announcement cited no evidence of any damage caused by road cones. As outlined in a recent report for Auckland Council, there are problems with roading contractors taking up too much space – for too long – with their traffic management systems, of which road cones are one part. But to solve this problem, the Ernst and Young report argues, councils need the power to levy steeper fines on errant contractors – not some daft hotline.

Coming from a party that derides “virtue signalling” and proclaims its allegiance to “evidence-based” policies, the hotline plan is the worst kind of empty, performative, evidence-free politics. It plays well with the angry older voter for whom road cones are merely the locus of a wider hatred of cycleways and other forms of progressive change, but does absolutely nothing to save lives and keep people safe at work.

The road cone obsession doesn’t even make financial sense. While ditching a few cones might at best save millions of dollars, the annual cost of our appalling health and safety record – the lost productivity from bodies dead and mangled – is, according to business leaders, at least $4.9bn. When questioned in Parliament, Van Velden admitted she has no proof her reforms will reduce this cost in any shape or form.

More troubling still is the human toll embodied by all this misery and death. Maybe the minister should familiarise herself with WorkSafe’s Fatalities Summary Table, a rollcall of workplace deaths detailed in language both spartan and sad: ‘quad bike rollover’, ‘forklift incident’, ‘fall from aerial work platform’, ‘crushed by falling object’, ‘trapped/caught in machinery’.

If anyone thinks that this is just how things are, that some occupations are unavoidably fatal, they’re wrong. Adjusted for population, deaths at work here are three times those in the UK, twice those in Ireland and Norway, a third higher than in Australia. We sometimes laugh at the UK and its pedantic, rule-obsessed, ‘elf and safety gone mad’ culture. But maybe there’s something to be said for laws that – you know – stop people dying at work.

Even Van Velden’s decision that some small businesses can focus only on “critical” risks is a classic case of something that sounds like common sense but falls apart on closer examination. The minister has suggested that those small businesses won’t have to manage things like psychosocial or ergonomic risk.

But as the Institute of Safety Management has pointed out, mental health and musculoskeletal disorders are the two main causes of workplace harm, accounting for twice as much damage as acute injuries like broken limbs. And smaller firms have higher rates of injuries than larger ones. As compliance costs for businesses fall, so will the costs to the nation rise.

Not helping matters are the government’s cuts to WorkSafe, where around 170 jobs have gone. Among its notional workforce of 675, some 200 positions remain unfilled, the Public Services Association reports.

Staff turnover is immense, not least because of the vast workload each inspector bears and their relatively poor pay rates. Investing in this workforce – rather than asking them to monitor road cones – is what’s actually needed.

Not that this registers with a minister now fully detached from the political mainstream. When she started wondering aloud last year about a “first principles” review of the 2015 Health and Safety Act, everyone who matters – including Business New Zealand, the Employers and Manufacturers Association, and the Business Leaders’ Health and Safety Forum – wrote an open letter pointing out that this would, in fact, be a total waste of time. The act is fine: it’s just not being enforced.

The great irony is that it’s not as if the coalition is incapable of governing well. Finance minister Nicola Willis’ intensifying attacks on the supermarket duopoly, and her recent threats of real action, suggest a politician in tune with both evidence and public mood.

Van Velden and her ACT colleagues, though, could block any supermarket break-up. Nor should we be surprised. Taking pro-duopoly positions, just like emphasising road cones over workplace deaths, is standard procedure for a party that has always put corporate profits above the welfare of ordinary folk.

The Spinoff: Note to ministers: cutting services doesn’t make need go away

Read the original article in the Spinoff

When even employers are complaining about public service cuts in the National Business Review, the organ of the country’s corporate elite, it’s a sign that the shortcomings of the government’s cost-cutting agenda are spreading far and wide.

Under the headline “Lengthy mediation delays forcing employers to go private”, the NBR reported that “extensive funding cuts” at the Ministry of Business, Innovation and Employment (MBIE), combined with increased demand, were causing “a lengthy backlog to access the country’s employment dispute resolution service”. And it’s a similar story across the country.

The number of people in emergency housing declines; the number of people sleeping on the streets increases. Emergency grants from Work and Income become harder to get; charity-run foodbanks have to hand out more parcels. State-funded social services retrench more generally; everyone else has to pick up the slack.

As the government is rapidly discovering, cutting back public services does not – astonishingly enough – make the need for those services go away. It simply shifts that need somewhere else.

National’s push to end emergency housing, for instance, has genuinely seen hundreds of people settled in state homes (that Labour built). But it has also driven more people onto the streets. In Wellington, the Downtown Community Ministry, which works with local homeless people, says the number of people rough sleeping in December 2024 was up by one-third compared to the year before. The ministry’s Natalia Cleland told RNZ that the criteria for getting emergency housing had been toughened so much that people had even “stopped asking”.

Another charity worker, Cindy Kawana from Auckland’s E Tipu E Rea Whānau Services, said she knew of one young couple using a hospital as a night shelter. “Them and their baby were sleeping in the emergency waiting room at night, so they had a roof over their head and it was safe and warm, and were in the park during the day, and they couldn’t even get onto the housing register.”

The government’s cutbacks are an attempt to shrink our sense of what constitutes the public good – the set of interests we share as citizens, as opposed to the varied and individual interests we pursue in private. This seems deeply misguided.

Being able to access publicly provided mediation services, for instance, certainly delivers a private benefit to employers and employees, but it is more fundamentally a public good – something that is in all our interests – for such disputes to be resolved with relative ease and speed, without a long and costly court process. Ensuring everyone has enough to eat, including via foodbanks if need be, is also a basic public good: we are all diminished if others go hungry, and we pay the long-term costs – in rising ill-health and falling productivity – when they do so. (Of course it would be better if paid work and welfare benefits covered people’s grocery shopping in the first place, so that foodbanks were not needed.)

Note that this is a question of funding, not service devolution. The government could legitimately take the view that some charities are better placed to deliver than central government agencies, and shift funding accordingly. But that is not what is happening. Funds are simply being removed.

Nor is this an issue that solely affects the poor and the weak: it has consequences for the middle classes. In opposition, National promised it would “co-invest” alongside councils to deliver new water infrastructure as an alternative to Three Waters. The government having backtracked on that pledge, councils are being left to bear more of the cost themselves: hence, in part, why rates bills are rising so rapidly. (Decades of under-investment are, of course, the principal villain – another example of costs being illegitimately shifted, in this case from one generation of ratepayers to the next.)

It’s the same story with items like vehicle registration fees (increased by $50 by National) and drivers’ licence re-sit fees ($89, removed by Labour but reintroduced by National). Your taxes may be lower than they would otherwise have been, but your user charges will be higher. Again, this goes against the public good: registering a car and re-sitting a test undoubtedly bring private advantages, but by far the most significant benefits – safe cars and safe drivers – are to the public as a whole.

The sad thing is that National could probably have reduced spending without harming public services. One public servant recently told me that, because there certainly was wasted spending, her department could have cut around 5% from its baseline had it been allowed to carry out a considered search for efficiencies over a year or so. Instead it got hit with a blunt 6.5% reduction target delivered at breakneck speed.

The same has been true across the public service, hence the cuts – proposed or actual – to climate change modellers, officials who help track down child pornographers, and countless other valuable staff and programmes. The vast majority of health-sector workers (in an admittedly self-selecting poll) recently said they had seen service cuts – something that is, of course, forcing people to turn to the private sector. Cutting the police’s backroom staff just means frontline officers have to spend more time filling out paperwork.

None of this generates productivity, efficiency or service improvements. It doesn’t make need go away. It just shifts the burden onto other people – often those least able to bear it.

The Post: The economic recovery should start at home

Read the original article on the Post

“I care little for the mere capitalist.” Such were the stark words of John Ballance, newly elected prime minister in 1891, as he faced down parliamentary criticism of his economic policy.

He told the House: "I care not if dozens of large landowners leave the country. For... the prosperity of the colony does not depend on those classes. It depends upon ourselves, upon the rise of our industries and upon markets being secured in other countries, and not upon any such fictitious things as large capitalists or large landowners remaining in or leaving the colony.”

History, as they say, doesn’t repeat but it does rhyme. And it’s hard not to hear echoes of that century-old debate in our current politics.

Last week’s much-touted “investment summit”, in which the Government sought foreign investors for our infrastructure projects, cemented an impression I had long been forming. Too much of the coalition’s economic pitch, I think, consists of this point: “We need overseas heroes to save us.”

Of course that’s not all there is to it. Reforms in schooling and land zoning, for instance, will lift skills and help shift investment away from residential property.

Nonetheless the appeals to foreign investors are constant. It’s not just the investment summit: we’ve also seen visa reforms for overseas financiers, changes to the Overseas Investment Act, and a drumbeat of support for public-private partnerships.

Foreign investment makes good sense where it brings otherwise unobtainable skills and knowledge into Kiwi firms. But that’s not what will necessarily result from reforms that allow overseas investors to just park their money in government bonds. Foreign investment can also see profits sent offshore, or control of strategic assets lost.

Nor are those investors a magic money tree: they always have to be repaid somehow. And if, as is generally the case, they face higher borrowing charges than do governments, we’ll end up paying more in the long run.

Such deals make even less sense when – as Kiwibank’s Jarrod Kerr points out – the government could double its currently low debt levels without troubling the markets.

National is, more generally, prone to implying that our economic success hinges on a handful of “self-made” entrepreneurs. All of which creates an opportunity for Labour. To draw a contrast with this adoration of millionaires, the party could rest its faith on something humbler and more home-grown: the country as a whole.

What if, after all, we slashed our child hardship rates, currently sitting at 13%, to just 4-5%, as in the Netherlands and Finland? Socio-economic status, the evidence shows, is by far the biggest factor in school attainment. It’s hard to succeed in a cramped, dangerously mouldy house, with insufficient food and nowhere quiet to do homework, and with parents experiencing the toxic stress of unpaid bills piling up.

Just think how many more entrepreneurial talents we would unleash if we lifted all those children out of poverty. Think, too, how many more world-leading companies Kiwis would launch if the government doubled funding for blue-skies research and development, lifting it to the OECD average.

Think, finally, of all the extra people who could contribute economically if we provided better skills training for welfare recipients wanting paid work. This is, again, an area where we spend half as much as our developed-country counterparts.

The prize, in short, is an economy based on backing one another, on believing that if we invest enough in the vast mass of ordinary New Zealanders, innovation and dynamism will spring up. This is what Ballance meant when he said our economic future depends “upon ourselves”.

You could call it investing in people; some call it bottom-up or middle-out economics. It’s an approach that doesn’t close the door on beneficial foreign investors, but which holds that the largest difference will come from uplifting the people already here.

Where would we find the money to invest in ourselves? Close to home, again. We could build pools of national wealth through a Kids KiwiSaver scheme, in which the state enrols every child at birth and matches small contributions from parents. We could increase adults’ KiwiSaver contributions. Or we could, as Winston Peters suggests, create our own sovereign wealth fund.

Speaking of New Zealand First: a little bit of progressive economic nationalism – as opposed to the ugly Trumpian kind – would help Labour cosy up to Peters’ party, should it want more potential coalition partners.

Could this agenda succeed politically? Ballance would have said so. By 1891, he had introduced the country’s first taxes on income, much as Labour is now gearing up to propose a capital gains or wealth tax. This helped fund his drive to build the economy from the bottom up, using state money to assist ordinary people to acquire small farms.

All this “met with considerable criticism both at home and overseas”, Ballance’s biographer Tim McIvor wrote. But, he adds: “This was largely silenced when the premier announced a record budget surplus in 1892.” Having helped lift the country out of its long years of depression, Ballance was – in our drought-prone country – known forever after as “the Rain-Maker”.

The Spinoff: Luxon’s epic unpopularity in one chart

Read the original article in the Spinoff

Everyone knows Christopher Luxon is unpopular. National’s polling is poor, and his preferred prime minister rating is now below that of his opposite number, Chris Hipkins, despite the latter’s deliberate strategy of being largely invisible for the last 18 months. There is even talk – although no more than that – of a challenge to Luxon’s leadership.

The extent of the PM’s unpopularity, however, has never been more clearly revealed than in the graph below, supplied to The Spinoff by polling firm Talbot Mills Research. It charts the net favourability – the percentage of voters who have a favourable impression of the prime minister, minus the percentage who have an unfavourable one – of our last four leaders during their initial term in government, from Talbot Mills/UMR polling over the years. While Helen Clark, John Key and Jacinda Ardern were mountaineers scaling the peaks, Luxon is plumbing new depths.

Every leader has their challenges, of course. Clark’s popularity dropped away in her first year, owing perhaps to the business revolt sometimes dubbed the “winter of discontent”, before recovering strongly. Ardern’s rating fell spectacularly amidst the failure to deliver the much-touted “year of delivery”, her status rescued only by a successful response to the pandemic’s initial onslaught. Even Key, largely serene, had a mid-term dip. Still, the paths of those three leaders could not be further from the one Luxon is treading: he started out unpopular, and has only become more so over time.

Everyone has their own theory as to why this is, but one common thread in the criticism is Luxon’s inability to articulate clearly what he stands for or what, at its best, this country could be. This leaves voters unmoved, their emotions detached from the prime minister and his prospects. As Duncan Garner recently pointed out, in a column predicting Luxon would be rolled before the next election, previous leaders have always had at least one group of hardcore fans. “Luxon can point to no such base of support,” Garner wrote, “even among the business community who must surely be wondering when [he] is actually going to do something.”

The point is borne out by new data from the Acumen Edelman Trust Barometer, which shows high-income Kiwis dramatically losing faith in the coalition. (Their low-income counterparts remain stubbornly distrustful of all governments.) This decline in trust appears to be evenly split between left-wing and right-wing elites, suggesting the latter are indeed disappointed with Luxon’s performance. While one can only speculate as to their reasons, they may include a distaste for the culture wars that the prime minister is allowing his coalition partners to pursue, a sense that his government has few real solutions to New Zealand’s long-term productivity problems, and the above-mentioned absence of vision.

All leaders, of course, eventually lose their shine. Some commentators perpetuated the myth of Key’s “incredible” popularity, but by the time of his resignation he had ended where Luxon began, at net zero, his detractors just as numerous as his supporters. The flag referendum debacle, the bizarre ponytail-pulling incident, the fact that leadership strengths inevitably turn to weaknesses: all these factors, and more, eroded his public favourability. Only the perceived unpalatability of his opponents, Phil Goff and David Shearer among them, propped up his preferred prime minister rankings. 

Clark, supposedly less charismatic than Key, in fact stayed popular for longer than her successor did. But even she was near net zero by the end of her prime ministership.

Luxon’s defence, if there is one, is that the process of popularity decline is being hastened worldwide by an increasingly disgruntled, restive and febrile electorate. Britain’s Keir Starmer has barely got his feet under the table but already suffers catastrophically bad ratings. Across the ditch, Anthony Albanese could be about to lead the first one-term Australian government in a century.

Closer to home, and further back in time, Ardern’s popularity in her second term was – as has been extensively canvassed – in freefall. Like Clark and Key, she reached net zero, but within two terms rather than three. In democracies, public unhappiness now operates at something close to warp speed.

Arriving onto this increasingly chaotic stage, Luxon has, in one sense, been dealt a tough hand. Nonetheless he has not played it well, at least in the public’s opinion. Can he recover? In politics nothing should ever be ruled out: a recovery in the economy and improvements in public services – assuming either materialises – would certainly help, as would a bit more of what the first George Bush called “the vision thing”.

Trust, though, is famously hard to establish and easy to lose. What prospects, then, for a man who never had it in the first place?

The Post: The dismal revelations at the heart of Wellington Water debacle

Read the original article in the Post

If you have tears of rage, prepare to shed them now. This week’s reports into the Wellington Water debacle contain some of the most infuriating, dismaying and jaw-dropping details of public-sector weakness this country has seen in some time.

Owing to the deals that Wellington Water entered into with a handful of contractors, ratepayers have – according to investigations by infrastructure consultants Aecom and the business consultancy Deloitte – been paying three times more than they should for repairs. Understandably outraged, local councillors are calling for a forensic audit of any potential “price-gouging”.

The reports reveal that Wellington Water – a utility owned by the region’s councils – was far too close to, and indeed calamitously reliant upon, the contractors it was supposed to oversee.

Rather than tender each piece of work to a full field of companies, Wellington Water created “panels” of three pre-approved teams of contractors, among whom the work was allocated. A further “maintenance alliance” effectively embedded another contractor, Fulton Hogan, within the utility.

Accordingly, Deloitte found, Wellington Water focused on “trust” and “partnership” with its contractors, rather than trifling things like competitive tension. Effectively, this “prioritise[d] … consultants and contractors over ratepayers”.

And it gets worse. As Wellington Water’s new chief executive, Pat Dougherty, has admitted, the utility had “consultants managing other consultants”. Some consultant managers were – unbelievably – asked to oversee the work of their own firms.

Before seeking bids, the utility sometimes told contractors exactly how much money was available for projects. How astounded its staff must have been, then, when the bids kept coming in high rather than low!

Ominously, Deloitte also noted concerns that the main contractors were not just charging Wellington Water their own overheads but also requiring the utility to pay the overheads of sub-contractors – effectively a form of double-charging. Local councillors suspect this is happening on other big projects.

And if you think you’ve seen this movie before, you’d be right. Two decades ago, a wastewater project in Kaipara blew out spectacularly, costing locals tens of millions of dollars. One of the failure’s root causes, the Auditor-General found, was a local council so short-staffed, so reliant on consultants, that it could no longer even manage its own contracts.

Likewise Wellington Water, which didn’t have its own system for managing pipes and other assets, but instead used systems supplied by, among others, Fulton Hogan, the very firm it was supposed to oversee. This, as Dougherty told local councillors last year, became an obstacle to pushing contractors for savings: “It is a little bit difficult to have terse conversations when we are absolutely reliant on their goodwill.”

This whole sorry saga is yet another indictment of the belief that paring back public bodies generates efficiency and saves money. By rendering those bodies hopelessly dependent on contractors, it does exactly the opposite.

The hollowing-out of Wellington Water ultimately stemmed, some argue, from underfunding by its shareholding councils. But given how the utility was run, why would they have coughed up more cash?

Either way, the obvious first step for Wellington Water – and any successor organisation – is to rebuild its core capabilities, and to treat contractors not as trusted “partners” but as what they really are, profit-hungry entities to be kept on a very short leash.

Whether the utility can do so under the leadership of its current chairperson, Nick Leggett, is another question. With some honourable exceptions, strikingly few people have noted Leggett’s conflict of interest.

In his other life as the chief executive of Infrastructure New Zealand, a body that lobbies for a bigger role for its corporate members, Leggett has his salary paid by – among others – Fulton Hogan. Not only that: the board to whom he reports includes Ben Hayward, chief executive of Fulton Hogan.

Other Infrastructure New Zealand members, including the engineering firm Beca, have had contracts with Wellington Water. Yet these are the firms whose work Leggett is supposed to control.

Some minor conflicts of interest can be handled by an individual “leaving the room” during specific decisions, but in this case, the issues with contractors – Fulton Hogan in particular – are threaded right throughout the organisation.

Leggett said this week that he had been managing the conflict of interest, and he was not involved in contractor discussions. But with all due respect to him, the conflicts of interest here look unmanageable – yet another instance of New Zealand not being tough enough on such relationships.

Leggett has, to his credit, acknowledged Wellington Water’s failings this week, and is putting more work out to open tender. But this is rather late in the day. A board member since April 2022, he was present in 2023 when the utility was warned of many of the above problems but dismissed them as, in the words of its then-chief executive, “a distraction”.

In its pursuit of better value for ratepayers, Wellington Water urgently needs to reset its relationship with contractors – and to have the public’s confidence that it has done so. It is hard to see how this can be achieved by an organisation helmed by someone who is paid by, and reports to, those very same contractors.

The Spinoff: We need to stop shadow-boxing on competition

Read the original article on the Spinoff

When, earlier this month, finance minister Nicola Willis warned our uncompetitive supermarket duopoly that they had been put “on notice”, Foodstuffs and Woolworths must have been trembling with fear. Indeed they can barely have recovered from the shock incurred the last time they were – according to RNZ – put “on notice”, in August last year, for routinely over-charging customers. This came on top of the mortal peril of – you guessed it – being put “on notice” in 2022, this time by Labour’s David Clark.

During his 2022 press conference, Clark insisted that the supermarkets’ uncompetitive behaviour “can’t be kicked down the road”, while in the same breath announcing “another review of competition in three years’ time”. Black comedy aside, the wrenching incompatibility of these two statements hints at the reason why our supermarket giants may not, in fact, have collapsed in terror. They have correctly deduced that all this half-hearted making of threats, all this putting “on notice”, amounts to nothing whatsoever.

In a similar boat are our cartel-like banks, who have somehow mysteriously survived being put “on notice” not only by the current government (the National Party in December last year: “The big banks are on notice”) but also by its predecessor (Kris Faafoi and Grant Robertson in November 2018: “Banks [are] on notice to lift their game”). The banks have also bravely endured the finance minister’s rapier-sharp wit, shrugging off her carefully crafted description of their industry as “a cosy pillow fight” where other firms might have crumpled under this near-mortal blow.

Customers, meanwhile, await action. The Commerce Commission has calculated the supermarket duopoly extracts $1m in excess profits every day – profits, in other words, above and beyond those they would make in a competitive market. That $1m a day comes straight out of shoppers’ wallets. Kent Duston, the convener of the Banking Reform Coalition, estimates that another $10m a day in “unearned and unjustified profit” is extracted from us by the four big Australian-owned banks. A small handful of firms likewise dominate – and earn excess returns from – electricity generation, building supplies and other markets, many of which have also been put “on notice” to equally little effect.

Why is there so much shadow boxing, and so little action? One major culprit is the hands-off approach to regulation that has haunted the English-speaking world for decades. Anti-monopoly regulations should theoretically be popular even among small-government types: competition is, after all, the only thing that makes markets work. Monopolies, duopolies and oligopolies – the latter denoting market dominance by a handful of firms – are a menace to consumers, raising prices and squashing innovation. But even pro-competition regulations have long been deemed suspect.

The dominant view has instead stressed the economies of scale that – in theory – accumulate in larger firms. The mere possibility of competition, what’s more, is supposed to put a check on monopolistic behaviour. Obviously this latter idea is self-serving – or, rather, big-business-serving – nonsense, but it has nonetheless been hugely influential. Hence New Zealand has long tolerated two supermarket chains having over 80% market share, while further afield Facebook was – to take just one egregious instance – allowed to buy up both WhatsApp and Instagram.

Overseas, the grip of this laissez-faire view is weakening: witness the US Justice Department’s determined prosecution of Google’s monopolistic behaviour, and the tougher approach to anti-competitive activity crystallising within the European Union. Even in sleepy old New Zealand, everyone can feel the pressure build. It is not hard to guess why Willis has started talking a good game on competition: people don’t like the banks very much, and they really don’t like the supermarkets. Having a go at those firms – and their uncompetitive colleagues the electricity gentailers – is a free hit.

Our current politicians have, however, an immense fear of taking risks. No matter how angry the public gets over excess profits, there is far less peril in making big-sounding statements – and taking small, ineffectual steps – than in implementing the weighty structural reforms that would actually drive change. Decisively shaping markets feels like a step into the unknown; the possibility of a botched effort looms large. Hence, when it comes to the supermarkets, Willis has done nothing more than talk vaguely about removing “unnecessary regulatory hurdles that discourage new entrants”, whatever those may be, and taking further steps that “could” – note the hesitant conditional tense – include helping new entrants access suitable land.

It doesn’t help that there is no clear consensus on the exact remedies for anti-competitive behaviour – which may vary from sector to sector – nor much detailed academic work on how to implement them. Several influential figures have called for the gentailers to be broken up, so that they can no longer exploit the commercial advantages of being able to both generate and retail electricity, but it is unclear just how much good this would do.

When it comes to the supermarket duopoly, a third competitor might be encouraged – but how? Some credible thinkers – among them the Australian competition expert Lisa Asher – argue New Zealand is badly under-served with supermarkets. Others, such as 2 Degrees founder Tex Edwards, believe that on the contrary New Zealand is “oversupplied”, and that the only solution is to force Countdown and Woolworths to divest 140 of their existing stores to a new entrant. Other thinkers on the progressive left are arguing, at least in private, that tougher regulation of the current supermarkets – rather than a new competitor – is the way to go.

Questions abound, too, about whether our entire legal framework on competition is fit for purpose. Clarity on all these points will be needed before the next election. Because right now, when it comes to tackling anti-competitive behaviour, New Zealand politicians are locked in a pointless cycle of empty words and signals of virtue. For the sake of the consumer, they may need to stop handing out “notices” that are about as threatening as a wet wipe, and start taking action.