The Spinoff: What happened last time we had a beneficiary crackdown?

Read the original article in the Spinoff

When asked earlier this week what happens to welfare recipients who have their benefit removed, social development minister Louise Upston said she wasn’t sure. There is, though, evidence from the past, because New Zealanders have been here before, and have kept the receipts.

A tough line on beneficiaries, after all, follows a National election victory just as night follows day. In 1991, Ruth Richardson slashed benefits by around one-fifth of their value. In the next National government, John Key’s welfare minister, Paula Bennett, sanctioned tens of thousands of beneficiaries – cutting their payments, essentially – in an attempt to force them off welfare and into paid work. Over 80,000 were sanctioned between July 2013 and September 2014 alone.

Bennett was not especially interested in finding out what happened to people afterwards. But others, fortunately, were. When Victoria University master’s student Alicia Sudden interviewed beneficiaries in 2016, she encountered many who found Work and Income’s punitive approach degrading. One said it “made me feel anxious that I would be doing something wrong all the time”. Another woman had her benefit cut for missing a Work and Income appointment because she had had to see her doctor urgently.  

Many of those Sudden interviewed had come off the benefit but returned relatively quickly. And this finding was borne out by a large-scale 2018 report on the impact of Bennett’s reforms. More people had moved from welfare to work in 2013-14 than in 2010-11, before the reforms, but that was “mostly due to the improved labour market”, the report found.

It also showed that, of those leaving the benefit, nearly half – 45% – were back on it 18 months later. Many had moved into low-paid, precarious work, or seasonal jobs, or study for low-level qualifications – and found themselves rapidly back on the benefit. Churn, in short, was high, even in a booming labour market. 

Other research has questioned the assumption that people’s lives will automatically be improved by paid work. Evidence reviewed by the 2019 Welfare Expert Advisory Group (WEAG) found that although, in general, employment improved beneficiaries’ mental health, low-paid and stressful work could have the opposite effect. Over the ditch, researchers on the Household, Income and Labour Dynamics in Australia survey have come to more or less the same conclusion: certain kinds of work are worse than being on a benefit.

Along similar lines, research by another Victoria University master’s student, Leah Haines, found in 2021 that the wellbeing of poorer mothers “is not systematically improved by employment”. Nor is this wholly surprising, given that childcare is often inadequate, the shift into work creates costs (for new clothing and transport needs, for instance) not covered by wages or government support, and jobs can be inflexible or precarious.

Also harmful are the widespread sanctions applied in welfare crackdowns, typically involving a benefit being cut by 50% or 100% for a set period of time when recipients fail to meet certain criteria. All welfare systems, unless they hand out no-strings-attached cash, will involve sanctions at some point. But there is a contrast between Labour’s limited use of them as a last resort and National’s more full-throated, first-resort approach. The latest crackdown does, admittedly, introduce softer sanctions – having Work and Income manage beneficiaries’ incomes, or compulsory community service – that can be used before benefits are cut partly or wholly. But it nonetheless envisages more punishment as a general principle.

Back in 2019, WEAG noted that increased sanctions had “compound[ed] social harm and disconnectedness” for parents. Overseas research comes to similar conclusions. A 2015 British report on the Conservative Party’s extensive sanctions found that “removing benefits increases hardship, destitution and foodbank use as well as damaging physical and mental health”. This extends to the children of beneficiaries, who – whatever one thinks of beneficiaries themselves – are obviously innocent in all this.

And while inflicting such damage, sanctions don’t even achieve their goal of speeding the transition from welfare to sustainable work. A 2016 review of the then-current evidence, by Britain’s National Audit Office, found that sanctioned beneficiaries may be “more likely to get work, but the effect can be short-lived, lead to lower wages and increase the number of people moving off benefits into inactivity”. (“Inactivity” is often code for “giving up on the system entirely”.) 

A more recent British report found that a sanction “leads the average claimant to exit less quickly into PAYE [regular work] earnings and to earn less upon exiting”. This is supported by 2022 Dutch research showing that threatening beneficiaries with sanctions “was still detectable in people’s lower employment and earnings [compared to those not threatened] three years later”. 

While this may seem counter-intuitive to some – how can a financial threat make people slower to leave welfare? – the answer lies in better understanding beneficiaries’ lives. The government’s mental model appears to be that if welfare recipients are doing the things that get them sanctioned – missing job interviews or Work and Income appointments, for instance – it is because they are lazy or abusing the system.

In point of fact, research suggests many beneficiaries lead complex lives beset by social forces beyond their control. They face a constant, daily struggle to pay bills, they often live in damp and mouldy houses that make them ill, their children have frequent health and behavioural issues, and they themselves are often in poor mental or physical health. 

Any sudden bill is a nightmare. Many hours each week are taken up explaining their situation to government agencies and charities. And they live surrounded by people whose equally complex lives will often suddenly impose on their own. (One beneficiary I know had to abruptly leave a contract job to rescue a friend from a domestic violence situation; such occurrences are relatively frequent for those in poverty.) Beneficiaries also live with a degree of hardship that means they may not be able to afford the petrol or the bus fare to get to a job interview or Work and Income appointment.

If they miss an interview, then, it is far more likely to be due to a sudden life shock than to sheer laziness. And imposing a sanction just adds a further element of chaos to an already chaotic life. It destabilises people even further, diverts even more of their attention to the struggle to pay bills and just survive, and limits even more sharply the time they can give to job-hunting or studying.

There are many ironies in the current crackdown. One is that Act, a supposedly libertarian party that believes people know how to spend their money better than the state does, is the biggest advocate of forcing beneficiaries to let the government manage their finances. Another is that the way to incentivise the wealthy is – apparently – to give them more money through tax cuts, but the way to incentivise the poor is to take money away from them. 

Yet another is that the government has set itself a target to get 50,000 people off the benefit even as our counter-inflation policy increases unemployment by exactly the same number. The final irony is that a government that prides itself on evidence-based policy is committed to a beneficiary crackdown that is not – as far as anyone can tell – supported by evidence.

The Post: Compulsory purchase of mall could create unrealised potential

Read the original article in the Post

It takes a lot to unite the Wellington City Council right now, but the owners of Johnsonville Mall may have just about managed it. Or so it seems from the council’s threat this week to compulsorily purchase the local “eyesore” that is the mall.

This represents, at least rhetorically, a break with the habits of the last 40 years. We have long been told that the best a state body can do is to steer, not row: to create the conditions for firms to do their thing, but not act directly itself.

This is hands-off, laissez-faire government. Hence we see, for instance, ministers subsiding low-end landlords through the Accommodation Supplement rather than building state houses en masse.

This has not been very successful, and helps explain why so many things in New Zealand cost so much and work so badly. Yet steering is still the limit of our ambitions. The housing debate has been dominated by the question of rezoning land: changing – one might say steering – the places where developers can build.

That reform, much-needed, has already delivered benefits in places like Auckland. But it is incomplete: developers, left to their own devices, will not automatically provide affordable, high-quality housing. We have, comparatively speaking, neglected state housing, currently 43,000 homes short of its 1990 level (when adjusted for population growth).

So it is striking that a Wellington City Labour councillor, Ben McNulty, has majority support to commission a plan to hasten redevelopment of Johnsonville Mall, potentially including compulsory purchase. He has the backing of conservative colleague Diane Calvert, who rightly says it’s time for action “rather than just solely relying on [mall owners] Stride”.

For non-Wellingtonians, the short back-story is that the mall is a disaster: a half-empty, low-slung sprawl of neglected shops right next to a major train station, when it should be the hub of a beautiful, medium-density, low-emissions development sporting shiny new retail, revitalised public transport and affordable housing. Under Stride, the mall’s long-established owner, redevelopment is forever promised, and never delivered. “Always tomorrow” could be their motto.

It’s unclear if the council has the courage to act on its compulsory-purchase threat. But it should.

This would, admittedly, terrify right-wing economists, who believe property rights are sacrosanct. And so they should be, 99% of the time: but not always. Compulsory purchase, after all, was used – albeit controversially – to build the new Kāpiti Coast highways. And one can’t argue that roads matter more than houses.

Some might say those compulsory purchases were justified because roads can take only one route. But perfect development sites are equally rare. If we are to urgently house more people, and rapidly minimise carbon emissions, we can’t let Stride stall progress for another 20 years.

One counter-argument is that, if there were development opportunities, Stride would have spotted them far before any councillor could. But the potential here is plain to see. And the argument that all-knowing firms automatically maximise opportunities is pure market theory, not reality.

Companies will, for instance, wrongly oppose cycleways because their owners over-estimate the proportion of customers who drive. Some businesses are simply sluggish, settling for a low-risk, land-banking life. Or they may lack the cashflow for redevelopment, and be unable or unwilling to borrow.

Property firms may also under-invest when they can’t capture redevelopment’s wider public benefits: better housing, lower emissions, improved transport. If rebuilding costs $100m, say, and the commercial benefits are $105m, a firm mightn’t take the risk. But if those public benefits have an estimated monetary value of another $45m, redevelopment suddenly makes sense. And the only body that will act to capture those benefits is a public one: in this case, the council.

McNulty’s colleague Iona Pannett is worried about his plan, arguing the council isn’t a good developer. But it needn’t be.

The council’s task is to purchase the site at a fair rate and, assisted by experts, draw up a master plan, delineating the broad outcomes the city desires: more retail, enhanced rail services, affordable houses. Such planning – admittedly complex – then catalyses private investment. For good urban development, British research suggests $1 of public money is needed to “crowd in” $4 of private cash. Once a master plan is out to tender, dynamic firms can do their best work: sensing retail opportunities, managing development risk.

A last counter-argument against compulsory purchase is that it has often been used to confiscate Māori land. And that’s true enough. But what if part of the new development was handed to iwi, and used for papakāinga housing or similar? An instrument of injustice could become an instrument of justice.

The compulsory purchase question, of course, goes much wider than Wellington. Every city will have a prime site where the private sector is land-banking or otherwise sitting on its hands, and compulsory acquisition could unblock progress. If the capital led the way, others might follow.

The Spinoff: Healthy homes standards worked, but many landlords are still refusing to comply

Read the original article on the Spinoff

Amidst the generalised despair about the last government’s failure to deliver on certain key promises, it’s easy to forget it had some major wins.

Take, for instance, the healthy homes standards, introduced in 2019 in an attempt to do something about the extravagantly bad quality of this country’s rental housing – something that consistently makes overseas observers shake their heads in bafflement. The standards are not especially demanding. They require only that a rental property has a fixed source of heating, is insulated where practicable, has extractor fans in both bathroom and kitchen, boasts functioning water pipes and gutters, and does not have massive holes in its walls. These are not, on any objective measure, unreasonable demands, even if some landlords treated the law change like they would a declaration of war.

But have the standards made any difference? Although objective data is in short supply, the Ministry of Housing and Urban Development does commission an annual survey of renters and landlords, the 2024 edition of which has been released to the Spinoff under the Official Information Act.

The survey reveals some good news. Nearly one-fifth of rental owners say they were compliant with the standards even before they were introduced; taken at face value, these are the good landlords, of which the country needs a far larger supply.

Even more pleasingly, the data suggest the standards have made a substantial difference. Some 84% of renters say their property has an “acceptable” form of heating installed (heat pumps, for the most part), up from 67% in 2020. Similarly, 77% of renters say they can heat their living room to a “comfortable” temperature all year round, up from 50% in 2020.

Perhaps most tellingly, the proportion of renters saying their home has a problem with damp or mould has fallen from 57% in 2021 to 44% today. The proportion citing problems with heating their home or keeping warm in winter has likewise fallen, from 55% to 42%.

When it comes to ventilation, 79% of renters report their property has an extractor fan in good working order in the bathroom, up from 64% in 2020. Similarly, 81% say there is a fan in the kitchen, up from 66%.

These marked improvements since 2020 plausibly tell us two things. One, the standards have begun to work. This is reassuring: it shows us that when the state does something, when regulation is enacted, improvements follow. Second, if there is to be further progress, it will come once again from regulation: the “market” so beloved of neoclassical economists had decades to raise rental standards to an acceptable level, and failed abysmally. 

We are, as a result, only at base camp on the mountain of rental reform. Recall that around four in 10 rentals, according to their occupants, are still to some extent damp, mouldy or difficult to heat. Within that, 6-8% have a “major” problem with mould and cold. On one measure, this proportion has not changed since 2020.

Likewise the situation with drainage. According to renters, roughly one-fifth of properties have unresolved drainage issues; within that, 10% of renters are not aware that their landlord has any immediate plans to fix the problem. 

We can also take that staple of low-grade New Zealand rental housing, the gaping hole in the wall. Just under a quarter of renters report their properties have “unreasonable” gaps and holes that cause “noticeable” draughts. Within that, in 14% of cases their landlord has no apparent plan to address the issue. Some 15-18% of rentals, meanwhile, have no appropriate source of heating, depending on whether one believes renters or landlords.

Most concerning, when landlords are asked whether they have prepared their properties to meet the Healthy Homes Standards, around 8% still say “no, not really” or “not yet”. Similarly, around 7% of landlords are officially described as being “in denial” about the legally mandated standards, a figure that is unchanged since 2020. 

What does all this tell this? If we take the issues with dampness, heating and drainage, roughly 20-40% of rentals – that is, hundreds of thousands of properties – still display some level of defects. Within this, somewhere between 8% and 15% of rentals are extremely damp, mouldy or otherwise unsafe, and their landlords are utterly unrepentant. 

Why have such problems not been regulated out of existence? A clue may lie in the inspection regime. Labour is to be saluted for one epochal shift: rather than requiring tenants to report problems, as was previously the case, Jacinda Ardern’s government gave officials the power to proactively launch investigations.

It did not, though, support this shift with sufficient resources. Two years ago, the inspectorate tasked with assessing New Zealand’s 600,000-odd rental properties boasted a grand total of 37 staff. In response to the Spinoff’s enquiries, the Ministry for Business, Innovation and Employment (MBIE) has revealed that the number today stands at … 35. 

This inspectorate, MBIE insists, has not been harmed by the new government’s cost-cutting regime, nor has it been instructed to dial down its regulatory efforts. But National hardly need do so.

Even under Labour, the rental inspectorate spent an awful lot of time “educating” landlords about the standards set out in law and very little time actually – you know – enforcing them. In the last year, rental inspectors issued 316 warnings, but took just four landlords to the Tenancy Tribunal. The result – as the survey shows – is that the very worst landlords continue to flout the law, safe in the knowledge that they are extremely unlikely to be prosecuted.

Little change can be expected from the current government. But while they are in opposition, Labour and the Greens should draw up plans for another, more comprehensive, phase of regulation. The slumlords deserve no second chances, no first warnings. One or two of them need to be put out of business, and their properties snapped up by better owners. Only then will the remaining slumlords be frightened into compliance; only then will the nirvana that most developed countries have long since achieved – a stock of predominantly warm and safe rental homes – come finally within reach.

The Post: The poverty pipeline which delivers the victims of abuse in care

Read the original article in the Post

The Royal Commission’s report into the abuse of children in state and church care is a landmark moment of accountability: an event during which powerful institutions finally acknowledged harm done. That’s its past-facing component.

Real accountability, however, also faces forward. Apologies, support and financial redress for victims must follow. And we, as a country, must ensure such evils are never visited again upon the vulnerable.

That is largely a question of what goes on inside so-called “care” institutions. But we should also consider why so many children come to be in care in the first place.

That pipeline has been fed by racism, and by a culture of separating children from their families instead of supporting those whānau to heal. Another central force, though, is poverty.

In 2019, researcher Angie Wilkinson and I wrote a background report for the Royal Commission in which we compared family stress to cracks in a dam, building up slowly, sometimes imperceptibly, until the pressure forces a break. A family becomes unable to cope; their home stops being a safe environment.

These stresses are felt in multiple ways. Poorer parents, unable to afford basic items like food and clothing, warm housing and school supplies, may feel they are failing. This stress can worsen their anxiety, depression and anger, compromising their ability to be patient with their children or invest in them emotionally.

Struggling constantly to pay bills and deal with unexpected costs, parents may end up withdrawing attention from their offspring. Erratic or unsociable working hours, including night shifts, make parenting harder still.

Families living under severe financial pressure, surrounded by others in similar hardship, may struggle to forge the social connections that could have buoyed them up in tough times. It’s no surprise, then, that New Zealand researchers have found poverty can “sap parental energy, undermine parental sense of competence, and reduce parental sense of control”. And this stress and anxiety is often absorbed by the children themselves.

As well as poverty, there’s inequality. In societies with sweeping disparities of wealth, poorer families feel themselves to be at the bottom of a steep hierarchy, leaving them with stigma, a loss of control over their lives and psychosocial stress. This has been strongly linked to heart disease and other stress-related health conditions.

Once again, it’s no surprise that global research consistently finds a close connection between poverty, inequality and the maltreatment of children. One British academic, Paul Bywaters, notes that deprivation is “the largest factor explaining major differences [from area to area] in key aspects of child welfare, such as the proportion of children entering the care system”.

Here in New Zealand, we know that “substantiation” – an official finding that abuse has occurred – is 13 times more common in the poorest fifth of neighbourhoods than in the richest fifth. That can occur because of official bias against certain communities. But it also points to the role of poverty.

Māori children, experiencing both racism and disproportionate rates of poverty, have been hit hard by every aspect of the system. In 2019, they made up around two-thirds of all care placements.

And the whole system is, in many senses, a depressing downward spiral. According to a 1999 paper by Moana Jackson, an estimated 85-90% of Mongrel Mob and Black Power members had once been wards of the state.

In that environment, they faced, to quote Mongrel Mob founding member Gary Gerbes, “sexual abuse by the people that ran the place [and] absolutely shocking violence... Those places destroyed our f...in’ heads, man”.

As cited in Jarrod Gilbert’s book Patched, Gerbes’ response was to say, “F... the system - if that is the way they are going to treat us, then we will treat them the same way. We are going to give them what they gave us - and [via the Mongrel Mob] they got it alright.”

Breaking that ugly cycle is colossally complex. But tackling deprivation could play a part. Bywaters’ work shows that lifting families out of poverty has a “statistically significant” impact on rates of child abuse and neglect. American researchers Lindsey Rose Bullinger and Kerri Raissian, meanwhile, estimate that a $1 increase in the minimum wage leads to a near-10% decline in reports of neglect.

All the more reason to worry, then, that it emerged this week that National had quietly downgraded its ambitions for reducing child poverty. Labour’s target had been to reduce material hardship rates from the 13.3% it inherited in 2017 to just 9% this year.

Admittedly it failed: the rate last year was 12.5%, owing to the cost-of-living crisis, and has probably risen since. But National’s new target is for 11% of children to still be in hardship in three years’ time. That’s twice the rate of some European countries.

It’s an unacceptably low level of ambition – and one that will, alas, keep the pipeline of care placements flowing freely.

The Spinoff: What the left and right still get wrong about 1980s politics

Read the original article on the Spinoff

For the left, the fourth Labour government’s victory on July 15, 1984 was the beginning of everything bad. A country in which people looked out for one another became, through privatisation, deregulation and attacks on the welfare state, a nation of diminished community, dwindling social cohesion and care, and rampant poverty. For the right, that election – and the 15 years that followed – were a glorious revolution. A Soviet-style economy of stultifying regulation and cossetted industries was swept away, and in its place sprung up a forest of dynamic, entrepreneurial companies.

Both stories, in fact, hold an element of truth. And failing to recognise this has harmed both right and left – the latter especially so.

The left is correct to point out that post-war New Zealand had one of the world’s highest – and most evenly distributed – standards of living. The profits of farm and other exports were widely shared via strong trade unions, near-zero unemployment, state house-building, high income and inheritance taxes, and a reliable welfare state.

But by the early 1980s that economy was in real strife. Lacking diversity, it was hit hard when meat exports to Britain declined. It was also immensely protected, a kind of pre-covid Fortress NZ. It was hard to acquire foreign currency, or even import magazines without a licence. Bureaucrats determined which businesses had licences to import certain goods. Some manufacturers enjoyed a virtual monopoly in their sector, leading to over-priced, poor quality products.

Compounding matters, prime minister Robert Muldoon responded to the 1970s oil crisis and concomitant inflation shocks with a King Canute-like attempt to freeze prices and wages. “You can’t run the economy like a Polish shipyard,” opposition leader David Lange famously said. (Muldoon tried to do it anyway.)

The New Zealand economy in 1984 was not, in short, especially dynamic. Productivity had barely risen since 1970. So when Lange was elected prime minister and, more importantly, Roger Douglas became his finance minister, there was pent-up demand for change of some kind. That promptly arrived in the Rogernomics revolution: subsidies were swept away, protected industries exposed to competition, state assets sold and taxes slashed. Following this lead, the subsequent National government decimated unions, sold state houses and viciously cut benefits.

At the frequent talks I give on economic inequality, an older, more left-wing member of the audience invariably asks a question along the lines of: how were Douglas and co able to perpetrate such a fraud on the New Zealand public? Part of the answer is the exploitation of circumstance: Douglas used a minor crisis – the fact that the country was exhausting its foreign currency reserves trying to prop up the dollar – to pretend there was a more widespread economic catastrophe in train. (There wasn’t: government debt, for instance, was at a manageable – though certainly not ideal – level of 60% of GDP.)

Another part of the answer is blitzkrieg: Douglas deliberately moved fast to prevent opposition. As he told the Spinoff’s Juggernaut podcast, “If you do it quickly, people don’t have time. They can’t adjust.” This repugnant, anti-democratic attitude ignores the fact that countries like Australia made similar adjustments, but more gradually and with less damage to their communities. Douglas’s approach was disgraceful, and built on a lie; but it helped him get his way.

A wider point, though, and one that the older left has never fully grasped, is that egalitarianism had become tarnished with the brush of mediocrity. It was seen as having led to conformity, an aversion to risk-taking and a distrust of success. As the political scientist Leslie Lipson had noted decades earlier: “In its anxiety to raise minima, the country deemed it necessary to lower maxima.” Egalitarianism had become – or been seen to become – “levelling down”, rather than, as the Brits might say, “levelling up”.

The New Zealand economy did have to be made more open, more dynamic, more entrepreneurial. But – and this is the crucial point that the right, for its part, has never quite grasped – more open did not have to mean more unequal. At the time, politicians insisted that it did. Bill Birch, a National minister in the 1990s, said income disparities “are widening and they will widen much more. That doesn’t worry me.” Wealth, after all, was going to trickle down. Newsflash: it didn’t. Between 1984 and 1999, the period of right-wing change, incomes declined for the poorest half of the country.

Economic damage on that scale – which can be sheeted home to the likes of Douglas, Birch, and 1990s finance minister Ruth Richardson, still sitting on the board of the Taxpayers’ Union – is extraordinary. It was also unnecessary. The fact that farmers were over-subsidised didn’t justify slashing benefits by one fifth. The fact that manufacturers were sheltered from competition didn’t justify cutting the top tax rate from 66% to 33%, or attacking trade unions, or selling off state assets at fire-sale prices.

New Zealand could have become the Denmark of the South Pacific: open, dynamic, and still egalitarian. Instead it became a kind of low-rent Britain, even more deregulated but even less successful economically. Since the Rogernomics reforms, New Zealand’s standard of living has steadily lost pace with those of comparable countries. Productivity, though rising compared to the Muldoon era, has actually fallen further behind that of our competitors.

The lesson the right hasn’t learnt from this, and seems incapable of recognising, is that there isn’t anything wrong with trying to shape the economy; it just needs to be done the right way. To succeed, economies need heavy investment in infrastructure, education and health; they need children to be lifted out of poverty in order to guarantee a productive future workforce; they need governments to regulate cowboy firms out of existence, and encourage a shift to higher value exports. All that a hands-off approach to the New Zealand economy has done is let predatory monopolists and oligopolists make hay, while other businesses potter along in their low-value, low-skill, low-wage ruts. Our elevated levels of poverty and inequality, meanwhile, are a constant drag on economic growth.

The lesson the left hasn’t consistently learnt, meanwhile, is that there’s no point in nostalgia. One can’t recreate the 1970s, and shouldn’t try: even leaving aside the Fortress NZ aspects, it was a much more racist, sexist and homophobic time. Better, surely, to ask what a modern, dynamic form of egalitarianism would look like. What does fairness mean in the future? What is an optimistic take on this century’s potential? What opportunities will New Zealand seize only if long-term poverty is swept away and the wealthiest pay their fair share of tax? Since we live still in its long shadow, it is reasonable to keep looking back to 1984 – but only as a springboard into the brighter days ahead.

The Post: What will be Luxon’s ‘John Key’ moment of bipartisanship?

Read the original article on the Post

In 2007, John Key made a move that, by putting the nation’s best interests ahead of political point-scoring, left commentators “flabbergasted”. In aiding his opponents, he enhanced his own reputation. The question now is whether Christopher Luxon has it in himself to do the same.

Back in 2007, the issue at hand was the anti-smacking bill put forward by Green MP Sue Bradford, which sought to prevent parents from invoking the defence of “reasonable force” when accused of hitting their children. For two years, debate over the bill had been acrimonious, and the country sharply divided.

Opponents said it would criminalise parents who smacked their children. The National caucus was firmly against it. But eventually a way out of the dilemma emerged: the setting of a threshold below which the police would not prosecute.

According to contemporary reports, Key met Bradford in April that year and suggested that smacks of a “minor and inconsequential” nature might be allowed. Although Bradford didn’t immediately accept the suggestion, prime minister Helen Clark had her eye on something similar.

She soon got Bradford and Key to agree that exempting “inconsequential” smacks – with no mention of “minor” – was an acceptable compromise. The bill then passed by 113 votes to seven, and once a misleadingly worded referendum had been rightly ignored, a near-consensus on the issue settled.

All three main actors had behaved well, not just Key. But his actions are especially notable now, in these polarised times, given his role as one of our current prime minister’s political idols. Key could have entrenched his opposition to the bill, exploiting the situation and ratcheting up the political pressure on Clark.

Instead he accepted a bipartisan consensus in the name of the common good. Respected political commentator Audrey Young declared herself “flabbergasted”, praising Clark’s “remarkable statesmanship”, but also declaring the episode “a real victory for Key”.

In retrospect, this was probably the highwater mark of Key’s bipartisanship, before he descended into the dirty politics so searingly exposed by Nicky Hager’s book of the same name. Nonetheless it reminds us that compromise is possible – or, at least, it once was.

Politics, of course, needn’t always end in consensus. The platforms of our two main political parties, Labour and National, are already too alike, especially on economic issues. The tepid soup of semi-indistinguishable policies is surely a turn-off for voters, and we would be better served, on the whole, by a sharper contrast between the two sides. Let divergent ideas be put forward, and tested in debate.

At the same time, nothing is more frustrating than to see parties opposing each other not because they truly disagree but because it is politically expedient. Where consensus or compromise is possible, as with the anti-smacking legislation, it should be sought. All the more so when society seems increasingly polarised.

A big question for Luxon, then, is this: what will be your John Key moment? What is the issue on which you will reach across the aisle and seek consensus in the name of the greater good?

Someone should put the question directly to the prime minister. If all he could manage was a rebuff – “What I’d say to you is, Labour was such a useless government that there’s really no point trying to work with them now” – he would have failed to meet the challenge of our age, and left the fractures in our politics to deepen.

Luxon’s record so far on bipartisanship is not good: consider, for instance, his withdrawal from the “townhouse nation” accord on suburban house-building. Yet there is, fortunately, a strong new candidate for consensus: the infrastructure pipeline. As Simplicity’s Sam Stubbs pointed out this week, and the Helen Clark Foundation has recently argued, bipartisan agreement on a future building programme would help us all.

One key reason that infrastructure costs so much here is the stop-start nature of the work. We bring in a tunnel-boring machine for a big job, then send it back overseas because no-one can agree on the next project. Building is poorly co-ordinated; skilled workers are lost.

Infrastructure, of course, is political, and people like former business leader Phil O’Reilly believe it will never be the subject of consensus. But in the Venn diagram of Labour and National policy, there is surely a large overlapping area.

Just agreeing basic standards for maintenance, which represents a huge chunk of infrastructure spending, would be a good start. Consensus, in short, could be sought on the overlap, without preventing either party from campaigning on the items that lie outside it.

Labour, with perhaps the most to gain from such an accord, is willing. At a Fabian Society event I chaired in February, infrastructure spokesperson Barbara Edmonds said she would “absolutely” pick up the phone if Luxon called. The challenge has thus been laid. Will the prime minister rise to it?

The Spinoff: Life in Aotearoa is increasingly precarious – and young people shoulder the burden

Read the original article on the Spinoff

Between their eighth and 12th birthdays, nearly half of all New Zealand children move house. A fifth of these displacements are involuntary, as their families, frequently living in the lowest-quality rentals, are evicted or forced to up sticks in search of housing that is affordable and not actively threatening to human life.

These stark findings, from the Growing Up in New Zealand survey, are a reminder that it is not just our earthquake-prone geography that is precarious: our economic and social arrangements are too. And this is greatly to our shared detriment. In the study, the young people who moved house most often, and thus lost contact with their local health service, were most likely to miss out on treatment they needed. The destabilising shifts from place to place will also, in all likelihood, disrupt their schooling and damage their ability to make friends. 

The burdens of precarity, in short, fall heavily on the young. Yet the government seems determined to exacerbate insecurity at every turn.

This can be seen firstly in the reintroduction of no-cause evictions for renters, a disproportionately young cohort. The housing minister, Chris Bishop, wants to give landlords the ability to evict tenants for no reason, something Labour had rightly taken away from them. The notional basis for restoring no-cause evictions is that it’ll make landlords more willing to take a chance on marginalised renters who might otherwise seem too much of a risk. 

Such families, though, could – and should – be accommodated in social housing. There is, what’s more, no actual evidence the policy will work, nor is there any good reason why other tenants should suffer such a loss of basic security. In Britain, Bishop’s counterparts in the Conservative Party have pledged to abolish no-cause evictions, not introduce them. In any case, the serious harm done to families, forced to move without reason, surely outweighs any marginal benefit that might accrue. Yet this is “pro-tenant” policy, we’re told. 

The second injection of precarity comes via the extension of 90-day trials. Up until now, only small employers have been allowed to fire workers without reason during their first three months. Now, thanks to employment minister Brooke van Velden, all firms can do so. This despite past research finding no evidence that 90-day trials increased average hiring, even for the more disadvantaged jobseekers. The trials achieve nothing of note, but create immense and unjustifiable uncertainty for working people. And it will almost certainly be the sectors where young workers congregate – retail, hospitality and so on – that will make disproportionate use of the extended trials.

The third element of precarity is the most amorphous but also the most important: the failure to take climate change seriously. The budget gutted climate-related initiatives, taking money set aside for emissions reductions and diverting it to tax cuts. Analysis by the New Zealand Institute for Economic Research (NZIER), a highly respected think-tank, found that just 1% of the budget’s new spending was “favourable” to the climate; around 60% was neutral and one-third was “unfavourable”. 

At a time when every extra dollar spent should be helping fight climate change – or at the very least not making it worse – this seems unforgivable. More than that, it increases the uncertainty for young people who will live their whole lives with the consequences of these decisions. A much warmer world is a much more unstable one, wracked by unpredictable storms and menaced by ever-rising waters.

Of course New Zealand by itself cannot turn that tide. But as the NZIER points out, the fact that we need other countries to act just heightens our own responsibility. “If we appear unwilling to meet our own commitments,” the think-tank adds, “how can we ask others to meet theirs?” And while National remains notionally committed to meeting our 2030 target to halve emissions, its actions seem likely to focus on planting trees – hardly a credible solution.

So there we have it: insecure tenancies, insecure jobs, an insecure climate. Is there anything on the other side of the ledger, anything the government is doing to reduce precarity? About the best one can say is that Bishop’s desire to lower house prices, if carried through, could make home-buying a more secure prospect. Beyond that, the government’s coalition partners are not giving young people any reason to vote for them next time round. Nor, as I’ve previously written, does the evidence suggest that will happen: young voters, having shifted right last year, seem to be rapidly reverting to their usual leftwing stance. 

Diagnoses of anxiety are, famously, widespread amongst the young. While it’s reasonable to wonder whether some of this represents an over-medicalisation of the standard turmoil of young adulthood, it is also not hard to see why the rising generations might feel anxious. 

They also have the galling sensation of knowing that while they face a loss of certainty, others get a corresponding increase. Such change always creates winners and losers. No-cause evictions give landlords greater control over their tenants; 90-day trials likewise for employers and their staff. In both cases, the protection of profits takes precedence over the stability of ordinary people’s lives.

The same is true of van Velden’s desire to remove a worker’s right to go to court and challenge their employment status. Currently, people can argue that, even if they signed a piece of paper saying they’re a contractor, they are in truth an employee, essentially operating in a permanent role with their employer controlling their conditions of work, and thus entitled to all the sick leave, holiday pay and other protections that employees get. 

Van Velden wants to give employers “certainty” by creating a world where, even if a worker is bullied into signing something that doesn’t reflect reality, they can’t challenge it in court. Curious, isn’t it, how important certainty becomes when corporate interests are at play?

The Post: The government promised to eliminate waste, but has piled it up instead

Read the original article in the Post

For a bunch of people notionally committed to ending “waste”, our Government sure likes some low-quality spending.

Attacks on the previous government’s “wasteful” policies have provided the soundtrack to National’s assumption of power. And no-one sensible doubts that Labour, ill-prepared for office, sometimes spent unwisely: the senseless polytech mega-merger, Te Pūkenga, was a case in point.

But look at how much waste the new Government has served up in just the last week.

Exhibit A: the Cook Strait ferry debacle. While ministers were right to be wary of cost over-runs on the $3 billion-and-growing iRex project, their decision to scrap it could now prove immensely wasteful. There’s the likely $300 million spent just to break the contract. Then, thanks to cost inflation, a potential $900m bill for two non-rail-enabled ferries instead of the agreed $550m on two rail-enabled ones.

The costs pile up: $420m spent planning iRex, down the drain; hundreds of millions of dollars to maintain the old ferries until the new ones arrive at a much slower pace than Labour planned; and no upgrades to substandard ports at both ends. We could still spend $2b and get far worse outcomes: sounds like waste to me.

Then there’s Wednesday’s announcement that the Justice Minister, Paul Goldsmith, will force judges to impose longer prison sentences. Soon our jails will be bursting with prisoners incarcerated at an annual cost of $193,000 each, the sort of thing Bill English once denounced as a “moral and fiscal failure”. Given that half these prisoners, post-release, will re-offend within two years, this looks a lot like waste.

And it keeps piling up. Ministers confirmed this week that billions of dollars will be spent on what satirists call Roads of National Party Significance. On the list is Auckland’s East West Link, the costs of which were, in 2017, estimated to potentially outweigh its benefits.

“From an economic perspective,” consultant economist Donal Curtin noted, “the country would be better off if the [road] were not built.”

No more recent assessment is available, but construction inflation in the last seven years has been brutal, and National now insists these roads must be four lanes wide and grade-separated. Presumably the cost-to-benefit ratio has only worsened. And that’s without contemplating the carbon emissions the roads will induce, the more frequent storms and sea-level rises that result, and the spending required for clean-ups and managed retreat. Waste aplenty.

Still on the roading beat: the Government plans to force councils to reverse reductions in speed limits, even though in Auckland those lower speeds have been found to reduce serious injuries by 15% and deaths by nearly half. Abandoning these exceptional achievements will be – to put it mildly – wasteful.

This week also brought news of a Government-appointed panel to review “methane science”, even though the Parliamentary Commissioner for the Environment has pointed out that the science here is settled.

More generally, the much-touted cuts to “back office” public servants are already hitting foodbanks and budgeting services. Which, considering the good work those organisations do, seems rather wasteful.

It’s striking that, despite the Government’s coalition agreements loudly proclaiming a commitment to “rigorous cost-benefit analysis”, scores of decisions have already been made with no – or indeed negative – assessments of their merits.

It’s almost as if the talk of eliminating “waste” was just ... talk. Decisions, it turns out, are determined not by what’s wasteful, but by what will play well with the Government’s base.

And it’s not just a matter of what such conservative governments do: it’s also what they don’t do.

Consider the issue of obesity, where the latest global obsession is the weight-loss drug Ozempic. It does, admittedly, show impressive results, and experts argue that making it widely available here could help reduce rates of diabetes, heart attacks and strokes.

But think about the equation that then unfolds. We continue to allow junk-food companies to spend millions of dollars, and indeed generate millions of dollars in revenue, by pushing deeply unhealthy food on consumers. And we then, as taxpayers, spend millions of dollars on drugs like Ozempic to clean up this mess.

The alternative, surely superior, would be to tackle the problem upstream. Label food products with clear information about their salt and sugar content, a move the industry has consistently thwarted. Ban junk-food advertising to children. Bring in sugar taxes or whatever else has been shown to work. Make it easier for people to walk and cycle and to exercise in local parks.

Conservatives fixate on the – often minimal – expense of such measures, while failing to spot that their own reluctance to properly regulate markets, and to confront big business, ends up costing far more in the long run. So too does ignoring the effects of climate change, locking people up for longer, and reflexively scrapping the transport projects of a previous administration.

Far from eliminating waste, this government spreads it around with gay abandon.

The Spinoff: Bishop’s house price comments show the mood is shifting. Will we see actual change?

Read the original article on the Spinoff

House prices must always rise. For as long as I can recall, this has been one of the core assumptions of Kiwi politics. It has seemed like a long-run item of faith, a central tenet in the national religion of property investment.

Metiria Turei learnt this to her cost in 2016, when the then Greens leader told Morning Report prices needed to halve – over a period of time, but halve nonetheless – if homes were to become affordable once more. Labour leader Andrew Little called her “irresponsible”, and the public, according to Greens I spoke to at the time, “freaked out”. More recently, Jacinda Ardern sought nothing more alarming than a “sustained moderation” in prices.

But on Monday, the housing minister, Chris Bishop, dipped his toe into these dangerous waters. Asked by Herald reporter Thomas Coughlan if prices should fall, he simply replied: “Yes.”

“Average house prices to the average household income are too high by any objective measure. They are severely unaffordable by international standards,” he added. “The flipside of house prices falling for people who own homes is that they become more affordable for people who don’t.” 

So far, Bishop’s laudable comments have not brought the proverbial house down upon his head. On the Stuff story carrying his remarks, the responses were mostly – though not universally – positive. 

Possibly this is because Nats can get away with saying things Greens can’t. But it could also represent the slow movement, from the fringes to the mainstream, of the view that house prices are just too high, and therefore must fall. As indeed they’ve done in the past. Relative to incomes, house prices declined sharply from the mid-70s to the mid-80s. And in the last few years they have dropped from their ridiculous pandemic-era peak.

Crucially, though, Bishop hasn’t been explicit about what he wants. When most people hear “house price falls”, they think of a scenario where a house that’s valued at $800,000 one year is worth, say, $790,000 the next. But if house prices increase at a slower rate than inflation, that still counts as an “inflation-adjusted” or “real terms” fall. If, in other words, a house valued at $800,000 sells for $808,000 (that is, 1% higher), but inflation is 2%, the value of the house has “fallen” relative to the costs of other goods. 

When The Spinoff asked on Tuesday which scenario he meant, Bishop’s office said only that he “stands by his comments yesterday and all previous comments around housing affordability”. Which reveals nothing – except that he isn’t taking up the opportunity to say, “Yes, absolutely, I want the actual dollar value of homes to drop.”

One might ask: so what? There is no knob marked “house prices” that the government can turn up or down with infinite precision; only the broad aim matters. And that’s a partially fair point. It’s helpful – encouraging, even – to have a housing minister talking about house price falls of any kind. 

But still the distinction does count. First, it’s the difference between really facing down anxious homeowners versus still not wanting to frighten the horses, à la Ardern. The scale of government action needed to achieve the two scenarios is also somewhat different.

The distinction, finally, matters for the path back to affordability, usually defined as prices being only three times incomes. The average house-price-to-income ratio, according to interest.co.nz, has fallen from its 2021 peak of 9.3 to a mere (!) 6.9 today. That’s because the average house is now valued at $790,000, and assuming a prospective house-buying family of two 30-year-olds, 1.5 incomes and one child, the average income available is $115,000. (Other assumptions give higher ratios.)

If one then projects that incomes will rise 2.5% above inflation each year, as they did in the decade pre-Covid, what does that mean for the “real-terms fall” scenario in which house prices increase by 1% but inflation by 2%? It means at least a two-decade wait before we get back to a situation where house prices are three times incomes. Such slow-and-steady progress would nonetheless represent a long wait for those currently locked out.

If house prices freeze (in actual dollar terms), affordability might return a little quicker: in 15 years, say. But to get back to the three-to-one ratio within a decade, prices would have to fall something like 3% a year in actual dollar terms. 

That may not sound like much, but it is. A house that’s worth $790,000 one year is only worth $721,000 (in actual dollar terms) after just three years of 3% falls. By the end of the decade it is worth only $580,000.

These are all rough numbers: a spreadsheet not a detailed model. Nonetheless those are the kinds of projected falls to make homeowners, well, freak out. Some would soon owe the banks far more than their houses are worth. Those with their retirement hopes pinned on an investment property would – rightly or wrongly – be in some trouble. And if the “wealth effect”, in which people spend more when their house value rises, is real, the economy would slow. 

Nor is it clear how far public opinion has shifted. It’s true that, for some time now, polls have shown support for house price falls as a concept: in 2022, three-quarters of New Zealanders backed the idea. Last year they were far more likely to be “optimistic” rather than “worried” about price drops.

But that is very different from saying that one’s own house price should fall – and the last time that, as far as I know, the public was asked that specific question, just one-quarter responded favourably. This is probably why, as Hayden Donnell and others have noted, any media mention of falling prices is related in the same tone one might use to announce the death of a beloved relative. 

This may change: the “aspirant homeowner” and “parents of aspirant homeowner” demographics may come to outweigh the “hands off my house price” cohort. Media coverage may shift. But if not, any real assault on prices would require National to face down two-and-a-half years of negative headlines before the next election – and, as above, countenance some startling declines in house values.

This is the problem with having allowed prices to rise to such insane heights, over so many years: the unwinding is liable to be either painful or slow. And it’s worth noting that Bishop has publicly pledged only to achieve house prices of “three to five” times incomes – which provides some wriggle room. Merely freezing prices could get us to the upper bound of Bishop’s target early next decade. 

Of course no one can predict exactly how prices will respond to any given set of government actions or wider economic shocks. And Bishop is a canny politician: if he’s willing to publicly discuss house price falls, something in the debate has clearly shifted. But a gentle stasis is still much more likely to be National’s dream scenario than anything that brings affordable housing more quickly into view.

The Post: Beware the politician talking up a crisis

Read the original article in the Post

Crises are a double-sided coin: terrible for a public, but an opportunity for sharp-eyed politicians. As the Obama staffer Rahm Emanuel once said: “Never allow a good crisis go to waste.” Such events can be used to justify extreme measures that the public would not normally tolerate.

So powerful, in fact, are crises that some people will manufacture them. As the fortieth anniversary of the 1980s Rogernomics revolution rolls around, its architect, Roger Douglas, has popped up to claim that we’re now in “as much trouble” today as we were in 1984, and that we once more need a hard-right shift.

Where to start with such stupidity? First, Douglas exaggerates the economic situation we faced in 1984 following Robert Muldoon’s near-decade in charge. While one specific policy – the refusal to devalue the New Zealand dollar – was exhausting our stocks of foreign currency, and the economy was massively over-protected, the nation was hardly about to go bankrupt.  

A slow and steady reorganisation could have got things back on an even keel without widespread social destruction. Instead Douglas and co used the “crisis” narrative to justify slashing taxes and launching a fire-sale of state assets. 

His successor, Ruth Richardson, attacked the living standards of the most vulnerable, cutting benefits and helping crush trade unions. Wages for many workers plummeted, while the deepest forms of poverty doubled overnight. Now, every day, the New Zealand state has to pick up the pieces of this economic and social vandalism, as it deals with the damp and dangerous housing, the third-world respiratory diseases, and the devastating consequences of the long-term unemployment and loss of hope bequeathed to us by the likes of Roger and Ruth.  

The reforms also did little to solve our long-term economic shortcomings. Our productivity is now further behind that of our rivals than it was when Douglas took control. Hardly surprising when you consider what a drag poverty and poor health are on economic performance. Douglas’s solution would be to double-down on privatisation and deregulation. “Beatings will continue until morale improves,” as the trade unionist Craig Renney likes to say. 

The crisis-mongers were wrong then, and they’re wrong now. New Zealand is not broke, nor about to be. Public debt, at around 20% of GDP, is low by global and historical standards, and although tax revenues remain insufficient, the government’s books are still heading back to surplus in a few years’ time. 

This week, infrastructure minister Chris Bishop has been trying out a subtler version of the narrative that the government is broke. User-pays and part-privatisation – toll roads, water meters, private financing of infrastructure – are inevitable because, he argues, decades of underinvestment have left a deficit “we cannot buy our way out of”. 

User-pays, though, doesn’t magically create more money to “buy our way out”: it just shifts the cost, from taxpayers as a whole to individual users. Which isn’t the right direction. Our government may not be heavily indebted, but we as individuals are: private household debt, most of it mortgages, is a staggering 166% of disposable income.  

The poorest households in particular are not well-placed to take on more costs. Yet broad-brush user-pays – tolling roads, for instance – will take a bigger chunk from their budgets than it will from richer ones. 

While user-pays may have a limited role – water charges for the largest properties, or tightly targeted congestion charging – it should not be the default. If we need to raise petrol costs to reduce climate-change emissions, that must be offset by increased cash transfers to poor households. Generally speaking, infrastructure that advances basic rights – freedom of movement, or access to water – is a collective good, something people are entitled to as citizens, and should where possible be funded from the collective purse. 

Private funding for infrastructure doesn’t stack up, either. Because firms face higher borrowing costs than the government does, it is more expensive upfront. And since that private borrowing has to be later repaid by the state, it cuts into our ability to fund more infrastructure in the future. Nor is there compelling evidence that private-sector efficiencies will offset those costs. 

We must, of course, do better as a country. We need bipartisan agreement on a shared infrastructure pipeline, and far tougher procurement by central government. The proposed National Infrastructure Agency could – if well-directed – help there.  

And, while there is no crisis, we do have grave and long-standing economic problems to solve. But they are mostly about under-investment: in basic infrastructure, of course, but also in retraining and upskilling, in productivity-boosting capital, in the machinery that drives our factories and in the people who work alongside it. Some of that investment – in skills, especially – must come from individuals and firms, but much of it from the state. The solutions to our economic problems involve the state stepping up, in a more active and smarter manner, not stepping away.