The Post: Time to hold the Government to account for the social costs of its spending decisions

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The problem with left-wing governments, Margaret Thatcher once said, is that they always run out of other people’s money.

What the Iron Lady wouldn’t admit, of course, is that if Labour parties’ budgets get stretched, it’s generally because they’re cleaning up the social and environmental messes left by their conservative predecessors. And that’s something to watch when our new Finance Minister, Nicola Willis, delivers her mini-Budget next week.

One of the most profound problems in New Zealand politics, and one that retards our national progress, is that financial deficits are eminently visible but social and environmental ones are not. If the government spends more than it earns, the result is unambiguous: a single number, universally relevant, written in black and white (and red). It’s easily grasped, as is the consequence of running one such deficit after another. So that’s what we talk about.

Inside government, the same problems apply. To borrow an example from Craig Renney, Grant Robertson’s former right-hand man, the Treasury can tell you, just about down to the last brick, how much it is costing us to build Dunedin Hospital – but not what it cost the city’s health all those years we delayed construction, services worsened, and people sickened and died.

Some social – and environmental – deficits can of course be defined, and have numbers attached to them. But there are thousands of these issues, they are poorly measured, people disagree about which ones matter most, and often – because they affect the most vulnerable – they remain invisible to the median voter.

So they don’t receive the same obssessive attention, inside or outside government, as the need to turn red ink to black. Labour tried, tentatively, to fix this with its wellbeing approach, but got stuck with 100-plus measures of social and environmental failure – too many to ever be tractable.

All this has a troubling consequence: it lets conservative parties off the hook. The last National government ran a tight financial ship, but was permitted to pile up appalling social deficits.

State houses were sold off, allowing the shortfall to rise by another 14,000 homes. Middlemore Hospital had sewage running down the walls. Dirty dairying left the country with sick, algae-ridden rivers and lakes, some of the most polluted waterways in the developed world.

Cold, damp housing filled children’s lungs with respiratory illnesses. Countless social services went unfunded. National’s books were balanced – but on the backs of the poor. And because social and environmental deficits always become financial ones – sick children need costly hospital care, polluted lakes require multi-million-dollar clean-ups – it also bequeathed us a long-term budgetary hole.

That’s not to say that Labour came in and spent every cent wisely. It didn’t. Funding for health and education has doubled, or nearly so, sometimes with little to show for it. Hence a core dilemma of New Zealand politics: the unpalatable choice between a National Party willing to run up social and environmental deficits and a Labour Party with no clear idea how to close them.

But, in Labour’s defence, it did wipe $1.8 billion of district health board deficits. It settled billion-dollar pay-equity claims for health and education workers, and built or bought 13,000 public homes. It doubled capital spending, helping close New Zealand’s colossal infrastructure deficit, and raised beneficiaries’ incomes. Yes, it ran financial deficits post-Covid – but so did National post-GFC.

Next week, Willis will emphasise Labour’s alleged financial woes, but our attention should be on any social and environmental shortfalls she sets in train. To rework Thatcher’s famous line, the problem with conservative governments is that they always run into other people’s misery.

To hold National to account, we will need to continue the project of measuring the wellbeing impacts of every decision – and, as with Dunedin Hospital, non-decision.

Beyond that, we may need to choose, collectively, 10 indicators that matter to us most profoundly – issues where failure cuts deepest and success is most precious – and, by reporting on them repeatedly, give them the same weight as the budgetary numbers.

These 10 targets, spanning – for instance – employment, life expectancy and river quality, could be enshrined in legislation, just like their financial counterparts.

Why 10, specifically? When I posed this question last year to Nobel laureate Joseph Stiglitz, a godfather of wellbeing economics, he said we should pick a handful of measures “that are at the centre of societal debate”.

These issues could be selected via opinion polling, but to get the public’s considered view – what they think after hearing others’ arguments, reflecting, and shifting their position – the task might be best handed to a citizens’ assembly.

A randomly selected group of 100 demographically representative Kiwis – the nation in a room, as it were – could decide on the 10 measures, their work getting updated every few years. And maybe then the shortfalls facing people and planet might get the same attention as the dollar signs.