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  • Writer's pictureIan Fletcher

What Might Really Make a Difference?


Health, crime, education, housing, productivity. It’s a familiar list of things that just seem like they won’t get better no matter who’s the government, or what they do. Add a dose of ministerial incompetence (and maybe sackings), a pithy quote from Te Pati Māori, and that’s the weekly news diet. Is there anything that might make a difference?

Standing back from it all, one thing stands out. No one has enough money.

Firstly, the Government (stupidly committed to tax cuts) is trying to cut its way to better public services. Just writing – or reading – that sentence exposes the futility of it all.

I don’t much care about the recent core public service cuts (there’s a lot of showing off on that, and a lot of departments tell me they are bravely “giving up” existing vacancies, as if that were a sacrifice). The real problem with the Wellington public service is its blame culture, groupthink, optimism bias, inertia, and systematic promotion of astonishing mediocrity. The current cuts process just gives those in charge at every level an excuse to avoid dealing with these issues. You can hear the cans being kicked down the road all along The Terrace.

What bothers me more are the recruitment freezes in Health NZ, and the associated decision not to pay for cover when front-line health staff get sick. That sort of silly, short-sighted decision-making exposes the lack of both systemic understanding and the moral cowardice of senior management. If you say you won’t cut front line staff, then don’t use these tactics to undermine your own promises. Flu jab, anyone?

Flu jab anyone? Cuts to health funding are trying to be hidden warns Ian Fletcher, while imploring the government to have a plan should Highly Pathogenic Avian Influenza reach our shores.

Secondly, households – families, like you and me – don’t have enough money, and it hurts. It strikes at confidence, suppresses demand, and causes real stress in families. We’re now officially in a recession, as slumping domestic demand (people not spending) and gently falling export revenues interact.

Finally, the system of government is visibly broken. Everyone seems to agree that the consenting process is bogged down, and needs fixing. Local government is generally in a parlous financial state, with little room for anything much more than keeping the lights on. And good people actively avoid getting into local politics. Who can blame them?

The other half of this wicked little problem is that the solution is thought to be even greater centralisation, so under the current government’s ‘fast track’ proposals, decisions would be remitted to a small group (a Cabal? a Junta?) of three Ministers, with an advisory panel. The answer to a failure of central government is surely not to centralise a bit more.

Saving the Situation

So, what can we do? First, save more money, both as a country, and as individuals. More savings will fund investment, infrastructure, innovation, and of course give savers a more secure future. It’s not a cure for our national productivity crisis, but it’s a necessary part of any solution: without more savings at a national level, we won’t be able to invest in other things that help.

How? We could jack up KiwiSaver rates to create a system that more closely resembles Australia’s excellent superannuation system. After several decades, the Australian system and its component funds now provide a world leading savings and retirement ecosystem. If we did that we could also cut (or means-test) so-called national superannuation here, and maybe raise the retirement age a bit. Everyone would win. Obvious, right?

No. The problem is that people don’t earn enough to meet their bills today, let alone put 10-15 percent of their income into a beefed-up KiwiSaver. We need to tackle the pernicious groupthink that says we can’t afford to pay people more. In fact, it’s only by paying more that people will save more, and let these other issues get tackled. The Australian secret (not really secret; we just don’t want to know) is that workers get a higher share of national income than in New Zealand. Some of that is the impact of very highly-paid and super-productive mining jobs; however, Australia has a more unionised workforce, and that has helped keep the share of national income enjoyed by workers higher than it would otherwise be. We need to consciously, significantly raise minimum and other wages, and increase savings rates, at the same time.

This won’t be a popular thought with struggling beekeepers. I get that. But with enough warning, and time to prepare, I think we’d surprise ourselves. Businesses facing higher wages would have the incentive to invest in skills, IT, machinery and so on, and over time they’d have access to the capital (via a growing savings pool) to do so.

Getting Away from Wellington

The other thing we need to do is also an attack on existing groupthink: decentralise real political authority to revamped local government (maybe renamed too). Wellington doing it all has failed, and we’re just mad if we think trying harder will change the result. Elected regional governments with some revenue of their own (Australian States share the GST take, for example) and a clear mandate to manage both economic development and service delivery (like health, schools, roads). Some would succeed; others might fail. But that would create both the incentive and the example to sort out the laggards at the hands of the electorate. Nothing voters like more than the chance to throw the rascals out.

Increasing New Zealanders’ savings through superannuation scheme KiwiSaver would go some way to overcoming the challenges we face as a nation.

This is all long-term stuff, but (as the UK’s Meg Hillier says), good politics means looking 20 years ahead as well as dealing with today’s crisis and next week’s emergency. We need to do both. So, let me finally urge MPI and the whole government to have a plan, shared with us all, to deal with Highly Pathogenic Avian Influenza, a savage viral disease decimating wild birds and marine mammals in the Northern Hemisphere, and now found in dairy cattle in the US. It seems infected cattle mainly survive, though birds and marine mammals can be wiped out. Rare in humans, but very high mortality when we do get. We need a plan.

Flu Jab anyone?...

Ian Fletcher is a former head of New Zealand’s security agency, the GCSB, chief executive of the UK Patents Office, free trade negotiator with the European Commission and biosecurity expert for the Queensland government. These days he is a commercial flower grower in the Wairarapa and consultant to the apiculture industry with NZ Beekeeping Inc.



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