Sowell says

October 15, 2019


3/5s of not very much

September 23, 2019

Steven Joyce gives the government some much-needed advice:

It was confirmed this week that New Zealand is now running at little more than half speed.

From growing at rates of 3½ to 4 per cent three years ago our economy at the end of June was only 2.1 per cent larger than it was the previous June.

That’s a problem firstly because our population is growing at about 1.6 per cent a year, so if our economy grows at 2 per cent then the amount of additional wellbeing per person (to coin a phrase) is three fifths of not very much.

Not very much is far less than we need for economic, environmental and cultural wellbeing.

The second problem is that our terms of trade (the prices of our exports versus our imports) are still very strong so we should still be cranking along. It’s a problem if we are slowing down when the world really wants to buy what we are selling. What happens if the world actually falls out of bed?

What happens is recession and maybe even depression.

The government has been quick to blame the world economy for our lower growth rate this week, but our terms of trade put the lie to that.

The third problem is that there is no sign of anything on the horizon that will lead to much of an upturn, and in fact all the signs are that we are going to slow further. Our businesses are in a funk because of what is known as regulatory overhang. In short, they are too fearful to invest because the government is making lots of rule changes that could mean they don’t get much of a return for the risk they take.

It’s not just farmers, other businesses are too scared to invest.

The government for its part seems inclined to shrug its shoulders and say “nothing to see here”. They observe we are still growing (slightly) faster than Australia so what’s the problem? That story is likely to change in the next six months as Australia’s tax cuts come through and their housing market picks up. Anyway weren’t we trying to grow a lot faster than Australia so we could close the income gap with our cousins across the Tasman – what happened to that ambition?

This government has no ambition for growth, only for regulate, tax and spend.

The fourth problem is that lower growth means less to go around. If we were still growing as fast as we were then in real terms our economy would be around $5 billion bigger this year than it is. That means more money for higher pay and more jobs, and of course about 30 per cent of it goes into the government coffers – which would pay for a lot more cancer drugs, teachers or electric vehicle subsidies.

How hard is it to join the dots between higher growth and more for essential services and infrastructure?

So what to do? Well if I could offer some gratuitous advice to the Finance Minister I think he should be working on baking a bigger cake, and I think the recipe is pretty straightforward. Its time to rein in some of his ministerial colleagues who are wreaking havoc with business confidence.

For example he should suggest the Minister of Immigration sort out his portfolio so that horticulturists can find seasonal workers and the international education sector can get up off its knees. He should tell the Minister for the Environment to come up with a more reasonable plan for water quality improvements and methane emissions reductions so farmers step back from the cliff edge, and the Minister of Education to stop stuffing about with the apprenticeship system.

He should encourage the Reserve Bank Governor to be less heroic on bank capital requirements, persuade his colleagues to do a backtrack on gas exploration now it is proven the ban is simply value destroying and does nothing for climate change, overrule the Greens to permit some gold mining, and stop taxing tourists more so the tourism sector starts growing again. He should cancel the return to industry-wide pay bargaining given that NZ First are never going to vote for it anyway, tell the Transport Minister to get on with building at least some of the stalled roading projects, particularly given that light rail is years away, and reverse at least one of the petrol tax increases.

Then he could watch the economy recover and start thinking about how he’s going to allocate the increased government revenues. And New Zealand will be in much better shape if the world economy does get worse. . .

He won’t of course and nor will he see that it’s the poor and the struggling middle that will be hurt the hardest by policies which hamper growth.


F is for

September 9, 2019

Is anyone surprised so much of the fee-free money was wasted?

A third of tertiary students who took up the Government’s flagship fees-free policy failed or withdrew from at least one of their courses last year, Ministry of Education data shows.

The Tertiary Education Commission (TEC) did not have details on how much the Government had spent on courses students failed or withdrew from.

But based on the 13,770 students who failed to complete at least one course, and the average course cost of $2800 for Student Achievement Component, the figure could be as high as $40 million.

Further information from the TEC showed that fees-free students tended to be younger, more likely to be NZ European, and more engaged in university-level study than non-fees-free students. . . 

The drop-out rate is similar to past years which shows the policy was flawed from the start.

Previous data releases show it hasn’t encouraged more people into tertiary study and most of the people getting their fees paid would have studied anyway.

The fee-free policy was a misguided election-bribe.

The number of children not ready to learn when they start school, the number failing at school and the number leaving functionally illiterate and innumerate should have been the targets for education funding.

Any assistance for tertiary education should have been carefully targeted where it would make a positive difference to students in need of help, to improve tuition standards, or to enhance the incentives for graduates to work in jobs and areas which find it difficult to attract staff.

F is for fees-free. It’s also for failed, flawed and flopped and for this policy it ought to be for finished.


Voluntary bonding much better than free fees

August 26, 2019

A record number of mental health nurses have joined the voluntary bonding scheme:

The government’s Voluntary Bonding Scheme gives health professionals the incentive to fill gaps in hard-to-staff professions and in communities where they are needed.

This year overall, 357 people were accepted into the scheme, similar to last year.

However, a record 148 mental health nurses were accepted, up 11 percent on last year.

That included 24 from Canterbury District Health Board, 19 from Waitematā DHB and 18 from Counties Manukau DHB. . . 

The scheme was launched in 2009. It offers bonded after-tax payments to doctors, midwives, nurses, medical physicists, radiation therapists, sonographers and dentists. . . 

This was a National government scheme and it’s a far better one than Labour’s free-fees for all first year students.

The former is targeted, the latter is not. The former is for graduates, people who have successfully completed their studies, the latter is for first years who may or may not pass and if they do may or may not continue studying.

The voluntary bonding  scheme makes it more attractive for people to take up work in hard-to-staff professions, communities and/or specialties.

It makes it less difficult for employers looking for those skilled people in those places and pays more to those who take up the jobs as either top-up income or off-setting their student loans off their student loans.

It also helps retain newly graduated professionals in New Zealand.

That’s good for employers, the people who need the services the professionals provide, and the country.

Contrast that with the fee-free policy which helps students, only some of whom need it, at considerable cost to the country.


Regions lose with central control

August 2, 2019

The government is centralising vocational education, merging 16 technology institutes and polytechnics into one:

Former Tertiary Education Minister Steven Joyce warns of the risks in this move:

. .  .Leaving aside the issue of transferring the control of hundreds and hundreds of millions of assets out of regional New Zealand to Wellington, there are huge risks in the proposal. Across the Tasman, New South Wales has just done something similar, merging its 16-odd TAFEs (polytechs) into one NSW-wide TAFE, and it is a cautionary tale. The merged entity lost $30 million in its first year, blowing out to $240m in its second. It’s now in the process of further reform.

Yes, many New Zealand polytechnics are currently struggling, but that’s not unique to this country. When employment is high, vocationally-minded people tend to get into work ahead of going to polytech, and roll numbers drop. It’s been made worse here by the sudden squeeze on international enrolments caused by government immigration policy which is contributing to a perfect storm of red ink.

Interestingly however, well-run polytechnics like SIT in Southland, Otago, and the Eastern Institute of Technology in the North Island, have continued to perform and make surpluses. A few board overhauls and the odd regional merger, plus a bit more tuition funding, would do wonders for the others and retain their local focus – and be much less risky.

The government’s prescription is radical surgery when much less drastic medicine could solve the problems at a much lower cost in both money and jobs:

The Government’s polytechnic and industry announcement today will cost thousands of jobs and may be the death knell for some polytechnics, National’s spokesperson for Tertiary Education Dr Shane Reti says.

“Moving apprentices back to polytechnics and creating one mega polytechnic will cost at least 1300 jobs in industry and probably as much again in polytechnics.

“Employers are telling us they will cease to employ apprentices next year if apprentices go back to polytechnics. This is a big step backwards especially when our construction sector is crying out for apprentices.

“The Government has brutally dismissed the concerns of industry and businesses who raised serious issues with polytechnic training. Industry understands the needs of industry best and who will be the best fit for them, but Mr Hipkins is blatantly ignoring them.

“Now the Minister is turning his axe to polytechnics. Under these reforms well performing polytechnics from the Southern Institute of Technology to Otago Polytechnic will lose the very essence of their successful and innovative local decision making.

“The reforms dissolve polytechnics into hollow and meaningless ‘legacy’ polytechnics. This ideology will destroy tradition, decimate organisational knowledge and the final indignity will be the mega polytechnic spending community gifted cash and assets.

“This is devastating for polytechnics and their staff and students.

“Every aspect of the vocational education sector is under attack. Apprentices are being sent back to polytechnics, polytechnics are being amalgamated into legacy campuses, jobs are being lost, cash and community assets will be ring-fenced and regional autonomy is being stripped away.

“These reforms will be disastrous for regional education and apprenticeships. Mr Hipkins is pushing ahead with ideology over what is best for students and regional New Zealand.

“National will empower the regions to make decisions around what they teach, where they teach and how they teach. We will return polytechnic assets taken by Labour and give them back to communities. We will return apprentices to industry.

“National supports apprentices and regional polytechnics and we will fight for their voice and autonomy in these ideological educational reforms.”

Invercargill mayor Tim Shadbolt said the city will fight to save The Southern Institute of Technology:

Invercargill leaders have vowed to fight a Government decision to centralise the Southern Institute of Technology [SIT] with 15 other polytechnics and training institutes nationwide.

Mayor Tim Shadbolt said he was in “absolute disbelief they could do such a terrible thing to our city” and said legal action would be taken against the decision.

“They have really ripped the heart out of Invercargill with this announcement.”

The proposal also threatens the future of Telford Farm Training Institute:

Clutha-Southland MP Hamish Walker said the announcement was incredibly disappointing and raised uncertainty for Telford’s future.

“Today’s announcement of the Government’s reform of vocational education through the centralisation of polytechs is another blow to rural and regional New Zealand. 

“It is the people in regions who know the needs of their people best, not a long list of public servants in Wellington.”

Community assets would be taken away, decision-making powers would be lost and as a result, Telford would be disadvantaged, he said.

“Telford’s long-term proposal was turned down because of this reform which will now cause further damage to Clutha-Southland and its workforce.”

“This creates further uncertainty for staff and students at Telford who have already been through enough.” . . 

Successful organisations like SIT and Otago Polytech could have been used as a model for other institutions that were floundering.

Instead the successful are being sacrificed because of others’ failures and the regions lose autonomy to central control.


Priorities

June 20, 2019

Last month’s Budget was supposed to be focussed on wellbeing, but some of its priorities suggest otherwise:

Hon Amy Adams: Why, when Budget 2019 allocated $15.2 billion of new operating spending over four years, couldn’t he find enough funding in the Budget to ensure that Pharmac’s funding at least kept pace with inflation?

Hon GRANT ROBERTSON: As has been traversed in the House last week, Pharmac did receive an increase in funding. In this Budget, in the health area, based on the evidence, mental health received a massive injection of funding after being neglected for many, many years. The overall health budget has received a significant increase. On this side of the House—as I said in answer to the last question—we can’t make up for nine years of neglect in one year or even two years, but we’re making a good start.

Hon Amy Adams: How can he say that he’s used “evidence and expert advice to tell us where we could make the greatest difference to the well-being of New Zealanders”, when the Government has chosen to pour hundreds of millions of dollars into fees-free tertiary at the expense of giving Pharmac enough money to keep pace with inflation?

Hon GRANT ROBERTSON: The premise of that member’s question is incorrect. Money that supports education, money that supports health, and money that supports housing are all part of the Budget; one is not at the expense of the other. What we’re doing is actually making up for the enormous under-investment of the previous Government.

Money spent in one area is not at the expense of money that can’t be spent in another?

It can only be spent once.

Even if you look at different categories, you can question priorities.

Extra resources for children who get to school without the necessary pre-learning skills and for those at school and failing are only two areas of much greater need, and that would make a far greater contribution to wellbeing, than fee-free tertiary education for all students, whether or not they need that assistance.

Hon Amy Adams: How does he think the refusal to even keep Pharmac funding in line with population growth has affected the well-being of New Zealanders like 14-year-old Stella Beswick, two-year-old Otis Porter, or Bella Guybay’s four-year-old daughter, who are all waiting desperately for the funding of lifesaving medicines that are funded in almost every other OECD country?

Hon GRANT ROBERTSON: As the member well knows, and as with the time she was in Government, Pharmac make those decisions. We now spend nearly a billion dollars on the Pharmac budget, and we will continue to invest in that. But we will also continue to invest in the areas which the last Government completely ignored—such as mental health—because that is what New Zealanders asked us to do.

Hon Amy Adams: How does he respond, then, to Troy Elliott, whose wife is suffering from serious breast cancer, and has said that New Zealand’s medicines funding is starting to make us look like a Third World country and that “this Government has to wake up; we’re going backwards.”?

Hon GRANT ROBERTSON: I understand that for any family that is going through a situation where they have a family member with cancer, that is traumatic. What we know in this country is that Pharmac makes the decisions about what drugs it invests in. . . 

Pharmac makes the decisions but the government allocates the funds which determine how much, or little, it can do.

Health inflation is many times greater than general inflation and this year’s Budget funding for Pharmac isn’t even keeping up with general inflation.

 

 

 


Would you rather :

May 15, 2019

The fees-free policy is another government failure:

The Government has reallocated almost $200 million from the fees-free policy as part of Finance Minister Grant Robertson’s push to cull $1 billion of low-priority spending.

The money was cut as the enrolments were not as high as the Government was expecting. . . 

The admission it’s low-quality spending shows it was a policy that ought to have never made it pass the is-this-sensible test.

Universal fee-free tertiary education is neither necessary nor wise.

Nor, when there are so many other priorities, is it affordable.

Would you rather:

  • put more into helping children who don’t have the necessary pre-learning skills when they get to school?
  • put more into special education?
  • put more into helping children who are failing at primary and secondary school?
  • put resources into improving pay and conditions for teachers?
  • put more into writing off student loans for graduates who work in hard-to-staff occupations and areas?

Or pay 100% of tertiary fees for first year students many of whom don’t need the help and some of whom will fail?

The fee-free policy joins KiwiBuild and the provincial slush fund as a poorly thought-out and poorly targeted fail.


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