Less quality more quantity less delivered

We’re spending more but have nothing to show for. This is Steven Joyce’s view and as a former Finance Minister he knows what he’s talking about:

Many of us have friends or family members that just “aren’t good with money”.

They earn a good income but somehow it all slips through their fingers and they never have anything to show for it except a maxxed out credit card.

This government is starting to look like one of those friends.

It’s not like they don’t have a good income, courtesy of the tax we all pay. The Government’s half-yearly update this week shows that by 2022 they’ll have collected at least $10 billion more tax than was predicted by Treasury before the last election.

Unfortunately, they are spending it even faster. The amount they are going to spend across the four years to 2022, according to official government numbers, is now $19b more than was in their own fiscal plan prior to the election. Alert readers will recall much wailing and gnashing of teeth when someone had the temerity to suggest they would spend $11b more than their own plan. We are now well past that point.  

This government fell into the $11b hole and they’re making it bigger.

Debt is now predicted to top out at $78b, as against the $68b they predicted at election time two years ago, and an expected surplus of $6b for the current year is now projected to be a deficit.

All this wouldn’t be so bad if the government had something to show for it. But just like our friend with the big spending habit, it seems to have all slipped through their fingers.  

More and better infrastructure, health, education, housing, fewer people on welfare, fewer in poverty . . .  would be something to show for their big spending but that’s not what they’ve delivered.

All the key performance indicators that measure the effectiveness of government spending are currently going backwards. State Housing wait lists, poverty numbers and numbers on welfare are all growing. The big hospital metrics like emergency wait times and elective surgery numbers are deteriorating. The performance of our kids in school relative to the rest of the world is continuing to decline, and tertiary enrolments are down despite a year’s free tuition. There has also been no discernible economic uplift in regional New Zealand to match the government’s fine rhetoric, beyond what was already occurring.

Just about every primary sector except strong wool is enjoying good to better returns. That ought to be flowing through the regions but in spite of that and the Regional Growth Fund, the regions aren’t booming.

So it’s perhaps not surprising this week that the government tried the “look over here” tactic to distract everyone from the deteriorating state of the government books.

We are to have an infrastructure splurge – which in itself will apparently help the Treasury’s increasingly modest growth predictions be achieved.

No-one, except the anti-road dark greens, is questioning the need for more roads but there’s a big but.

Let’s be under no illusion as to how quickly the infrastructure pipeline has been run down. There are currently eleven major roading projects, all started before 2017, that are building 120km of new and upgraded four lane highways around this country. Nine of them are due to finish before the end of next year.  

From that point in time there is literally nothing, no large new road projects, rail projects, or anything else to replace them. All of the big projects in the queue have been stopped, slowed down, or postponed because “we shouldn’t be building new roads” and we’re not ready to build anything else.The civil contracting industry has been tearing its hair out worrying about what to do with its workforce.

Twice in recent weeks people in roading have told me they’re running out of work and some in the industry have already cut staff.

The problem will be how to ramp that infrastructure pipeline up quickly again. The Government finally acknowledged this week that NZTA has been pretty good at building stuff, but that was before the same government took multiple billions out of the forward roading budget, unfairly shamed the agency over the Auckland tram fiasco, made key personnel changes, and operated a revolving door into and out of its boardroom.  Treasury seems to acknowledge this issue, by projecting the government will get little more than a third of their new $12b spend out the door by the middle of 2022.

Another challenge will be to build the right infrastructure, stuff that improves economic efficiency rather than damaging it. A useful hint is to invest in more of the infrastructure that people already use, like commuter rail and busy road corridors, and not the stuff that requires heroic assumptions about bending the world to suit your world view. Flights of fancy about far-away ports and returning to a time when 70 per cent of freight travelling by rail are examples of what not to invest billions in.

Rail is good for getting some things from A to B but it covers only a very small part of the country and a lot of goods are more efficiently transported by road.

More broadly the government must start demanding some accountability for all the billions of extra spending it is doing. The absence of any tangible results from all this spending is another brake on our prosperity, and the amount of wastage going on is insulting to hard-working kiwis paying their taxes.

Most of those people would surely prefer to pay less tax to take the pressure off their own family budgets, rather than having to watch their spendthrift friend without a care in the world max out New Zealand’s credit card and have nothing to show for it.  

Letting people keep more of their own money would be better than handing it to this government to waste.

New Zealanders worked very hard to restore the country’s fiscal position following the global financial crisis. We shouldn’t be frittering all those gains away.

The previous National government put a high priority on the quality of the spend rather than the quantity because more spending is not necessarily better spending.

This one has gone for quantity rather than quality.

As a result of that it hasn’t been able to deliver on its promises, we’re all worse off because of that and it’s the poor this government purports to want to help who are paying the biggest price for that.

Unprepared, ill prepared

The ODT opines, there’s been a lack of progress from the government:

The Government seems intent on digging itself into a hole from which there may be no escape.

After nine years in Opposition, there were expectations change would happen quickly once New Zealand First went with Labour to form a coalition government, with support from the Greens.

However, that has not been the case. More than 100 working parties or inquiries have been established, some of them at least reporting back by the end of the year.

The latest one involves ‘‘fair pay agreements’’, seemingly code for collective bargaining agreements, to set industry standards.

Although the Government appears keen to talk to everyone possible about changes it wants to make, it seems Energy and Resources Minister Megan Woods did not bother to consult her colleagues when it came to deciding to stop offshore oil and gas permits being allocated in New Zealand.

When the papers were finally released this week, it was discovered the Government was warned its plans for future oil and gas exploration could have a chilling effect on investment.

The papers said if the supply of natural gas was restricted, the likely price rise for consumers posed a significant risk to the security of energy supply and could have a detrimental impact on some regional economies.

Wasting multi-millions on working groups then failing to consult on a policy with such significant ramifications as this is the sign of a government both unprepared and ill-prepared.

The Government is hamstringing itself. There is a chance, and a real one, the Government will achieve nothing before the 2020 election if it does not start making progress on some key policies.

The only policy it has made real progress on is fee-free education for tertiary students, most of whom don’t need it and which hasn’t resulted in an increase in students.

Even KiwiBuild seems out of reach for Housing Minister Phil Twyford. Branding private housing developments as KiwiBuild will not solve the problem of building 10,000 houses a year. Within a few months, the Government will have been in office for 12 months. Recriminations which are bubbling under the surface now will become fully-fledged attacks on the core competency of ministers who should have hit the ground running when it became their time to serve.

Prime Minister Jacinda Ardern can only hold the coalition together for so long if progress is not being made.

Planting one billion trees has not yet started, social policy is edging its way into the system, and the so-called housing crisis is not being addressed by Labour, which christened it such.

It is unrealistic to expect the Government to implement all its policies in the first 12 months, but some progress should be measurable by now. . .

What is measurable is a lack of business confidence, which is worsened by the prospect of a return to collective bargaining.

Employers say the fair pay agreements are a major cause of concern. BusinessNZ is part of the working group announced on Tuesday but employers say they are not supportive of a national award-type employment regime in New Zealand.

Under the proposal, employers and workers cannot negotiate their own conditions — unless they are above the fair pay rates. Although workers cannot strike for a fair pay agreement, they can strike to get their own rates above the fair pay agreement rate.

This is a return to the days of multi-employment contract agreements (Meca) which broke out separate pay agreements for workers living in high-cost areas, such as Auckland and Wellington.

This is a recipe for job insecurity, an increase in unemployment and business failure.

The craziness of continually forming working parties smacks of a Government ill-prepared to govern. Until Ms Ardern stepped into the position of leader, it did look as though National would win a fourth term. Perhaps Labour MPs had given up on the treasury benches and were going through the motions.

There’s no perhaps about that – they had and they were.

There have been missteps from some ministers, something not good enough from three-term MPs. The at-fault MPs are surely surviving because there is no-one with experience to replace them.

Labour, the major party of the coalition, needs to stop thinking about solutions and start enacting policies. Otherwise, a second term is starting to look out of reach.

Just eight months into government is very early to be talking about it being a one-termer.

But Labour, which spent most of its nine years in opposition wallowing directionless with most of its energy going on undermining its leaders, is unprepared and ill-prepared for government and it shows.

The fee-free policy is Labour’s, the other ones in which there has been any progress are New Zealand First’s money for good looking horses and the regional slush fund which Shane Jones admits is politically biased.

Shane Jones’ admission this morning that his Provincial Growth Fund is a political tool is backed up by new figures released this morning revealing Northland as the main recipient of taxpayers’ money, National’s Regional Economic Development spokesperson Paul Goldsmith says.

“The Provincial Growth Fund should really be renamed the Political Survival Fund after more than half the funding announced so far has gone to one region – one with less than 10 per cent of regional New Zealand’s population.

“MBIE information shows Northland has sought $54.6 million from the fund so far. Applications from all the other regions combined amounted to $240 million.

“Yet Northland projects have received funding up to $61 million – even more than they’ve asked for. While the rest of the regions have had to make do with $42.4 million combined, plus a $7.5 million grant to the Howard League covering the whole country, including Northland. . .

Northland’s got more than it asked for and the whole of the rest of the country has had to share two-thirds of that amount.

Yet even Northland hasn’t got what it really needs – a better road to and from the rest of the country.

Northlanders will be scratching their heads, wondering why some groups are getting all this attention, while the single most important investment for their region – the double lane highway from Wellsford to Whangarei has been scrapped in favour of Auckland’s light rail.

“Shanes Jones is being allowed to use public money for a thinly veiled political slush fund – but on the really big issues, such as advancing oil and gas production, there is no question that New Zealand First’s ‘provincial champion’ label is nothing more than wishful thinking.”

We need a government that’s prepared to govern for the whole country, not one whose major party is so ill-prepared it is mired in the quicksand of working groups and lets its minor partner get away with pork barrelling.

If only there’d been a teal deal

The governing coalition is all at sea over fisheries monitoring:

Evidence given to the Environment Select Committee from the Department of Conservation (DOC) today just goes to show the deeply divided factions occurring within the Coalition Government, National’s Fisheries spokesperson Gerry Brownlee says.

“Speaking at DOC’s annual review, the Director General Lou Sanson was asked what input his department has had on the new Government’s decision to firstly postpone and then, this week, cancel the introduction of cameras on fishing boats.

“Mr Sanson and DOC have always been spirited advocates of on-board cameras as one of the best practical measures needed to protect our declining marine bird species.

“He told the committee that DOC ‘absolutely’ maintains its position that cameras on fishing boats are essential if we are to reverse the decline in the sort of seabird species we see in our waters.

“It’s therefore quite extraordinary that his Minister, Eugenie Sage, has so quickly and thoroughly distanced herself from Stuart Nash’s decision to cancel the roll-out that the National Government initiated.

“It doesn’t take a rocket-scientist to work out that Mr Nash is being leant on by Coalition partner, New Zealand First.

“I’m surprised that as a junior Coalition partner, the Greens have allowed themselves to be side-lined in this way,” Mr Brownlee says.

The Green Party has had to swallow a lot of dead rats in its agreement to support Labour and New Zealand First in government.

Had they been able to countenance a deal with National last year, there would be no compromise over on-board cameras.

If the Greens could moderate their radical left economic and social agenda, they could sit in the political middle, able to go left and right.

A teal deal would have been better for both the economy and environment than what we’ve got – a red and black one with a weak green off-shoot.

Poverty policy lacks ambition

The government talks a lot about reducing child poverty but its policy lacks ambition:

The Prime Minister’s ‘good intentions’ have once again fallen short, with the Government’s child poverty targets aiming to lift fewer children out of poverty than National actually lifted out in the last five years, National’s Children spokesperson Paula Bennett says.

“The Prime Minister committed her Government to reducing the number of children in material hardship over the next ten years by 70,000. Yet, over the last five years of the National government, the number of children in material hardship fell by 85,000.

“So this Government is promising to do less over a longer period of time than National did – in spite of its bold claims it would do better.

It’s making a lot of noise but aims to do less than National already did.

“National also remains more ambitious – that’s why we had committed to reducing the number of children in low-income households by 100,000 over three years, while Labour is committing to reducing the number by 100,000 in 10 years.

“National’s Family Incomes Package was also projected to lift 50,000 children out of poverty on 1 April 2018. It would have given 1.2 million working Kiwis an extra $1060 per year in the hand – and, we had committed to a further package in 2020 that would have had a similar impact.

“Labour, on the other hand, have no money for another Family Incomes Package – they’ve spent it all on a year’s free tertiary education. That is why they are giving themselves such a long timeframe to achieve what National would have done in the next three years.

What’s more important – fees-free tertiary study for people, most of whom don’t need it, or lifting children out of poverty; money and expertise for children who don’t have the pre-learning skills they need when they start school and those failing at school or adults who’ve already got through school?

“If the Government was truly serious about reducing child poverty it would reconsider abolishing the Better Public Services targets, which directly focused the public service on reducing the number of children living in poverty and tackling the causes of long-term deprivation.

Poverty isn’t just about income. It’s causes are complex and include lack of education, poor physical and mental health, and drug and alcohol dependency.

“As is becoming the Government’s modus operandi, it is all intentions and no substance. Its ambition falls way short of the action needed to actually deal seriously with child poverty in New Zealand.”

Poverty is a serious issue. Reducing it requires serious and substantial action not just good intentions.

Where did the lollies come from?

National left office with an economy that many other countries would envy:

There was confirmation today that the new Coalition Government has inherited a strong economic growth story from the previous National-led Government, National Party Finance Spokesperson Steven Joyce says.

“Stats New Zealand’s report of 3 per cent growth for the year to September together with upward revisions to recent growth figures paint a clear picture of a strong economy over the last few years,” Mr Joyce says.

“They have revised New Zealand’s growth figures for the 2014, 2015, and 2016 calendar years to 3.6 per cent, 3.5 per cent and 4 per cent respectively. That’s a highly respectable growth story in anyone’s language.

“GDP per capita has also been revised upwards in those years. We’ve had 8.3 per cent in real GDP per capita growth over the last five years.

Mr Joyce says the figures released today finally put to bed the fallacy that New Zealand was having a ‘productivity recession’.

“In addition, the figures today show that the construction industry remains strong with the largest quarterly growth since March 2016. Road and rail infrastructure was a key driver, with the largest increase in ten years.

“New Zealand has now experienced 18 quarters of consecutive economic growth; and has grown in 26 out of the last 27 quarters, all the way back to December 2010.

“These figures provide clear confirmation that the new Government has inherited a very strong economy driven by the strong economic plan of the previous Government.

“The Labour-led Coalition needs to take heed of softening business and consumer confidence numbers since the election and make sure their policy changes don’t muck this story up.”

The incoming government is showing great delight in spending the money the strong economy has generated but if it understands how that was achieved, it’s not showing that, as Bill English pointed out in the adjournment debate:

I must say, it has been a bit rich sitting here listening to the moral awesomeness and self-congratulation of the Labour Government over the family incomes package when they opposed every single measure that it took to generate the surpluses that they are handing out. That is why they won’t get the credit they expect from the New Zealand public, because the New Zealand public know it’s a bunch of people who found the lolly bag and ran the lolly scramble without having any idea where it came from. 

The money came from taxes generated from the work and ingenuity of taxpayers under three terms of National-led government’s careful stewardship.

The words and actions of the incoming government give no cause for confidence that the respect for, and careful stewardship of, taxpayers’ money will continue.

 

 

Mining personal grief for political ends

When politicians make promises do you take them at their word?

Under MMP that’s harder because they can always use the excuse, that was their policy but had to let it go during coalition negotiations.

But if it was a promise made by the two parties in government and their coalition partner outside government that one can’t be used.

In August, leaders of Labour, United Future, the Maori Party and the Green Party signed a commitment to reenter Pike River mine.

National, rightly, put lives before politics:

Environment Minister Nick Smith responded to the commitment and said the parties were either making empty promises to the families or proposing to water down a law intended to prevent future workplace tragedies. 

“It is a hollow political stunt for parties to promise manned re-entry of the mine by the end of 2018,” he said.  

“It would be reckless for politicians to override the 800-page detailed assessment that concluded that manned entry deep into this drift was too risky to life.

“There is no cover-up. There is no conspiracy. Pike River was a horrible industrial accident that unnecessarily killed 29 men.

“The greatest duty we owe the memory of these men is to take the risks of explosions in gassy coalmines seriously and to comply with the new workplace safety laws that stemmed from the Royal Commission of Inquiry [into the Pike River Mine Tragedy].”

Winston Peters said he’d be one of the first to go back into Pike River and manned entry was one of New Zealand First’s bottom lines.

Such promises are oh so easy in opposition, but what happens when the reality of government bites?

Pike River Mine minister Andrew Little says he cannot guarantee a re-entry of the mine and has told family members that he will do what he can but safety is the top priority. . . 

“Ultimately, and the families are very clear, the first principle of the set of principles that are governing what we do is safety, the safety of anybody involved in the re-entry project. I’m not going to put anybody at undue risk. I’m simply not going to.”

He did not intend to legislate for any exemption to the health and safety laws or immunity from liability for the Pike River Agency.

Safety was the priority of the previous government in the face of harsh criticism from the Pike River families and then-opposition parties supporting them.

That was the right position.

The Pike River disaster was a tragedy. There are many unanswered questions on how it happened and the shortcoming that led to it happening.

Some of the answers to those questions might be found if it was possible to safely reenter the mine.

But safely is and must always be the operative word.

The bottom line that National and the mine owners stuck to still stands: no lives must be endangered, no lives must be lost, to retrieve the dead.

Some families have accepted this.

Some have not and put their faith in the politicians who promised them manned entry would be undertaken.

Little will be criticised for his safety-first stance, but this time it’s the right one.

The wrong one was making a promise that he and the other politicians, including his leader, Jacinda Ardern, should never have made.

Those politicians were mining personal grief for political ends.

It was despicable behaviour.

 

Labour’s got wrong priority for education

The biggest priority for education spending is the long tail of under-achieving children, especially those who don’t manage even basic literacy and numeracy.

The National-led government spent a lot of money working with young people who were destined for a lifetime on benefits knowing investing more now would save much more in both financial and social costs over their lifetimes.

This approach ought to be taken with education, giving one-on-one help to the children who aren’t school-ready when they turn five.

That’s the children who can’t speak English or have poor language skills, even if English is their first language; those who come to school hungry and with other health needs; those who haven’t had the emotional, intellectual and material support all children deserve and need to ensure they are ready and able to learn when they get to school.

At the same time, children already at school who are struggling with numeracy and literacy need more help.

Then there’s children with special needs who for their sake and others in their classes need more help than a single teacher with a room full of children can possibly give them.

Helping these children requires more teachers and teacher-aides. It also requires better teachers.

Teacher unions insist all teachers are good teachers. They’re not, like any other group. They are spread on the bell curve with some excellent ones, some duds and most in the middle.

Putting more money into more training and support to improve teaching standards is another priority.

Teachers aren’t particularly well-paid in comparison with other professions. Part of the fault for that lies in the union insistence that all teachers are equal and refusal to countenance performance pay.

That aside, pay rates that make teacher salaries competitive with pay rates for other occupations which compete with them for recruitment would help.

The new government is determined to alleviate child poverty. Ensuring all children achieve at school so they have what they need to succeed when they grow up should be part of that.

Instead, Labour’s first priority is spending even more on those who mostly need it least, tertiary students.

The taxpayer already pays more than 70% of the cost of tertiary study.

If more help is needed, it should be targeted at those who really need it; at areas of study where there are graduate-shortages and in loan write-offs for professionals willing to work in hard-to-staff places.

The average graduate earns around $1.5 million more over a lifetime than non-graduates who will be paying more tax to help them into better paid jobs.

In opposition the parties in government were strident about the ills of inequality.

How hypocritical that one of their first moves, giving tertiary students fee-free education will make inequality worse.