Stuff: A classless society? Don't make me laugh

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“You get rich people that just look down on you like you’re a nobody. They look at your appearance and the way you dress … They can’t wait to get away from you, because you’re not on their level.”

That’s what Pete, a 57-year-old Levin handyman, told me recently. And it’s a challenging statement for a supposedly egalitarian nation.

I know some New Zealanders love to believe that theirs is a society without class distinctions: anyone can talk to anyone else, without sensing a gulf in manners or tastes; we’re all mates; no-one gives themselves airs; and everyone has the same opportunities, regardless of upbringing.

It’s more myth than truth, though. While researching my new book, Too Much Money: How Wealth Disparities are Unbalancing Aotearoa New Zealand, I was struck by the intensity of our social divisions. Pete’s views are one testament.

Another interviewee, Alexa, talked about “invisible classes that people feel … they are treated differently if they are on a benefit or not, or based on what kind of job they have, like a cleaner versus a CEO. People are spoken to differently and treated differently”.

These disparities start with wealth. Just 1 per cent of New Zealanders – roughly 40,000 people – control a quarter of all assets. The business world is especially lopsided: that 1 per cent owns seven out of every 10 shares.

This wealth buys advantages and opportunities not available to others. Richer parents can – and do – spend five times more than poorer families on their children’s education. They buy houses in the grammar zones, starting their children on what I call the conveyor belt of advantage.

The most prestigious university courses then recruit heavily from those elite schools.

Over a period of several years, when the University of Canterbury took 2000 students into its first-year engineering course, just one was from a decile-one college.

Today’s university students are, the evidence suggests, very likely to have university-educated parents; the Bank of Mum and Dad creates a similar effect in housing. Some of the key opportunities have become generationally self-replicating. If you’re a young New Zealander, nearly one-third of your income can be predicted from what your parents earned.

That’s much less than in deeply unequal America, but still twice the rate of egalitarian Denmark. Advantages are passed down the generations; the wealthy have become ‘‘opportunity hoarders’’. Is there a fair go? Hardly.

Class can seem an old-fashioned word, but it’s really just a way to talk about these enduring differences in opportunities. Class divisions can be seen when inequality of assets turns into inequality of opportunity, when wealth buys better housing, healthcare, university admission, career progression, political influence. Those advantages are handed on to the next generation, limiting social mobility and entrenching disparity. That’s a class system.

This doesn’t imply there’s no hope at all for those from less fortunate backgrounds. But their lives are certainly a lot harder. And New Zealanders know that: even if we try to avoid the wider truths, some two-thirds of us – when pressed by pollsters – admit there are far fewer chances for poor children to succeed.

New Zealand lacks Britain’s aristocracy, but we do have several varieties of upper middle class. Another of the interviewees for my book, Louisa, described the South Island class system as “very unforgiving”, entrance to the upper echelons being determined by “where you went to school, who your social circle is, who your friends are, who you marry”.

Farmers are one kind of elite. In my book, I suggest we also have twin upper middle classes that I playfully label the Kelburn Left and the Remuera Right, one highly educated and discreet, the other more openly commercial. These are the people who “frown upon” Pete because he doesn’t have “a couple of hundred dollars to rub together”.

In contrast to the idea that everyone mixes easily here, upper middle class New Zealanders can manifest certain tastes and dispositions – especially around food – that make others feel inferior.

Inequalities aren’t inevitable, of course: in the early 1980s, the wealthiest 1 per cent had (a still disproportionate) 16-18 per cent of assets, rather than a quarter – because the politics were different. We taxed inheritances, and income at much higher rates than now. The state spent more on housing and other services that helped poorer families back on their feet.

We have it in our hands to reduce wealth inequalities, restore wage-earners’ bargaining power, and limit undue political influence. We can restart what I call the engines of opportunity, investing more in health and education to push back against the unfair inequalities of birth, upbringing and luck.

But we have to begin with some honesty, and acknowledge that, in fact, we don’t live in a classless world.

New book launched: Too Much Money

I’m delighted to announce today the publication of my new book, Too Much Money: How Wealth Disparities Are Unbalancing Aotearoa New Zealand. It tells a story of massive wealth inequality in this country – but goes beyond that to also look at all the other things, like better health, housing and education, that money now buys.

And when those opportunities and advantages all coalesce, and get passed down through the generations, you end up with what looks suspiciously like a class system – despite New Zealand supposedly being a classless society.

More details about the book – including where to buy it – are available here or on my publisher’s site.

Stuff: Some schools rejecting competition — the rest should too

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In the 1990s, when competition between schools was at its peak, I attended Petone College, which had developed a bad reputation locally. Many parents – Pākehā ones in particular – had panicked, and fled; the school’s roll was sinking, as was morale.

What happened to it in the end? We’ll get to that; but first, I want to talk about a promising path that Christchurch’s state schools have quietly been taking. Following the 2011 earthquake, they had to rebuild on a big scale. And that, Burnside High School principal Phil Holstein told me this week, was a chance to look at “the inequalities, the growing disparities between perceived ‘successful’ schools and others”.

Ever since the 1980s Tomorrow’s Schools reforms, our educational establishments have been set up to compete with each other for pupils, and thus funding. But while some things, like supermarket provision, are improved by competition, schooling is not.

Since the evidence shows low and high-decile schools have equally good teaching, ‘white flight’ reflects less a drive towards quality and more a prejudice against poorer, Māori and Pasifika children. It’s also immensely wasteful: driving kids across town congests roads and supercharges emissions.

In 2017, Christchurch children travelled 171,000 kilometres a day getting to school, 71,000 more than if they’d attended the nearest establishment.

Competition can also result in school closures, wasting precious equipment and buildings and damaging the local community. Worst of all, it hinders knowledge-sharing: well-regarded schools have no incentive to share insights with struggling ones, who remain competitors. No wonder successful school systems like Finland’s emphasise collaboration, not competition.

Neil Wilkinson, a former president of Christchurch’s secondary principals’ association, says even pre-earthquake there were “concerns about the number of out-of-zone enrolments some schools were taking, and the impact of some schools getting larger and others shrinking”.

After a long process, 13 of the city’s coeducational state schools have signed a memorandum of understanding (MOU), committing to keep their rolls below mutually agreed levels. Some rolls will actually shrink: Cashmere’s from 2022 in 2018 to 1700, and Burnside’s from 2342 to 2100. (Separately, the city’s enrolment zones have been redrawn.)

Since fewer pupils means less funding, this is a remarkable commitment. How did schools overcome self-interest? Ethics, essentially. “We really believed it was for the good of our city,” says Holstein, who has succeeded Wilkinson as principals’ association president. “There was just a moral purpose, if you like, [a sense] that it was time to address it.”

As a 2016 KPMG report showed, some principals maintained hardline free-market views, arguing other schools were “excess market capacity” that should be closed. Fortunately they were outnumbered.

The process involved “many difficult conversations”, Wilkinson says. But it helped that the Ministry of Education, which was funding the post-earthquake rebuild, made it clear “they weren’t going to put buildings on your site if you were increasing your out-of-zone enrolments”.

Connections were also forged: other principals “came to understand, and hear, the stories of schools that were losing students” – not because they were educationally weak, but because an unfair reputation had become entrenched. Big-time raiders – like Burnside, whose roll was 40 per cent out-of-zone – acknowledged their impact on others.

The MOU doesn’t eliminate competition and poaching entirely. But, Holstein says, “We are looking after the network now.” Even the state schools that haven’t signed the MOU – all four single-sex ones, and one coeducational – are abiding by its principles, he says.

Of course the private schools, like Christ’s College, will do as they please. And the MOU process is a slow one: Burnside, for instance, will miss its deadline for reducing its roll, which it is doing incrementally by trimming its Year 9 intake.

Nonetheless, Holstein says, city-wide out-of-zone enrolments have already fallen. This year Burnside’s only such enrolments were for special-programme students and siblings of current pupils: “That’s a significant change.”

Wilkinson says collegiality has soared, because principals “aren’t looking at the principal next door and saying, ‘you’ll be flogging my students next year.’” The network is used more efficiently: fewer classrooms sit empty. And limiting parental flight “gives schools the chance to prove how good they are”.

Parents also have an incentive to “get in there and be part of the solution”. The pressure for improvement is maintained by their presence, not their absence.

The MOU is voluntary: there are no penalties for schools that break it. But it’s still something that other cities’ schools should be encouraged to copy – or face having it mandated by the ministry if they can’t agree.

This would help reform a system marred by inappropriate competition. And it’s all the more important to safeguard the future since we can’t undo the damage of the past. Petone College, you see, never pulled out of its white-flight death-spiral: it closed just after the end of my seventh-form year.

Do we need a Ministry of Green Works?

It’s a big idea: a ‘Ministry of Green Works’, a reboot of the old Ministry of Works (but with modern sensibilities), equipped to design and build the public housing, railways and green infrastructure this country needs now and into the future.

The idea is contained in a paper published yesterday, written by researchers Max Harris and Jacqueline Paul for FIRST union. And there’s a lot to like about it.

The paper is careful not to glamorise the old ministry, which – among other faults – was prone to compulsorily acquiring land in ways that “caused significant harm” to Māori communities. But the paper does point out what a storehouse of knowledge the ministry was. Its teams of engineers, architects and builders had vast experience in constructing public infrastructure, and left us with important buildings and other structures we still rely on. That knowledge was at best fragmented – and in the worst cases probably completely lost – when the ministry was split up and sold off in the privatisation frenzy of the 1980s and 1990s.

The report also rightly identifies major problems in the current construction of public infrastructure, which relies almost exclusively on contracting-out and delivery by private builders. The construction sector is short of workers, struggling to meet current demands, and often inefficient and prone to producing work of relatively poor quality. Elsewhere, the paper usefully points to traditions of design that can be drawn on, including Māori approaches to building kāinga and the like, and recommends that any rejuvenated ministry be accompanied by increased funding for Māori housing and infrastructure.

In my mind, the paper unequivocally establishes the need for – at the very least – a reconstruction of government’s storehouse of knowledge about infrastructure. Currently, each government department organises the procurement of its major infrastructure projects – be it in housing, roadbuilding or whatever – by itself. The public servants working on those projects will be relatively inexperienced, but have to negotiate with extremely experienced private sector construction partners. That means they are unlikely to negotiate a good deal; and because the private sector does the actual building work, most of the knowledge – the expertise, the lessons learnt from that project – stay with said private sector. Government struggles to learn lessons, work out how to run the next project better, or understand how to drive down costs.

What we need then, at the very least, is an upgraded Infrastructure Commission, with a dedicated team of architects, engineers and designers, who can set standards across public building projects, retain knowledge, drive a tougher bargain with the private sector, and ensure higher quality and better value. And there will be lots for them to work on – as the paper identifies, we need tens of thousands (if not hundreds of thousands) more state houses, a huge amount of green infrastructure to deal with climate change, and potentially a revitalised rail network.

Where the paper isn’t yet convincing is in the argument for government to actually do this building work itself – which of course would be a far larger, and more controversial, undertaking than simply creating the knowledge storehouse described above. It would, after all, involve creating an enormous public sector building workforce, including carpenters, painters, electricians and the builders themselves.

First, although there are certainly problems with the private construction sector, the paper seems to me overly reliant on one study (Hinton et al.) claiming inefficiencies and poor quality in private construction, when there must be a much vaster literature comparing public and private construction results across the globe. I’m a fan of more active government, but public agencies have all sorts of problems, just like private firms do; there are government failures as well as market ones. The profit motive is hardly a panacea, but it does often force firms to work more efficiently (though potentially at the expense of worker conditions), find different ways of using materials, etc., while the process of putting work out to tender encourages firms to compete with each other, come up with design innovations, and so on.

In the absence of these pressures, what is going to ensure that a Ministry of Green Works uses materials efficiently and can innovate? If the old Ministry of Works was indeed “nimble”, as the paper says, what made it so? What is going to stop its new incarnation from becoming a bureaucratic monolith, one that is slow to make decisions, inefficient in its operations, a kind of law unto itself? I’m not saying there are no answers here: the paper briefly mentions models like Paris’s re-nationalised water system, and one could point to similar systems in the Netherlands and elsewhere. This approach is often based on having diverse governance boards, with representatives of service users, technical experts, and so on, which provide scrutiny, oversight, and the ability to juggle multiple priorities facing a public body. There’s definitely a case that this model could create the right pressures for efficiency, innovation and quality in our infrastructure, but I would want to see much more detail before I was convinced.

Second, I’m not swayed by the argument that public construction would be more efficient than private simply because it would do away with the profit motive, saving – according to the paper – something like 7-12% on costs. Profit can be viewed as an unnecessary expense, or it can – as above – be what’s necessary to encourage efficiency and innovation. After all, if all private profit was pure inefficiency, the government should simply take over everything the private sector does, right down to providing its own stationery. (Think about how much we could save if we abolished the profits of stationery companies!)

There is (as I think the report authors know) a huge amount of research on when contracting-out does and doesn’t make sense. Crudely speaking, it often boils down to whether the service being provided is relatively simple and can be easily checked up on, or not. Private prisons don’t work very well (apart from their other problems) because it’s very hard for the public sector to supervise what the private provider is doing; as a result, private prison operators tend to cut costs and reduce wages, rather than actually doing anything innovative. Conversely, to return to the above example, stationery is relatively simple and it is easy to observe whether a private provider has done a good job (do these staples work?), so contracting-out makes sense. Obviously, there’s a strong case that public infrastructure falls into the first category – but that argument isn’t really developed in the paper.

It also doesn’t establish its case empirically. If we are going to be convinced that a new ministry would do a better job of building infrastructure than the private contractors do, surely it would be useful to know what the current contractors’ costs are (on a per square metre basis, or something like that), and compare that with the old Ministry of Works’s costs. Quality could be estimated by some proxy, like maintenance costs or experts’ evaluations. It also doesn’t look like the researchers engaged widely with private contractors, which is a shame – because even if one views them as part of the problem, they would still have come up with important counterarguments the report would have had to address.

I appreciate that the researchers probably didn’t have the time and resources to address all the points raised above. And I think their work is exciting nonetheless, because policy-making in this country has for too long been overly cautious and constrained by a set of pro-market “certainties” that are in fact anything but. It’s good to see the space for innovative policy-making opening up. I just think there are some big questions still to be answered if this kind of argument is to prove convincing in the years to come.

Stuff: Good week in opposition upset by ‘trivial error’ in economic plan

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In Parliament on Wednesday, National’s shadow treasurer, Andrew Bayly, was already looking tired when Grant Robertson decided to twist the knife.

“Bring back Paul Goldsmith!” the Finance Minister shouted gleefully. The pair had been debating National’s set-piece Covid-19 announcement earlier that day, in which Robertson had spotted a slip-up: Bayly’s team had mistaken the male unemployment rate (3.8 per cent) for the whole-population one (4 per cent).

It was a trivial error, perhaps, except that it suggested a certain gender-blindness – and, more importantly for political purposes, allowed Robertson to recall the multibillion-dollar mistakes that sank Goldsmith’s proposed Budget in the 2020 election campaign.

It was especially unfortunate for National because it had been having – by its recent standards at least – a reasonably good week. The previous day, party leader Judith Collins and housing spokesperson Nicola Willis had shared the stage with the latter’s opposite number, Megan Woods, for a shock announcement: the two major parties, so often at each other’s throats, were collaborating to radically increase housing supply by making three-storey townhouses the new normal in our biggest cities.

The policy’s merits aside, National looked relevant, constructive and on the ball. It was a big coup for Willis, in particular, who had long pushed for planning deregulation.

Elsewhere, the party could claim victory as Labour adopted, or appeared poised to take up, several Covid-19 measures National had proposed: freeing up MIQ spots for healthcare workers, for instance. Ministers might have eventually done those things of their own accord, but hadn’t before National suggested them; and at the very least, the party’s Covid-19 spokesperson, Chris Bishop, was raising the right points and keeping pressure on a Government suddenly looking unsure of itself.

Much of that good work, though, may have been undone by Bayly’s ‘Back in Business’ plan, which tries to set out a roadmap for the economic recovery from the coronavirus. Parts of the plan are sensible, among them a $10 million mental health support package for small businesses. But there is a lack of credibility about the whole document that suggests National hasn’t learnt from recent mistakes.

In the plan, National lists the cost of its individual initiatives but doesn’t add them up, perhaps hoping no-one else will. But it is easily done, and the policies the party has set in stone – like lifting from $14,000 to $17,000 the threshold where the 17.5 per cent tax rate cuts in – will cost perhaps $1.9 billion a year, plus as much as $370 million a week for other, more targeted measures.

So where will it find the cash? You can’t expect us to know that just yet, National might say – except that when Labour was in opposition, it was pilloried each time it couldn’t account for every single cent of its spending pledges. If that’s the new standard of accountability, National has to live by it.

Even worse, Back in Business continues the party’s inexplicable obsession with slashing public debt, even though it is just 30 per cent of GDP, compared with roughly 100 per cent in Britain and America. The interest rate government pays is at an historic low, and what it is purchasing with that borrowing – wage subsidies that will keep businesses afloat and health measures that keep people alive – is more than worth the money. Yet National wants debt slashed to 15-25 per cent of GDP, whatever the cost.

Compounding the problem, it plans to spend more, cut income taxes and reduce debt simultaneously – an impossible task unless it also raises more in tax elsewhere or, an infinitely more likely prospect, slashes other services. This is bad history repeating: last year one of its MPs anonymously summed up its election platform by saying, “We’d fallen into some sort of economic Bermuda triangle. We were going to spend everything, but we were also going to be better on debt, and provide tax [cuts].”

Inconsistencies abound: Bayly says his plan is “about the here and now” but promises tax cuts two years hence for businesses that by then may be doing fine. National also can’t seem to decide whether it is “ending lockdowns … when we hit 85-90 per cent vaccination”, as its plan says at one point, or whether “once vaccination rates reach 85-90 per cent … lockdowns should become a measure of absolute last resort”, as it states on literally the next page. Casting something off forever, and holding it in reserve, are not the same.

The party’s determination, meanwhile, to open up on December 1, regardless of vaccination rates and the likely consequences for marginalised communities, is downright dangerous.

It all suggests rushed policy from a party that, its funding slashed by electoral catastrophe last year, is under-resourced, and has an uneven line-up of front bench talent. Unlike errant statistics, this is not a trivial matter. Events this week have shown what a consistently effective opposition could do. We need ours to be firing on all cylinders.

Stuff: Let’s face it, New Zealand — we’re terrible environmentalists

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The recent fuss over James Shaw’s flight to the Glasgow climate change talks would be funny if it weren’t so hypocritical.

The climate change minister needs to be at the summit: although many things can be done over Zoom, a high-level climate negotiation is not one of them. If you’re not in the room – and in all the corridor meetings and hastily convened side huddles – you don’t really know what’s going on. You can’t properly represent your country.

Yet we badly need to put our best foot forward at COP26 because, contrary to all our national myths, we have an abysmal environmental record. We are, overall, some of the least green people in the developed world.

Among industrialised nations, we have the sixth highest greenhouse gas emissions per person, each of us racking up an appalling 16.9 tons of carbon dioxide (or equivalents) every year. We generate 781kg of municipal waste per person, more than all but two other developed countries.

As if that weren’t enough, we have some of the OECD’s most polluted rivers and the highest proportion of threatened animal species anywhere on the planet. We’re No 1, but not in the way we’d hoped.

None of the defences of this frankly awful record seem convincing. Sure, we have an exceptionally large number of endemic species. But that just means we should have taken even greater care of them.

Sure, our climate emissions – and river pollutants – come disproportionately from farming, a dominant export industry that’s hard to address without widespread economic disruption. But that just means we should have recognised the problem sooner and diversified more quickly.

Not all of this can be sheeted home to the average citizen. It’s not their fault, for instance, that the farming lobby is so powerful: even under a Labour-led government, the organisation with the greatest access to ministers was Federated Farmers.

But we ordinary New Zealanders haven’t even done very much about the environmental damage happening closer to home. Although the polluted rivers problem is largely a rural one, many urban waterways are also in a parlous state. New Zealanders, the vast majority of whom live in cities, have sat back and – in most cases – done precisely nothing.

Poorer families, understandably, are often too busy keeping ahead of their bills to worry about their carbon footprint. But middle-class households have no excuse.

We can’t even recycle properly: we send to landfill thousands of tonnes of goods that most Europeans would recycle. Yes, they have better recycling systems: but what does it say about us that we have never systematically voted for the politicians who would get ours up to scratch?

The bright spots in our environmental record, such as they are, often stem from the fact that there are so few of us: just 5 million people in a landmass larger than the UK, which houses 13 times as many. I shudder to think how polluted this country would be if it were more densely populated.

The sad truth is that many New Zealanders don’t care that much about the environment – at least not in any meaningful sense. Oh sure, they say they do. They tell pollsters how important it is. They talk lovingly about light and landscape.

But, as the Christians say, faith without works is dead. So if people don’t back their words with deeds, if they’re not willing to inconvenience themselves or give their time to help the environment, and they don’t have a valid excuse for inaction, do they really, in fact, care?

Of course there are individuals and communities out there doing wonderful, environmentally restorative work: planting trees, protesting against climate change, calling for cleaner rivers and less waste. Iwi such as Ngāti Ruanui and Nga Rauru Kītahi are leading the fight against potentially damaging mining plans in Taranaki and elsewhere. Generation Zero provided the impetus for the Zero Carbon Act. These people know the planet is something to be treasured.

But too many New Zealanders, Pākehā in particular, remain stuck in an extractive mindset that I suspect has been passed down from history, and has much to do with the male settler’s desire to head off into the bush and be left alone to do what he will, no matter how environmentally hurtful.

One of our first major colonial economic activities was a sealing industry that almost eliminated the animals on which it was based. That was two centuries ago, but old habits die hard.

None of this is intended as a counsel of despair. People are always capable of change – and the first step is to confess one’s own failures. James Shaw can’t solve all our problems, obviously. But at least he’s trying to turn things round. We should be throwing fewer insults at him, and looking more closely at ourselves.

Stuff: How social insurance could provide a safety net for NZ’s most vulnerable workers

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For Craig Renney, chief economist of the Council of Trade Unions (CTU), it’s personal. Growing up in northeast England as the son of a coal miner, he saw his community “devastated” by the closure of Ellington Colliery​ in 1994​, with the loss of 1100 jobs​. Making no attempt to soften the blow, the government of the day simply “shut the door and threw the key into the North Sea”.

This experience partly explains his support for social insurance, which could be one of this Government’s biggest – and most controversial – legacies. Operating in every major developed society bar ours and Australia’s, social insurance schemes require workers and employers to pay a levy – typically 1-2 per cent of salary – into a fund. When people are made redundant, the fund pays them a time-limited benefit that’s usually a set proportion of their previous salary, capped at a certain amount.

The Government is expected to shortly launch consultation on its proposed scheme. Unusually, it has the support of both Renney’s unionists and Business New Zealand’s corporations. It’s unpopular, though, on the left, where it’s often seen as ushering in a “two-tier welfare system”. And that critique has some merit.

But social insurance is trying to do something different from standard welfare. It’s about preparing for rapid economic shifts, managing risk, and avoiding the phenomenon known as wage-scarring, or long-term income loss. Every year, roughly 1-2 per cent of workers lose their jobs involuntarily, and although the predictions of robots pinching your job are overplayed, still that pace of change may pick up.

New Zealanders, who receive neither social insurance nor compulsory redundancy payments, have one of the least protected workforces in the developed world. Accordingly, we suffer severe wage-scarring. Motu research shows that five years after redundancy, the typical worker is earning up to one-fifth less than they did in their old job.

Receiving, at best, the standard $315-a-week unemployment benefit, the newly redundant have little time to assess their options or retrain. Instead, in desperation, they often grab the first job going; hence the former Air New Zealand pilots stacking supermarket shelves.

A social insurance payment, in contrast, can give them time to find the right job or upskill, and helps avoid forced house sales and other desperate measures. International comparisons suggest the result is less wage-scarring.

It’s not clear yet what New Zealand’s scheme might look like, but the overseas versions often pay people 60-80 per cent of their previous salary for 6-12 months. Ministry of Business, Innovation and Employment (MBIE) documents released last year modelled various options, many of which cost about $1 billion. Those documents also suggest wage-scarring costs us nearly $10b a year, so if social insurance reduced that by just one-tenth, it might pay for itself.

Who would be the winners and losers? High earners would contribute the most (in dollar terms), while low-paid workers would benefit most because, evidence suggests, they get made redundant more often. Within the paid workforce, social insurance might be progressive – and would get employers to bear some of the cost of laying people off. This would rightly help reverse a long-term shift of risk from firms to individuals.

One common criticism is that casual and gig-economy workers, who are disproportionately young, female, Māori and Pasifika, wouldn’t benefit, nor would those with interrupted work histories. But the eligibility criteria in overseas schemes vary, and we could design ours so the payouts are based not just on past salary but also on expected income. Social insurance would then increase support for some of the most vulnerable workers, and do so better than compulsory redundancy payments, which generally favour older, longer-established staff.

Overseas, social insurance can also cover people whose illness forces them to stop work, or at least take a break. Following that path would take us a step towards the much-needed extension of ACC cover from long-term injury to long-term illness.

Of course, the critics’ point remains. Labour may have boosted benefits by $90 a week, but a further $1b spent there would do more than social insurance to help the most vulnerable, and should be top priority. Good luck, though, getting employers and employees to stump up for that, in the Government’s view.

So prioritising social insurance is a political choice. But it’s also, in itself, a good idea. The British coalfields where Renney’s father worked have, over time, brought forth new industries, new jobs, new livelihoods. But a 2014 report found the consequences of the closures “still all too visible in statistics on jobs, unemployment, benefits and health”.

Here, economic change has visited similar damage on towns like Tokoroa, and could do so again. Social insurance alone won’t stop that. It could, though, be one way to ensure that we don’t leave such communities to their fate, but instead help them forge a better future.

Stuff: Why the leniency for Covid wage subsidy fraud, but not for welfare fraud

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“Just get your application in, and worry about the details later.” This, in the words of RNZ journalist Nona Pelletier, is how business groups are advising their members to apply for the latest round of the wage subsidy.

It is, I think it’s fair to say, a piece of advice that has never been given to anyone planning to apply for the unemployment benefit, ever. These people face a maze of tests, requirements, and intrusive personal questions, and have to produce piles of documentation that Work and Income not infrequently loses.

Now, I don’t mind that the original, hastily drafted wage subsidy operated on a high-trust model, requiring few details from applicants. The main thing was to get the money out the door – and in that task it succeeded wildly.

The Ministry for Social Development (MSD) also, to its credit, declined 130,000 invalid applications. Even so, as the Auditor-General has argued, the greater the leeway a scheme gives to applicants initially, the more intense must be the post-payment scrutiny.

For the most part, though, MSD simply rang employers and asked for “verbal confirmation” of their details – then had the nerve to call these enquiries “audits”, something the Auditor-General rightly labelled misleading.

Anger over large firms taking the wage subsidy, then posting handsome profits and shareholder dividends, has also been muted. Some were shamed into repayment, but many others – the likes of Hallenstein Bros, Harvey Norman and Fulton Hogan – were not.

The latter may be acting legally: a company can experience a 30 per cent revenue loss during lockdown – the subsidy criterion – then recover to post a full-year profit. But it’s morally dubious. These firms should have come under far more public pressure to return payments clearly intended to help stave off disaster, not fatten ultimately healthy bank accounts.

In total, of the roughly $13 billion paid out, just $744 million has been repaid – and only $23m of that followed a request from MSD. Given how strongly the economy rebounded, that hardly seems sufficient.

Scrutiny is, belatedly, arriving. After the Auditor-General’s rebuke, MSD is going back and checking “a representative sample” of 339 subsidy recipients to see if they have the documentation to corroborate what they told officials over the phone. This will take several months, apparently. One thousand of the biggest recipients, representing one-tenth of the total bill, have also been asked for written proof they were entitled to the subsidy.

So far, though, the ministry has investigated just 1058 cases of suspected fraud, of which 517 are still under review. And so far only eight applicants face civil recovery action. More may follow, but even so: do we really think just eight firms – out of the hundreds of thousands of applicants – ripped off the scheme?

In the current round, MSD says it has already knocked back 42,000 invalid applications. Some firms are being asked to demonstrate revenue losses before receiving payment. That’s excellent.

But given the miniscule number of past prosecutions, how much of the $1.2b-plus bill this time round will be properly investigated? And why don’t the rules specify that, for instance, firms have to repay the subsidy before distributing dividends to shareholders? We’re still not getting tough enough, quickly enough.

This relatively easy ride for businesspeople reflects inbuilt attitudes. A few years back, the Victoria University academic Lisa Marriott exposed the sharp tilt in the supposedly level scales of justice.

Although the average welfare fraudster stole just $70,000, a fraction of the average tax fraudster’s $270,000 take, the former was three times more likely to be jailed than the latter, her research showed. Judges made glowing comments about white-collar criminals – “references to things like their good character and community standing”, Marriott says – while condemning beneficiaries “in very negative, highly judgemntal ways”.

No doubt this reflected judges’ social background: tax fraudsters, after all, are often people from their own circles.

It also reflected a longstanding government policy of pursuing suspected benefit fraud relentlessly, ruthlessly. In one notorious case, MSD spent 15 years, from 2001 onwards – and well over $100,000 – dragging a deeply impoverished Auckland woman, ‘Kathryn’, through the courts because they thought she had been in a relationship while receiving a benefit.

This Government, thankfully, has softened that approach. MSD figures show the number of beneficiaries prosecuted has fallen from 453 in 2016-17 to just 44 in the year to March 2021. More cases are dealt with through discussion, early intervention and adjusting payments quickly.

That’s only a first step, though. The maze-like complexity of the benefit system still torments recipients. And the reluctance to really crack down on wage subsidy fraud parallels the Government’s general timidity when it comes to the elites.

The idea that businesspeople are all battling entrepreneurs, and welfare recipients all scroungers, may be an old, tired stereotype. But it still exerts its power over public debate.

Stuff: We put too much faith in big events to usher in real change

Read the original article on Stuff

Call it an illusion-less lockdown: many people, especially the relatively well-off, have greeted our latest confinement wearily, prosaically, without the odd, feverish mix of fear and anticipation that last year’s big one occasioned.

Without the sense of hope, too. Last year almost everyone – in my circles at least – was proclaiming that coronavirus would “change everything”, that we couldn’t revert to the “old normal” of environmental pollution and egregious poverty, that we would “build back better”. No-one believes that now.

It gives me no pleasure to say I never really thought a revolution was close at hand – though even I have been surprised by just how little has changed. Carbon emissions are still rising, as are state house waiting lists. We basically got our old world back, plus some homeworking.

I was mulling this over recently on one of my late-evening lockdown walks through Wellington’s Kelburn, the cold and clear night so quiet I could hear every drop of water gurgling in the drains and the “skrark, skrark” of kākā echoing across the valley. This was the peacefulness, the space for birds to flourish, that so many of my friends mourned when the last lockdown finished. It went quickly, and will go quickly again this time.

What have we learned, 18 months on, as to why so little changes? Pandemics are poor catalysts, for one thing. Change is motivated by an enemy, a thing to counter – but you can’t mobilise politically against a virus.

The most that one could have said, when trying to foment change, was that the coronavirus stemmed from our relentless incursions into nature, signalling a relationship that needed to be rebalanced. But even that’s unclear: Covid-19 could have escaped from a Wuhan lab. (Just because Trump pushed that argument in bad faith doesn’t mean it’s false.)

When it comes to sparking change, the global financial crisis, with its clear villain – the multinational banking industry – should have been a better bet, but back then too many people were still dreaming the dreams of the 1980s, too few people ready for real change.

It’s true that, when Covid-19 hit, governments suddenly looked good (well, some of them). If, in some libertarian dystopia, businesses had had to cope with the pandemic by themselves – forced to shut down as infections spread like wildfire, but with no support from the state – they would have been toast. Even the National Party’s pollster, David Farrar, thinks New Zealanders will be much more tolerant of the big state in future.

But many Kiwis, unsurprisingly, also associated the big state with a big constriction of their lives. The vibes weren’t all good. Hence the lack of any substantial redrawing of the boundaries between government and business.

And, also unsurprisingly, people wanted normality back. Behavioural science doesn’t tell us exactly how long it takes to form new habits, but it’s generally more than six weeks.

Ironically, if the first lockdown had lasted longer (and thank goodness it didn’t), we might have seen bigger shifts in our basic social and economic structures. One of the reasons Anglosphere politics became more egalitarian in the 1950s was the shared misery of World War II. But that lasted six years, not six weeks.

In any case, some countries have now had extended – though also chaotic – lockdowns, and their politics are becoming more inegalitarian, more atomised, more vindictive. Change needs solidarity, not just suffering.

Here, it might have been different if the Government had really tried to transfer the “team of five million” and “Unite against Covid-19” messages from pandemic to everyday politics. Instead it stuck to its cautious course, intent on hoovering up every last available centrist voter. As a result, there was no springboard towards structural change. “The public has just banked that [Covid] success,” as one minister told me late last year.

But perhaps we put too much faith in big events anyway. Last year I couldn’t understand the mourning for the post-lockdown drop-off in birdlife: there’s so many birds about anyway. I live on the edge of Wellington’s CBD and often there are kākā flying past my window, some of them heading for the centre of town.

This truly amazing fact results from no calamity. Rather, it reflects decades of slow, patient, far-sighted conservation work, by the founders of Zealandia but also by the unsung heroes of the regional council, whose trapping of rats and possums is partly responsible for the extraordinary flourishing of native birdlife we now see around town.

If, then, you genuinely want a country with lower carbon emissions and fewer children in poverty, as I’m sure most people do, the best course of action is to find a cause you believe in and start chipping away. Don’t wait for a catastrophe to create the change you want to see in the world.

Guardian: Why we’re happy hobbits in Jacinda’s ‘mysterious socialist hermit kingdom’

Read the original article in The Guardian

Physician, heal thyself. This phrase has been in my thoughts ever since global media outlets, most of them British, started mocking New Zealand’s Covid elimination strategy last week.

I’m a proud British passport holder, and spent some of my best years in London, but not once during this pandemic have I ever wished to be anywhere except New Zealand. That holds true even though we’re now back in lockdown while the British freely enjoy what passes for a summer there.

As Twitter users were quick to point out, it was indeed crazy of New Zealand to go into lockdown with just one case – no wait, 22 – hang on, 107 … You get the point. The fact that coronavirus case numbers can mount rapidly should be obvious by now, but apparently not.

Also apparently, some British columnists believe New Zealand has become “a mysterious socialist hermit kingdom”. But we’ve led infinitely freer lives over the past 18 months. On the Oxford Covid-19 Stringency Index, they’ve had – crudely speaking – 60% restricted lives for most of that time, while we have seldom been over 20%. We have lockdowns, but they’re generally short and sharp.

The lockdowns are also effective: we’ve had just 26 people die of Covid, a number which – and I cannot stress this enough – is very different from more than 130,000, the current UK death tally. Our per-person death rate is 400 times less than the British one. And if any British people think that’s down to New Zealand’s being an island, they might want to take a look at the shape of their own country on a map. Luck, and living on the bottom of the world, have also helped us, but not that much.

It’s hard to think of any downsides to our approach. Lockdowns are not great for one’s mental health, admittedly, but also probably not as bad as having to watch “the bodies pile high”.

Our compassionate response has also been an efficient one: New Zealand’s economy recovered more quickly than Britain’s did, while our unemployment rate, at 4%, is so low that firms trying to recruit staff are contemplating desperate measures like actually raising wages.

Yes, we can be sleepy little hobbits, less protective of our civil liberties than the British. But when infringements are proportionate to the harm they seek to prevent, and governments act competently, citizens are right to be trusting. And it’s not as if no one dares criticise Jacinda Ardern.

In short, our coronavirus response has been that rarest of things, a win-win-win situation. In the “slightly magical animal” stakes, we can boast not just hobbits but also unicorns.

As to the “hermit” line: it’s not like we want to be isolated. We organised a trans-Tasman travel bubble with Australia as soon as it looked safe, only for the Aussies to mess everything up. If we don’t have one any more it’s not for lack of effort on our part.

Of course our government has made mistakes. Managed isolation bookings are chaotic, intensive care beds inadequate, testing systems far from perfect. Most notoriously, our vaccine rollout is the developed world’s slowest.

But we could afford some slowness because of our previous victories. What’s more, the continuing deaths and resurgent infections in vaccine “success stories” such as Israel, the US and the UK suggest there are few role models out there, unless one is willing to tolerate a body count of hundreds of people a day, tens of thousands a year. New Zealanders would be more excited about “learning to live” with Covid if it didn’t look so much like learning to die with it. We would also probably prefer not to open up to Covid with a very partially vaccinated population, a delightfully British approach that appears perfectly designed to create the next Delta variant.

Given Delta’s exceptional infection rates, of course, our latest lockdown may not work. We have no monopoly on perfection, no crystal ball. But for the moment it looks like the right strategy.

And of course we need an exit plan, just like everyone else, and we may eventually have to accept a few coronavirus deaths a year. But that exit plan, and the opening of our borders, will seem feasible only once global vaccination rates are sky-high and the rest of the world is a safe place for travel.

That, in turn, does not look likely to occur before the end of this year, by which point New Zealand will be in the same situation as everyone else – that is, having got the vaccine to anyone who wants it before commencing a desperate battle with the anti-vaxxers.

I’m genuinely delighted that the UK has nailed its vaccine rollout, helping protect my many British friends and family members. But rather than mock others, Britons would do well to contemplate their own past – and continuing – problems with a pandemic that is sorely testing us all.