The Post: The honeymoon’s over, but a hangover’s just kicking in

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The received wisdom is that this government never got a honeymoon – and, like much received wisdom, it’s almost certainly wrong.

Sure, the coalition parties didn’t see the usual polling bump immediately post taking office. But, according to at least one pollster I interviewed early last year, focus group participants were giving the government the benefit of the doubt.

Some things made them uneasy. Voters had sympathy for public servants losing their jobs, and sensed something slightly savage in the cuts to spending. They were also turned off by the more aggressive anti-Māori policies.

But, like all fair-minded Kiwi folk, they felt a new government deserved a chance to prove itself. That leeway – a honeymoon of sorts – was duly extended. Hence the coalition’s polling held up for much of last year.

The problem facing the government is that it has now thoroughly burnt through that goodwill. Casey Costello’s pro-tobacco shenanigans, the anti-environmental Fast-Track Bill, the relentlessly negative unwinding of Labour’s agenda: that’s quite some way to torch your honeymoon.

The divisive Treaty ‘Principles’ Bill, meanwhile, may have slightly boosted ACT’s ratings, but at the expense of driving moderate voters towards Labour and radical ones towards Te Pāti Māori. Between the 2023 election and the last five polls pre-Christmas, National’s vote slumped from 38.1% to 32.9%.

On the other side of the ledger, Chris Hipkins’ party rose from 26.9% to 29.4%, and support for the Māori radicals jumped from 3.1% to 6.5%. All of which leaves the governing parties just two percentage points ahead of the opposition.

While ACT and NZ First seem unconcerned, National’s leading lights can sense danger, and in a series of interviews late last year signalled a shift towards a more “positive”, forward-focused agenda. The problem is that it’s not clear what that would actually look like, nor if it could undo the reputational damage already done.

While National was well within its rights to reprioritise low-value spending and tackle things like the bloating of government comms teams, the mindless haste of the state staffing cuts – which could total 7000 on current estimates – seems to have registered with the public.

In infrastructure, the same story pertains. National could have sought efficiencies at the homes and communities agency, Kāinga Ora, and gradually increased the building capacity of NGO providers. Instead it has brought construction to a near-standstill, feeding its ideological animosity to state provision at the expense of actual on-the-ground progress.

The public sector and infrastructure cuts, both of which slow spending and investment, have only weakened an economy already struggling under Labour. On a per-person basis, we are experiencing a worse recession than that which followed the GFC.

This is why National so fervently insists it got inflation “under control” by cutting spending. It’s the party’s sole economic claim to fame.

But even that is bogus. Inflation has fallen only because the Reserve Bank had hiked interest rates sky-high.

Labour’s pandemic-era spending was, in any case, never a major contributor to inflation. A 2023 report showed increased corporate profits were responsible for more than half the post-pandemic spike. This chimes with global research blaming factors largely outside governments’ control, in particular corporate profit margins, but also disruptions to supply chains and oil price increases.

Post-GFC, conservative governments worldwide – notably in Britain – successfully sold the lie that the financial crisis had been caused by excessive state spending (as opposed to the actual culprit, weak regulation). But if Labour can push back against the latest lie – and all the signs are that the public isn’t swallowing it – then Hipkins and co have a greater opportunity to be heard than parties usually do after being turfed from office.

Labour’s problem, of course, is that last time round it left too large a gap between ambitious promise and underwhelming delivery. Over the next 18 months, the party will have to tread a fine line, simultaneously offering voters something positive while acknowledging – more strongly than it has so far – the mistakes made in office.

Pledges of sweeping change are unlikely to sit well with a public now sceptical that big dreams will come true. Even the 2023 promise of free dental care for under-30s, a relatively unambitious policy, was – I’m told – met with disbelief that it would ever be delivered. Some kind of mid-range change – not minute incrementalism, but tangible improvements people can see in their daily lives and their communities – may offer Labour its best hope of victory.

If, as predicted, the economy does recover by mid-2026, with growth rising and unemployment falling, National will still be favourite to win another term. The cuts may then be long-forgotten, the coalition’s tone shifted from vengeance to positivity, the approach less ideological, more practical.

And economic fundamentals matter: they are, ultimately, what cost Democrats the presidency in the US last year. But, thanks to the coalition’s failings, the political door is more open to Labour than it would normally be.

The Post: Taking control of technology’s future direction

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As we reach the end of yet another year that has not, perhaps, been the best the world has ever seen, it would be easy to feel defeated about the future. War, drought, famine, climate change: no end of things trouble us.

Technology has become another potential source of pessimism. Many people are understandably worried about the way that AI, in particular, seems to be evolving beyond our control, its economic threats at least as large as its promises.

But we should not be defeatist. That, at least, is the message of the best book I read this year, Power and Progress: Our Thousand-Year Struggle over Technology and Prosperity, by the Nobel economic laureates Daron Acemoglu and Simon Johnson.

Their basic contention is that technological development, AI included, can yield extraordinary economic benefits to humankind – but only if we point it in a specific direction. And we hold that power in our hands.

What Acemoglu and Johnson have in their sights is a naïve – and dangerous – version of the “productivity bandwagon” theory which, as espoused by the tech lords of Silicon Valley, holds that technological development is uniformly positive because its economic benefits automatically filter out across society. Citizens and their governments should, in this view, just get out of the way of technological change, and watch productivity rise and living standards soar.

The beauty of Power and Progress is that it delves deep into 1000 years of history in order to point out that this theory is not, in fact, universally true. I already knew that during the Industrial Revolution, many workers were temporarily worse off after being displaced by innovations like spinning machines. But even I was surprised to learn that the living standards of textile workers went backwards for an entire century.

Even more startlingly, it turns out that the mediaeval period had a fecundity of technological innovation far beyond what I had believed – including greatly enhanced ploughs, the first fireplaces and chimneys, and the development of mechanical clocks and eyeglasses – but the living standards of peasants stalled for 200 years.

Why is this? Acemoglu and Johnson’s great insight is that the “productivity bandwagon” operates only if two conditions are met.

First, a given innovation has to raise something known as worker marginal productivity – the additional contribution that each extra worker makes, for instance by increasing throughput in a factory. Innovation, in other words, has to make each extra worker more productive.

This has happened often throughout history. New forms of software, for instance, have helped car mechanics work more rapidly and productively.

Technological development can also create whole new tasks. Henry Ford’s assembly-line method for making cars may have rendered some workers obsolete, but it created a vast swathe of design, technical, machine-operation and clerical tasks. It also spurred the development of other industries – in oil, steel and chemicals, for instance – and new forms of employment, from inter-city freight through to the humble drive-in cinema.

In contrast, pure automation, the replacement of people with industrial robots, leads to fewer jobs and can effectively make workers less productive. Acemoglu and Johnson are also scathing about what they label “so-so automation”. Self-checkout systems in supermarkets don’t meaningfully increase productivity or bring whole new industries into being: they just shift the work of scanning items from employees to customers.

The second thing needed to make the productivity bandwagon a reality is an institution – a law, an organisation, a body of some kind – that ensures the gains from productivity are broadly shared with workers, in the form of higher wages. Powerful trade unions and minimum-wage laws are two such institutions.

Lacking collective power, mediaeval peasants and early Industrial Revolution workers unsurprisingly saw their living standards degrade. In the latter case, it was only once trade unions hove into view, and labour laws were reformed, that industrial innovation began lifting ordinary people’s wages.

The underlying point here is that we, as citizens, retain that most precious of commodities: choice. We do not have to submissively accept the technological changes espoused by our would-be overlords in Silicon Valley.

There are many ways we can ensure that digital technologies, including AI, bring widespread economic benefits, making workers more productive in their current jobs or creating new tasks for them to do. Government can, and should, provide subsidies for socially beneficial technologies, regulate surveillance technologies, protect people’s privacy and data ownership, and invest massively in lifelong vocational education.

These are not pie-in-the-sky ravings; Acemoglu, in particular, is probably the world’s most influential and broadly respected economist.

He also argues, correctly, that in political mobilisations like America’s late-19th-century Progressive movement, we see examples of ordinary people succeeding – against great odds – to overcome the domineering power of big capital and vested interests.

“The future path of technology”, Acemoglu and Johnson conclude, “remains to be written.”

The Post: The Greens find a new target that isn’t one of their own

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Watching the Green Party’s series of self-inflicted scandals unfold this year, I’ve often been reminded of a shoot-out scene from Guy Ritchie’s Lock, Stock and Two Smoking Barrels, in which one gangster remarks, “I don’t f...ing believe this! Can everyone stop getting shot?”

But even if it sometimes looked like their MPs were, in fact, determined to get shot as often as possible, the party has closed out the year in respectable fashion. Most notably, it released last Sunday an alternative emissions reduction plan that would triple the pace of our climate change response.

The document, though light on details, is stuffed full of big, interconnected ideas. A clean power payment to cover the upfront costs of rooftop solar panels is matched with a Future Workforce Agency to train a new generation of installers, all funded by a turbocharged emissions trading scheme.

Where National’s relatively feeble plan would take 17 megatons of carbon out of the atmosphere early next decade, the Green version, its modelling suggests, would remove 48 megatons.

Politically, the plan serves multiple purposes. The party has been accused of being “missing” in environmental debates this year, and even though party insiders disagree, they concede it’s useful to have a heavyweight intervention to counter that claim.

The plan signals an intent to get on the front foot, to consign the annus horribilis to history, to be known once more for policies not personalities. It also foreshadows a key strategic focus: the idea that the environment is, as the document states, “a fundamentally economic problem”.

The Greens have always struggled with the tension between honouring radical roots and appearing fit to govern, and the current strategic focus can be read both ways. On the one hand, it signals a desire to put the environment – for too long regarded merely as an extractable resource – at the heart of economics.

On the other hand, it accepts the reality that while climate change is not, alas, a public priority, the economy absolutely is. This positions the Greens well for the run-up to next year’s Budget.

Getting heard, though, will still be hard. There has been heated debate about whether this year’s scandals – most obviously the Darleen Tana catastrophe – have harmed the party’s polling.

One could argue that they haven’t: the Greens’ 2023 election-night tally of 11.6% has, by my calculations, dipped only imperceptibly, sitting around 11% in the last five polls. But the party has, historically, profited from moments of Labour weakness, and given the larger party’s struggles, the Greens should probably be several points higher.

Whereas the party’s base support once appeared perilously close to MMP’s 5% threshold, it is now more like 8-9%, insiders suggest, with a similar number seriously contemplating going Green. It surely helps that the party has proved it can cope with the rigours of government – albeit, critics allege, at the expense of its radicalism.

This year’s polling sensation, though, is Te Pāti Māori, riding a wave of hīkoi energy to hit 6%, twice its 2023 election tally. Labour is also up slightly.

So although the public mood is shifting on issues dear to the Greens’ heart, including te Tiriti justice and tax, the danger – from the party’s viewpoint – is that it may not be the beneficiary.

But while grassroots members may see things differently, there is no immediate prospect of a radical change of direction. The emissions reduction plan may attack capitalism as “an insatiable, unsustainable economic system”, but the solutions it envisages, though supportive of an enlarged state, are hardly anti-capitalist.

Nor does the party plan to microscopically target sections of the electorate, in the way that – for instance – Donald Trump focused on disaffected young men who listen to podcasts.

Green MPs are, admittedly, intensifying their outreach to marginalised non-voters – a more useful task, from the left’s overall viewpoint, than poaching votes from Labour – but such schemes have been tried before with limited success.

At least three big challenges loom for 2025. One is how to accommodate the ongoing absence of co-leader Marama Davidson, still battling cancer, and address the resultant strain on Chlöe Swarbrick.

The second is the party’s sense of being placed constantly on the back foot by the coalition’s blitzkrieg approach to governing, which creates endless policy announcements that can’t be ignored but which nevertheless distract from the task of shaping a proactive Green agenda.

The final challenge is perhaps the biggest: getting cut-through. The Greens have eschewed the David Seymour approach of dominating the news by picking high-profile fights with whoever is deemed the enemy of the day, be it “woke” food providers, Māori activists or Tusiata Avia.

Fair enough, perhaps – but with a diminished media struggling to digest complex policy, this stance raises the risk of being ignored. To adapt an old adage: if the Green Party holds a press conference in a forest, and no-one is around to hear them, do they even make a sound?

The Post: Erica Stanford has made education a bright spot of first-year legacy

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If you only read the headlines, and had seen last week that education minister Erica Stanford called her opposite number “a stupid bitch”, you’d be forgiven for thinking that schools policy was mired in the usual political pettiness. And you’d be wrong.

The woman thus abused, Labour education spokesperson Jan Tinetti, did make clear her displeasure. But she also told RNZ that just the night before, she and Stanford had had a constructive meeting about curriculum reform.

Behind the scenes, there are promising signs that New Zealand’s school results may soon flip from Bs to As – and that the change, being relatively bipartisan, will endure. As the National-led Government celebrates its one-year anniversary, education stands out as a potential bright spot amid a stalling economy and David Seymour’s attempt to rip up the Treaty of Waitangi.

Stanford’s core ambition is to restore balance to the way we teach our children. New Zealand has long had an exceptionally flexible curriculum: teachers have wide discretion over what they cover, and when. And this has unmistakeable advantages.

When I lived in London, the teachers I knew complained about an over-prescriptive British curriculum that robbed of them of the creativity and autonomy that animate the best instructors.

Many people now think, though, that the New Zealand curriculum is too flexible. It can require teachers to make decisions above their pay grade, and leave them unsure of what they should be doing. Weaker teachers can dodge the most difficult elements of their subject. Too many students leave school unable to properly write or do maths.

Hence Stanford’s push for a more clearly articulated curriculum. Teachers will get detailed instructions about which elements to cover and when, and – in theory – more classroom materials to support that work. Teacher training and professional development will be overhauled; assessment likewise.

Though distinctively Stanford-esque, these reforms continue on a path that Labour had tentatively trod. During her brief tenure as a minister, Tinetti had announced a list of “the essential and foundational maths and literacy assessment standards” that a student must achieve in order to pass NCEA. And while Stanford is rolling out “structured literacy” and “structured maths” curricula, Labour had already begun implementing “a comparable literacy curriculum”, according to Newsroom’s Laura Walters.

One might, of course, question just how quickly Labour was actually creating change, given its enthusiasm for expert advisory groups and reviews that went nowhere. Stanford has clearly stepped up the pace and thoroughness of reform. But then Covid-19 had put a wrecking ball through Labour’s school plans; some allowances must be made.

In any case, the attribution of success or failure – a favourite sport of politicians – is far less important here than the basic, underlying message of hope: the New Zealand state retains the ability to solve problems.

Sure, it took too long to recognise a decline in school performance that had occurred under both Labour and National. But as public concern has grown, so too have experts, public servants and politicians of all stripes responded. This is elementary stuff, but stands in stark contrast to, say, the American political system, now so dysfunctional that it is more likely to exacerbate problems than solve them.

Stanford’s reforms should, by contrast, bear fruit over coming years. This includes her mobile phone ban and her moves to cut construction costs by standardising classroom design.

And whenever Labour gets back in, we can hope to be spared the usual destabilising 180-degree change of direction. The alternation of parties should instead help us tack towards the goal, like a boat sailing into the wind.

Labour was right to introduce a curriculum that corrected the long neglect of Māori history, but the curriculum’s principles ignored Pākehā history entirely (save “colonisation”); Stanford’s promised restoration of “balance” could be beneficial.

In place of a draft science curriculum that didn’t even mention physics, emblematic of a certain wooliness of thinking, we’ll have curricula that emphasise the acquisition of core facts and good grammar.

The reforms are, however, being implemented at a speed that threatens to overwhelm teachers, and could become too prescriptive and test-focused; a Labour administration might need to tack back a little.

Better support for teachers, through enhanced professional development and classroom resources, will also cost money, something National is loath to spend. Beyond Stanford’s own reforms, the mess soon to be left by Seymour’s charter schools and other evidence-free ideas – fining parents for their children’s truancy, anyone? – will have to be fixed.

And there is one inconvenient fact National prefers not to confront: the biggest handbrake on learning, research shows, is not bad teaching but poverty and its related socio-economic ills. It’s hard to succeed when your parents can’t afford a laptop, your house’s mouldy walls are incubating rheumatic fever, and stress and violence are all around.

Given National’s profound lack of ambition on tackling poverty, that may be one problem Stanford leaves for her successor.

The Post: Understanding the forces that bring authoritarian populists to power

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The day after Donald Trump got re-elected, lecturers in at least one American university –the New York Times reports – told students, “we’re actually cancelling class today because of the election”.

The academics’ inability to cope is understandable in part: Trump, as has been exhaustively documented, is a serial liar, an abuser of women and an attempted over-turner of legitimate elections. But as Laura, the 20-year-old student who conveyed her lecturers’ remarks to the Times, said, “I was shocked because [they were] completely blocking off the idea that someone might support someone other than Harris”.

Surely, after nearly a decade of seeing “The Donald” in public life, we have passed the time for bewilderment, and reached the point of addressing the forces that bind people to such authoritarian populists. This is not some far-distant concern: Trump’s support here seems to have more than doubled from 9% in 2016 to 21% this year. That figure rises to 31% among Kiwi men.

Hypothetical polls (“how would you vote in another country’s election?”) may, admittedly, be unreliable, or just reflect Trump’s greater familiarity. But they are consistent with a vote share of around 15% for New Zealand First and ACT, parties that increasingly foment a similar divisiveness.

In the last decade, of course, countless columns have been written about authoritarian populism. But as can be deduced from the shocked American lecturers, and from the equally shocked Kiwis in left-wing circles, those of a more liberal bent have still grasped neither the drivers of Trumpism nor its solutions.

The first step, I think, is to isolate the valid from the invalid drivers. The latter sometimes consist of outright bigotry: racism, sexism, the wider pushback against a more diverse world. Those impulses can only be confronted head-on, as the hīkoi to Parliament is currently doing.

But there are also people who, in every nation, have valid reasons for anger. No-one, in my view, has ever bettered the analysis of Trump voters offered by the University of Wisconsin-Madison’s Kathy Cramer, who, after years spent interviewing rural Americans, reported that they felt they weren't getting their fair share of three elementary things: income, respect, and political power. Globalisation had wrecked their livelihoods; elites looked down on them; and political decisions were made in faraway urban centres.

The question of respect is complex, because not everything in those lives deserves validation; but the two other complaints are more straightforwardly true, in New Zealand as elsewhere. Since the 1980s, the number of families in poverty here has nearly doubled, and most of them feel they are locked out of the political system.

A 2022 survey, carried out by the OECD, found that although nearly 60% of financially secure New Zealanders say they trust Parliament, that figure falls to just 40% for people who struggle to pay their bills. Similarly, just 35% of the poorest Kiwis feel they “have a say” in political decisions.

Rural dwellers likewise report very low levels of trust. And since 2022 the figures may well have worsened.

What’s driving this disenchantment? Although the Official Information Act needs reform, nearly eight in 10 Kiwis think “information about administrative procedures” is easy to find. The problem is less about what government puts out, and more about what it doesn’t take in.

Fewer than half of New Zealanders – 48% – feel they have enough opportunities to voice their views, and only 37% believe that if they did speak up, state agencies would listen. As a recent OECD report put it: “People need to feel trusted by the government in order to trust it.”

What would it take to turn this situation around? An effective state, able to deliver core services well, is crucial: competence plays a central role in enhancing trust.

Addressing hardship is likewise vital. If lifted out of poverty, hundreds of thousands of New Zealanders would be more likely to vote. And to ensure their voices weren’t still drowned out, we could clamp down on the political donations and vested-interest lobbying that convert wealth into power.

But at the heart of any reform programme must be a determination to do politics differently. The most trust-enhancing reforms are, according to the OECD’s evidence, those that ensure citizens’ voices “will be heard”.

Top-down, one-way politics is a 20th-century hangover. We need more opportunities for ordinary people to come together, share their collective wisdom, and play a meaningful part in decision-making.

That requires, in particular, greater outreach to marginalised New Zealanders. State agencies should ditch their cosy habit of consulting “selected stakeholders”, and get out there – in malls, sports clubs and community centres – to engage people where they are.

We have the chance, if only our public service can grasp it, to restore a more cohesive society.

The perils of the alternative path – divisiveness, polarisation and a breakdown of trust – are plain to see.

The Spinoff: The right’s weird new obsession – Singapore

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In years gone by, New Zealand’s right-wingers had predictable heroes. They looked to tax-cutting, regulation-shredding leaders like Margaret Thatcher, and their exemplar states all had libertarian characteristics: America’s weak trade unions, the former Soviet Bloc’s flat taxes, Ireland’s corporate-friendly “Celtic Tiger” economy. Now, though, a new hero has roared into view: Singapore.

This interest dates back at least as far as a 2016 paper by Act founder Roger Douglas and Auckland University economics professor Robert MacCulloch, which lauds Singapore’s health and welfare services. But it’s everywhere now. “I’m a big fan of Singapore,” former National leader Don Brash said during a recent debate. Singaporean-style ideas turn up in New Zealand Initiative presentations. “Christopher Luxon hankers after Singapore’s success,” the Listener columnist Danyl McLauchlan wrote recently. Winston Peters’ mooted national infrastructure fund has parallels with Singapore’s Temasek.

It is, on the face of it, a strange enthusiasm. Far from being libertarian, Singapore is an immensely authoritarian state, one barely qualifying as a democracy. Since 1959 it has been ruled by one party, the PAP, which currently controls 89% of seats in its parliament. Political opponents are forced into exile or bankrupted by PAP “defamation” lawsuits. Similar tactics are used against journalists. Activists are jailed for holding up pictures of smiley faces.

Some right-wingers are, of course, happy to overlook such trivial matters as long as a government follows other parts of the conservative playbook. You could call it the John Key doctrine, given the latter’s support for Donald Trump and Jair Bolsonaro: the vilest behaviour, the most brutal assaults on human rights, can be justified as long as you cut taxes. (In fairness, parts of the left have long been willing to overlook parallel failings on their side.) And Singapore does indeed have low taxes and minimal restrictions on foreign investment. But its popularity on the right seems to stem from the other part of its somewhat schizophrenic approach to government: its unashamedly “big state” tactics for creating growth and promoting social outcomes.

Central, in both cases, is the push for greater savings and investment. Singaporean workers must put a startling 21% of their wages into compulsory savings accounts, and employers contribute a further 16%, sums that would otherwise be paid as wages. From these accounts, workers pay for their own pensions, healthcare and medical insurance.

This approach, Douglas and McCulloch argued in a 2016 paper, encourages consumer choice, limits health costs and provides high-quality care. Their paper exhorts New Zealand to slash state spending and force people to save, Singaporean-style, for not just their pension and healthcare but also for six months’ worth of “unemployment insurance”. Nor is it just Douglas and MacCulloch: a New Zealand Initiative researcher, Max Salmon, espoused similar ideas at a Retirement Commission event earlier this year.

Although I did, in the spirit of open debate, commission MacCulloch to rehearse these arguments for a journal I edited in 2019, I can see serious defects in this plan. For one thing, higher-paid people would get bigger pensions and be able to buy more healthcare.

And the state can’t stay out of things entirely. The Singaporean government still subsidises up to 80% of care in some cases, while MacCulloch acknowledges that the New Zealand state would need to keep providing unemployment benefits and healthcare for the very poorest. More generally, the global evidence is that competitive, user-pays systems for health and education are less successful than those that work collaboratively and are free at the point of use.

Then there’s Winston. He wants New Zealand to create a $100bn pool of infrastructure cash that would have parallels with Singapore’s Temasek, a sovereign wealth fund whose initial stake was created by commercialising state-owned enterprises. But if one wants a model for sovereign wealth funds, there are plenty in the democratic world, including that run by Norway (albeit using the proceeds from a past oil boom). And although, at a more general level, Singapore has remarkably good social outcomes, the countries that still outperform it are, predictably, the Scandinavians. And they do so while guaranteeing their citizens minor things like – you know – basic human rights.

More interesting than the flaws in this Singaporean love-in, though, is the reason the enthusiasm exists in the first place. There is a sense that, on one crucial point at least, New Zealand’s hands-off approach to the economy has failed. We are famously bad at saving, and that leaves us with relatively little to invest in things like infrastructure and start-up businesses. Even when we do have windfalls – like the Maui gas fields – we fritter them away. And so our economy languishes.

As Simplicity’s Sam Stubbs points out, Australia has five times our population but 38 times our retirement savings, thanks in part to a superannuation scheme that forces them to save 11% of wages. Stubbs, and others commentators, increasingly call for a two-birds-with-one-stone solution, in which we are somehow made to save more and thus generate domestic funds for investment.

In this context, Singapore, with its muscular approach to economic development, can look attractive. Compulsory savings accounts, meanwhile, evoke in part the traditional libertarian desire to individualise and marketise human life. But only in part. What’s truly fascinating is just how authoritarian these visions are. In a libertarian paradise, healthcare privatisation would leave people “free” to spend on medical treatment. The Singaporean version forces people to save large amounts of their salary to spend on certain things. It’s not that dissimilar to taxation, only with none of the efficiencies of Inland Revenue collection.

Partly this may reflect global trends: the American “new” right, for instance, which counts among its flag bearers people like JD Vance, is remarkably non-libertarian. It embraces tariffs on foreign goods, government-directed industrial policy, and even in some cases a particularly masculine version of trade unions.

Partly, also, Singapore’s popularity reflects a philosophical shift. At least in New Zealand, there is very little credibility left in the 1980s libertarian ideal that, if the state just got out of the way, everything would be fine. The average voter has clocked the poverty and dysfunction that that embedded. People haven’t forgotten the havoc that unregulated markets wreaked during the GFC, nor do they think that markets will solve climate change. They know that the countries with the smallest governments aren’t prosperous paradises but rather the failed states of Africa. The embrace of authoritarian Singapore, in short, symbolises the absolutely bankrupt state of modern libertarianism.

The Post: The disaster scenarios arising from building consent deregulation

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Here’s a thought: if the government didn’t need to inspect your car before it was built, does it need to inspect your house?

Such are the questions raised by the Government’s announcement this week that it wants to allow certain tradespeople and builders to “self-certify” their work.

Construction minister Chris Penk wants, firstly, to see “qualified” plumbers, drainlayers and builders join electricians and gasfitters in being able to self-certify work – that is, avoid inspection – on “low-risk” builds.

Secondly, construction businesses with “a proven track record”, like those who build hundreds of near-identical homes each year, would get a “more streamlined” consent process.

For minor plumbing jobs, this might be fine. But for anything bigger, disaster scenarios immediately suggest themselves: cowboy builders do a bodge job, “self-certify” it, and are long gone – or conveniently bankrupt – when the homeowner finally discovers the fault.

In response, Penk says tradespeople would be eligible only after passing rigorous professional exams, and would have to put funds aside – through insurance or cash reserves – to fix defects and reimburse homeowners.

Then, theoretically, building practices would be reformed by the shift in responsibility. At present, the argument goes, councils are risk-averse and over-inspect, because they can be held liable for ushering through a defective build. If the responsibility lay with builders, they would carry the can for faults, while a layer of time-consuming inspection was removed.

Hence the car analogy, derived from AUT construction professor John Tookey, who argues that, even though cars are potentially deadly, the state doesn’t inspect each vehicle as it comes off the line. It relies, instead, on new models meeting rigorous quality standards pre-production, and firms being liable for any subsequent defects. This leads to safer cars, Tookey says. “So conceptually, could it work [in building]? Sure.”

Practical problems abound, though. First, there is ample evidence that even “qualified” professionals will do shoddy work.

Second, the industry would undoubtedly apply pressure for more projects to be deemed “low-risk”, until even relatively high-risk work was done without inspections.

Third, as The Post has reported, no insurer currently offers builders cover for non-completion or defective work, suggesting they don’t think it can be provided at a sensible price. And, if they did provide cover, insurers would – guess what? – want to do their own inspections and consents, thus partly nullifying the “streamlining” of the system.

Faced with this reality, Penk has gestured towards things like the Master Builders’ “guarantee”, but it doesn’t deserve the name. Heavily caveated, it only covers leaky-homes style defects for two years post-completion.

Master Builders, meanwhile, try very hard not to actually pay out. News reports are littered with headlines like “Family suffers 17-month Master Builder guarantee ordeal” and “Master Build guarantee ‘not worth the paper it's written on’ ”.

A better version is of course possible, but as Tookey notes, when New Zealand politicians are setting up new systems, “we tend to go for the economy version”. If Penk’s changes happen, they are likely to happen shoddily, marred by inadequate professional standards, powerful industry lobbying and weak insurance.

In the UK, the 2017 Grenfell Tower fire, which claimed 72 lives, was this year found to have been caused partly by deceitful firms installing products they knew were unsafe – but also by a privatised regulator captured by the industry. Any shift away from conventional state regulation is, in reality, a massive risk.

It could also generate a massive bill. Remember that the leaky homes crisis, incurred in the last bout of deregulation, has cost the country somewhere between $11 billion and $47b.

And even if, under Penk’s system, builders can get insurance, homeowners would have to spend huge amounts of time and money pursuing the payouts. Then there’s the costs of repairing defective work.

However expensive the delays caused by council inspections are, they are unlikely to be anywhere near as bad. Prevention is almost always much cheaper than cure.

Sure, council consenting needs to be streamlined, sped up and standardised across the country. But that doesn’t require deregulation.

Some might say that, under deregulation, the potential damage to reputation (and insurance profile) would encourage builders to do consistently better work. But that’s fantastical. It’s also the point where Tookey’s car analogy breaks down.

Such fears might motivate car manufacturers, but only because car faults are so deadly, so easily traceable, and so fatal to reputation. Building faults, by contrast, can take ages to emerge, are often hard to pinpoint, and generally aren’t fatal.

Plenty of firms will cut corners but bank on being able to frustrate clients, outlast them in the courts, deny responsibility, or – ultimately – declare bankruptcy. (The Government has nothing more than a vague “plan” to deal with the latter problem.)

Penk’s reforms are supposed to shift liability from councils to builders, but in practice would probably lump it onto a third party, the one least equipped to handle it: homeowners.

The Spinoff: A new suspect in the case of New Zealand’s property investment obsession

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A few years ago I wrote a column arguing that, over a generation, house prices in New Zealand needed to fall 40% if they were to become once more affordable. This was, it’s fair to say, controversial: the online response was heated, even at times furious.

One commenter claimed I was advocating for a “handout” from existing homeowners to prospective ones, suggesting he had so strongly internalised the idea of his home’s current value being an actual property right that – in his mind – any decrease in it was like giving his money to others.

Even more intriguingly, someone else wrote that they felt I was attacking the New Zealand “dream” of owning one house to live in and one for retirement income. “Hah,” I thought to myself. “When did that become the New Zealand ‘dream’?” And then I thought: “Hang on – when did that become the New Zealand dream?” Middle-class New Zealanders have long sought to use residential property for current income. But for their retirement?

This has, of course, only ever been a “dream” attainable by a few. For all their dominance of political debate, the number of property investors in 2021 was just 530,000, according to analysis by data firm Valocity. That’s about one in seven adults. But because they are relatively well-off and influential adults, their dreams matter. One of the arguments already advanced against a capital gains tax, for instance, is that it will harm “mum and dad” investors who have pinned their retirement hopes on a big tax-free capital gain. Never mind that these investors, according to Valocity, own just one-third of rental properties, the remainder lying in the hands of large-scale landlords. Such arguments still have rhetorical power.

So I kept puzzling over the conjunction of retirement savings and rental properties. And then someone, at a social gathering, said to me, surely it’s to do with the collapse of corporate pensions. At which point a lightbulb went on. Many New Zealand firms had, pre-1980s, provided relatively generous pensions to their staff; as with the welfare state, the loose assumption was that powerful players with deep pockets – big businesses and big governments – should look after those with lesser means. The world was a difficult and risky place, and there were limits to how well the average person could “insure” themselves against those risks – could protect themselves against economic shocks, in other words – if acting alone. 

By the 1970s, the state shouldered the main burden, paying New Zealand Superannuation at a rate designed to keep recipients out of poverty. But, then as now, that was insufficient for a comfortable retirement: hence the importance of the company pension, for the admittedly well-off slice of the population that received one.

All this changed in the pro-market revolution that swept the west in the 1980s. The individual was held responsible for their outcomes in life, and the most efficient way to solve problems – including the puzzle of retirement savings – was for people to make their own private investments in the free market. Risks were shifted onto individuals. Firms felt less responsibility to their staff, and cut back their corporate pensions. Many got out of the game altogether, and the remaining players shifted away from relatively generous “defined benefit” schemes, based on the employee’s final salary and length of service, and towards less generous “defined contribution” schemes, based more on the employees’ own savings.

It made intuitive sense, then, that as corporate pensions declined, their former recipients started searching for another source of retirement income, and looked to real estate as their saviour. But did the data back this up?

The answer, according to the data I’ve compiled, is a tentative yes. There is a clear decline in the average value of private pension wealth from 1990 onwards, and an even greater increase in property investment wealth. (In both cases, the total dollar value invested in each category has been divided by the New Zealand population, and adjusted for inflation.) From 2008 onwards, Kiwisaver emerges as a third source of retirement income; a classic “Third Way” policy, it is both individualistic and communitarian, relying essentially on the individual’s contributions but bolstered by state top-ups.

Caveats to this analysis abound, however. Correlation is famously not causation: corporate pensions might have declined, and property investment risen, for unrelated reasons. The housing market has been radically changed since the 1980s, in ways that have nothing to do with retirement per se: think about the decline in house-building volumes, the sale of state housing, the more general retreat of the state from subsidising first homes and mortgages, the creation of tax advantages for property investment, and the much wider trend for the “financialisation” of housing. We have no way of knowing how much investment property has a specific retirement focus.

The data assembled here are also seriously partial, pieced together from multiple different surveys and laced with all kinds of gaps and assumptions. (Individuals’ entitlement to New Zealand Superannuation could, for instance, be rolled into an estimated lump sum, and charted as another form of “wealth”.) This should be seen as a first, rapid pass at answering a crucial question, rather than a definitive answer. 

Even if the data could be corroborated, a further puzzle presents itself. Why, if middling and well-off New Zealanders wanted another source of retirement income, did they turn to rental property and not, say, the stockmarket? The tax advantages for housing offer one simple answer. Another is located in this country’s appallingly low levels of financial literacy. Housing is easy to understand; financial investments seem complex and scary.

There is also a justifiable sense that non-housing investments are not as well-regulated as they might be. All financial sectors experience occasional crises, but New Zealand’s are especially severe: our 1987 stockmarket crash was a particularly brutal version of the type, and throughout the 2000s our regulators were having a pleasant snooze while finance companies engaged in the risk-taking behaviour that eventually saw them collapse en masse, taking $3bn in people’s savings with them. 

In this light, property investment looks a far safer bet. So if the country is to end its over-investment in housing, build up its export sector – and, potentially, introduce a capital gains tax – it may need to provide alternative retirement options, whether that means leaning more heavily on Kiwisaver, or something else. And that, in turn, may require steps to make financial investment safer. One of the most unexpected roots of the housing crisis, in short, may be our failures in financial regulation.

The Post: Manufactured crisis over ACC ignores the bigger picture

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We live in a moment of manufactured crises. We’re told the Government’s finances are unsustainable, when in fact spending under Labour was – at around 32% of GDP – barely above its long-term average of 30%, and heading downwards even before National set its razor gang to work.

Alarm bells are also rung over government debt, even though liabilities of roughly one-fifth of GDP are low by both historical and global standards, and at least one bank economist thinks the government could double its debt levels without troubling the credit-ratings agencies.

This week’s candidate for a manufactured crisis is ACC, which announced a $7.2 billion deficit for the financial year. Numbers like that are cheap fuel for the narrative that the state is broke, that we are drowning in seas of red ink, that vicious cutbacks are needed right now.

Nothing, though, could be further from the truth. The deficit is – at least in one key sense – a good thing.

Of crucial importance here is an $8.7b increase in the corporation’s estimate of how much it will have to pay out for future injury claims. That, in turn, stems partly from court rulings requiring ACC to cover more injuries.

There is, notably, an expected $3b-plus bill from a Court of Appeal decision that sexual abuse victims should be compensated for their loss of earnings from the time they were abused, rather than the date they sought treatment.

What the deficit partly represents, in other words, is one step further into the dawning realisation that we, as a society, have not been adequately wrapping our arms around those who have suffered harm.

It is not – to state the obvious – a good thing that this harm occurred. But it is a good thing to take, on our collective shoulders, the financial burden of trying to redress it. The deficit is a symbol, in cold hard cash, of a determination to do better by those who suffer.

Bear in mind the philosophical foundations of ACC, or the Accident Compensation Corporation as it is more formally known. It exists to help people who, often through no fault of their own, have suffered injury, and who we have rightly prevented from suing the perpetrators of that harm, in order to avoid an American-style culture of hair-trigger litigiousness.

When ACC was established in the 1970s, the intention of its intellectual godfather, Owen Woodhouse, was that it would cover not just those harmed by one-off, easily defined accidents, but also those experiencing long-term medical conditions. The latter, after all, are just as likely to suffer an uncontrollable and long-lasting loss of earnings, and just as likely to need treatment.

Campaigners have, over the years, forced a gradual expansion of what counts as an injury, including some of those experienced by women when giving birth or being fitted with surgical mesh.

The only party with a plan to fulfil Woodhouse’s vision, however, are the Greens, who in 2023 proposed spending around $3b a year to extend ACC’s services to cover health conditions and disability.

Because of the narrow fiscal lens through which they view such things, centrist politicians have always baulked at that cost. This is, however, a false economy, at least when it comes to health in general.

Not treating long-term illness saves the government money superficially, but only by forcing blameless individuals to shoulder those costs themselves, even when they can ill afford it. More seriously still, from a social point of view, the problems stemming from that long-term illness end up rebounding on the very Treasury that has tried to shrug them off.

The government’s own research into long-term illness suggests that “indirect” costs like lost productivity – never mind the wider social effects – are “at a rough approximation” equal to the amount that would have to be spent to treat them. That’s what fiscal conservatism amounts to: having to wear the same costs, but without having even treated the problem. It’s a specialised form of madness.

Which brings us to another contributor to ACC’s fiscal deficit. Its rehabilitation timelines are blowing out, in part because it’s so hard to get people treatment in the health system at present.

That, in turn, stems partly from the system’s current dysfunction, but also from the fact that, according to 2020 research by the Association of Salaried Medical Specialists, we spend an annual $6.7b less on health than the average of 14 other major economies.

Finance Minister Nicola Willis was quoted this week as saying that increases in ACC levies are “unsustainable”. And, given the continuing squeeze on household budgets, we need to find ways to cushion the levies’ impact on ordinary Kiwis.

But, ultimately, the real unsustainability lies in passing the burden of ill-health onto society, and in aiming to run fiscal surpluses at the expense of social deficits.

The Spinoff: The slow drift towards ‘user pays’ risks turning New Zealand into a two-tier society

Read the original article in the Spinoff

When thousands of people are signing up for private health insurance even in a cost-of-living crisis, you know something has gone badly awry in our hospitals and GP clinics. Last week, the private insurer Southern Cross Health announced it had gained 15,000 new customers in a year, bringing its membership to more than 955,000.

Nor is this unexpected. At least one iwi has made headlines for buying private health insurance for its staff. And more and more companies offer it as an employee benefit.

But while each move is entirely defensible on an individual basis, especially given the current pressure on public hospitals, the collective danger is obvious: an ever-stronger drift towards something like the American health system, which, centred on private insurance, both wastes unfathomable sums of money and denies healthcare to millions.

And it’s not just health. The government wants to aggressively expand toll roads, even where there may be no decent free alternative. The currently under-construction replacement for the Manawatū Gorge road, a vital conduit in the lower North Island, could cost car drivers $4.30 a trip and trucks $8.60, a potentially unaffordable sum for regular commuters in a low-income region.

Tararua District mayor Tracey Collis says neither of the two “alternative” routes – which include the steep and windy Pahiatua Track – are of an acceptable quality for long-term use. “We don’t want a road that the rich can take and you leave the others for the poor,” she told a recent protest. All the more so given that, once the Gorge road replacement opens, the two alternatives will become her council’s responsibility to maintain – and it won’t be able to afford the bill.

Where there are feasible alternatives, of course, toll roads may not seem so troubling. Driving, after all, uses up resources in a manner that we may want to discourage. But what about the impacts on the poor? Research by the Infrastructure Commission shows road charging takes a bigger chunk out of household budgets for low-income families than for rich ones. Will more poorer households simply stop being able to get from A to B? Or will the untolled roads that serve them sink into greater and greater disrepair? These questions have had remarkably little attention.

For some time, the user-pays approach has been growing and fostering social divides in supposedly egalitarian New Zealand.  Compulsory “voluntary” school donations, for instance, have rendered our “free” public education system rather less than free, even if the last Labour government rightly pushed back against that practice. The private fundraising carried out by rich schools vastly outweighs the minimal “equity” funding received by poorer ones. The principal of Porirua College, Ragne Maxwell, told a recent meeting that New Zealand has a “three or four-tier education system”, given the resource disparity between state schools, let alone that between state and private. 

In health, we levy GP fees that simply don’t exist in some advanced nations. Cost barriers prevented one in seven New Zealanders from getting care even before the current crisis. The danger now is that such disparities worsen, and harden, and that we sleepwalk still further into a society divided by ability to pay.

How did we get here? Some of our user-pays practices, like GP fees, are long-established, deriving from commercial distrust of collective provision and European settlers’ “rugged individualism”. Other practices are a hangover from the 1980s “Rogernomics” drive, in which state services were regarded less as a collective good to which people are entitled as a mark of their citizenship (even though that is what they really are), and more as a private benefit to the consuming individual.

These tendencies are now being exacerbated by two crises, one imaginary and one of the imagination. The imaginary one concerns the financial state of our government, which we are constantly told is “broke”. In fact it is no such thing: successive governments have saved money in good times and borrowed to get the country through bad times, as is standard practice. Government debt is low, by international and historical standards; one bank economist thinks we could double it without risking a downgrade by ratings agencies.

If we have a problem, it’s that we don’t raise more tax revenue. The European nations with the best public services generate around 40% of GDP in taxes, whereas we take in just 30%. If we taxed at the same rate as the Germans and the Dutch, the New Zealand government would have another $20-$30bn to spend each year fixing up health, education and transport. 

No one, then, should fall for the siren song that increased private spending must fill the gap left by the state. Southern Cross is already pushing this line, its chief executive Nick Astwick telling RNZ that private insurance will be part of the solution to the “massive demand” for health as the country ages.

But making people pay for services doesn’t magic money out of thin air; it just shifts spending from the state to the individual. If the individual can’t afford that, the net result is injustice, denial of care and social division. And if it’s less efficient to run a health system via private insurance than tax-funded provision, a country actually ends up getting less healthcare for the same amount of money.

This is emphatically – indeed, disastrously – the case in America. Not only does its health system leave tens of millions of its citizens without adequate care, it wastes vast sums of money, as insurers fight to preserve their profits by denying claims, private hospitals battle with insurers (and patients) over payment, and every part of the system has an incentive to relentlessly overcharge.

The result is that, despite delivering terrible health results overall, America spends, on a per-capita basis, roughly twice as much as its developed-country counterparts. The waste is so vast that it would pay for the insurance costs of the 30 million Americans without cover – or even, most startlingly, the entire budget of Britain’s National Health Service. The lesson for New Zealand is clear: shifting towards a user-pays health system would actually reduce the amount of care the country can provide – as well as making that care more unequal.

So much for the fiscal “crisis”. We do, though, have a crisis of imagination. Why is the public health system in such a state? Partly thanks to the pandemic, of course, and its attendant social strains and public-sector burnout. But partly, too, because Labour decided that the best thing it could do to a public health system in the middle of a once-in-a-century pandemic was to tear it apart structurally and then try to reassemble the pieces. 

Leave aside, for the moment, the fact that restructuring is rarely the solution to anything, and think about the paths not taken. Labour could have turbocharged prevention and community care. Or it could have bet the farm on technology: AI, remote tech-assisted care, telehealth. Or it could have taken big steps towards a system with no financial barriers to care whatsoever.

Any of these visions – whatever their respective strengths and weaknesses – would have at least embodied values, beliefs, inspiring ideals. Instead we got a soulless technocracy – one that, judging by current results, doesn’t even work very well. And the same lack of vision can often be seen in Labour’s approach to public services. So it’s no surprise that people acquiesce in, or cannot be motivated to complain much about, a slow drift towards user-pays. In the absence of a more compelling vision, what else would they vote for? 

A new vision for public services, in short, is urgently needed. Although there is little evidence that the health minister, Shane Reti, wants to do anything but restore the public system, Act has been vocal about its desire to privatise the whole shebang. The response must be to point out that, yes, health – and other public services – are underfunded. And, yes, we need to reinvigorate the view that public services are fundamentally a collective good: the benefit society derives from having healthy and well-educated people is vastly greater than the benefit to any one individual; and no one should be denied access to those essential goods because of an inability to pay.

But there also has to be a plan for how those services can run differently – better, more efficiently, more in tune with the demands of the 21st century. When core public services run well, it no longer makes sense for people to pay to go private. A vision that is practical, as well as compelling, is needed to ward off the slow drift towards unfair and inefficient user pays. After all, we have seen, over and over in the last few decades, what results when core public services are marketised, when fees and private provision are introduced: a world in which the good life, with all the access to the public realm that it requires, is increasingly reserved for those who can buy it.