Rural round-up

May 10, 2019

Trade water NZ Initiative says – Neal Wallace:

A trading scheme for water, similar to that for emissions, will improve water quality, the New Zealand Initiative says.

Its chief economist Eric Crampton’s report, Refreshing Water: valuing the priceless, advocates a cap and trade market system backed by hard-wired environmental constraints to manage and sustain freshwater resources.

A well-functioning system can ensure all users follow best practice but cannot choose between the merits of competing water and land uses. . .

Bid to assess ‘M. bovis’ scheme surge – Sally Rae:

An independent report has been commissioned into the cause and effects of the current surge in the Mycoplasma bovis eradication programme and to identify additional immediate improvements.

Last month, the Ministry for Primary Industries announced the programme was increasing activity before autumn and winter stock movements.

About 300 farmers would be contacted as a priority and it was expected 250 of those would have notice-of-direction movement controls placed on them immediately and, following testing, that 10% to 12% might become confirmed properties. . . 

 

Dairy can protect water gain – Tim Fulton:

Water carried Graeme Sutton’s forebears to a life of freedom in New Zealand and it keeps doing the same for them on land. Tim Fulton reports.

Five generations ago, in 1842 Graeme Sutton’s English family landed in Nelson. 

It was the start of a family partnership that has endured and expanded into several irrigated dairy ventures.

“The reason they came out, I understand, is that New Zealand gave them an opportunity for land ownership. They never had that in England. They just worked for a Lord,” Graeme says. . .

Giant new painting reflects Tauranga’s rich horticulture history :

New Zealand’s largest rural art collection that tells the stories of provincial communities has a giant new painting.

Award-winning artist Erika Pearce completed her striking mural on the side of Tauranga’s Farmlands store on Taurikura Drive off State Highway 36.

Pearce started work on April 28 and managed to finish by her May 4 deadline, despite the project being rained off earlier in the week.

The finished product is an impressive 23 metres long. . .

Southland TeenAg member puts love of tractors to work

Southland student Hamish Goatley is using his love of tractors and machinery to make hay while the sun shines.

The 18-year-old spent six weeks over the summer school holidays driving for an agricultural contractor.

“It was an amazing learning experience. I really enjoyed it. It was my first season operating a round baler,” said Goatley.

Goatley is the vice-chair of Gore High School’s thriving TeenAg club. . .

The erosion of trust in society’s food regulators – Scott McPherson:

In a twist of remarkable irony, the very agencies that were put in place to protect each nation’s food supply, health, and environment are now often viewed with suspicion. This follows an overall trend in where, in general, trust in the expertise of society’s authorities appears to be at an all-time low.

What psychology repeatedly tests as the most fearful, anxious, and worried generations in history did not happen by accident. World War II had developed in the previous generations a genuine sense that citizens were united in making society happen. The natural deterioration of that sense happened over time, to everyone except farmers. They still needed their neighbors.

By the 1980s, cities were getting so disconnected that impressionable parents were teaching their children the concept of stranger danger. Considering the fact that modern parents were taught as children that strangers were potentially lethal, today’s lack of trust makes more sense. . .


CGT would hit middle hardest

February 22, 2019

It there’s such a thing as a fair tax, it’s not one based on misplaced envy as the Tax Working Group’s capital gains tax appears to be.

No photo description available.
Fairness is desirable but not at any cost and  it’s best achieved by helping the poor up not pulling the better-off down, especially when those who will be hit hardest are those with modest investments, not the really wealthy, and worse still, they’d be hit by one of the most penal CGTs in the world:

The Tax Working Group’s report released today proposes a broad-based top rate of 33% capital gains tax (CGT).

The New Zealand Initiative argues in a new policy note, The Pitfalls of CGT, that headline rate would immediately push New Zealand to the top of the international CGT rankings among industrialised economies, just behind Denmark and Finland.

“The proposal is conspicuous by a lack of exemptions and concessions around business investment, so a full rate would arguably qualify New Zealand’s CGT regime as one of the harshest in the world,” said Dr Patrick Carvalho, Research Fellow and author of the note.

“Worse, given New Zealand’s recognisably low-income tax thresholds by international standards, a new CGT would disproportionately hit middle-income earners already struggling to invest for retirement.”

“New Zealand should be cautious about siren calls for a top-ranking CGT. Trying to punch above our weight can sometimes place us in the wrong fight category,” concludes Dr Carvalho.

A good tax would foster investment that would help businesses grow, produce more and employ more.

A good tax would encourage and reward thrift and delayed gratification.

A good tax would improve productivity and promote growth.

The CTG as proposed would do the opposite.

New Zealand needs foreign investment because we don’t have enough of our own capital. The CGT would aggravate that by making investing overseas more attractive than investing domestically:

The Tax Working Group (TWG) proposals released this morning would skew New Zealand investors away from local assets, distort the KiwiSaver market and mangle the portfolio investment entity (PIE) regime if introduced, according to the founder of the country’s largest direct-to-consumer managed fund platform.

Anthony Edmonds, InvestNow founder, said while the TWG final report includes some welcome reforms, overall the capital gains tax (CGT) recommendations would add cost, complexity and confusion to New Zealand’s relatively efficient managed funds market.

“For example, the TWG’s plan to increase tax on New Zealand shares by applying CGT while leaving the fair dividend rate (FDR) tax for offshore shares unchanged would naturally drag capital offshore at the expense of local assets – at a time when New Zealand needs to fund major infrastructure projects,” Edmonds said. “In trying to discourage people from investing in residential property, the TWG has created a tax disincentive for Kiwi shares, which can only distort investment allocation decisions.”

Essentially, the TWG recommendation to tax unrealised capital gains on PIE funds marks a return to the ‘bad old days’ when Kiwis paid more tax on managed funds than direct share investments. . .

Concern over the housing shortage is one of the motivating factors for a CGT but It won’t improve home affordability in the long term:

Bindi Norwell, Chief Executive at REINZ says: “In the short-term there may be some initial relief in house price affordability as investors look to sell their property to avoid paying CGT. This may create opportunities for first home buyers.

“However, in the long term it’s likely to push house prices up as people look to invest more money in the family home, as there will be less incentive to invest in rental properties or other forms of investment e.g. equities.

“This will also have a flow on effect for the rental market with fewer rental properties available for tenants, thereby further pushing up weekly rental prices when they are already at an all-time high.

“The report even recognises that any impact on housing affordability could be small, therefore, we question whether all of the administrative burden and cost to implement GCT is worth it? Especially as CGT coming at the end of a raft of legislative changes the housing market has faced recently including the foreign buyer ban, ban on letting fees, insulation, healthy homes and ring fencing. . .

A tax that results in fewer and more costly rentals and more expensive homes is not a good one.

Nor is a tax that is fatally flawed:

Today’s Tax Working Group report recommendation for a new capital gains tax will not address residential housing affordability but it will penalise business owners and create costly complexity in our tax system, meaning it is fatally flawed, according to Business Central.

“New Zealand’s tax system is envied worldwide. The proposed capital gains tax increases compliance costs without boosting productivity,” says Business Central Chief Executive John Milford.

“Business Central agrees with the conclusions of the minority view on the Tax Working Group.

“A capital gains tax is just another cost on business, nothing more. . .

It would hit small and medium businesses hardest:

Key areas of the Tax Working Group Final Report released today were disappointing, says Canterbury Employers’ Chamber of Commerce Chief Executive Leeann Watson. . . 

Ms Watson says the proposed capital gains rules should not be implemented because of the significant impact on small and medium-sized enterprises (SMEs).

“We support the Government’s review to ensure that our tax system is fit for purpose for a changing business environment. However, there is very real concern that taxing both shares and business assets under a comprehensive capital gains tax regime would create double taxation.

“This could disadvantage New Zealanders owning shares in New Zealand and create inconsistencies around overall taxation on investment.”

Ms Watson says a capital gains tax would be unlikely to achieve the desired outcome for business.

“There is concern around the effect for capital markets in a capital constrained economy with a long-term savings deficit. Adding further tax on the savings and investment of those New Zealanders in the middle-income bracket won’t drive the deepening and broadening of the capital base that we need for business investment, which is higher productivity and wages.

“While the impetus behind the changes are aspirational, there is little to indicate they would significantly reduce overinvestment in housing or increase ‘tax fairness’. In addition, there is concern that additional administration costs and investment distortions could outweigh any benefits and potentially discourage much-needed investment and innovation by locking businesses into current asset holdings.

“It is vitally important that we remain competitive as a country and are not continuing to add further compliance for business and in particular small business, who represent 97% of all businesses in our economy.”

Ms Watson says there needs to be a viable business case for any changes to the current tax system.

“There seems to be a real focus on ‘fairness’ in the system design, as opposed to revenue-building, so we need to be careful that any tax changes are for the right reasons and are backed by a clear, practical and sustainable business case. We currently have a fairly simple and efficient tax system that should be kept and better enforced, with changes to specific rules where needed.” . . 

The costs of a good tax would not outweigh the benefits:

The Employers and Manufacturers Association (EMA) says the key issue in the Tax Working Group’s proposal released today is that the cost of its capital gains tax rules will outweigh any benefits.

Chief executive Brett O’Riley says any gains from such a broad-based capital gains tax would be eaten up by administration and other costs, leaving little revenue.

“Fundamentally the proposed capital gains rules don’t address the Tax Working Group’s objectives of reducing over-investment in housing and increasing tax fairness,” he says.

Mr O’Riley is also concerned that capital gains tax on business assets could discourage investment and innovation, locking businesses into their current asset holdings. He says there are other policy settings that could be changed to increase investment in different asset classes, away from property.

“I also fail to see how taxing growth on the value of assets from the proposed commencement date of 1 April 2021 would work, because it would be open to conflicting valuations,” he says. “It could also act as a further disincentive to growth when New Zealand already has issues with business not growing from SME’s into larger scale operations and a CGT may also limit the availability of capital to reinvest in businesses as smaller businesses face an additional tax bill.

“It’s difficult to see any benefits for the business community from implementing the proposed capital gains tax rules, as taxing both shares and business assets appears to be double taxation,” says Mr O’Riley.

It is relevant to note that a number of the Tax Working Group do not favour its recommendations on capital gains tax. The minority view summary is available here

One reason for dissension was compliance costs:

Former IRD Deputy Commissioner Robin Oliver was one of the 11 in the Tax Working Group.

Along with two others from the group, he believes the costs and bureaucratic red tape involved in adopting all the capital gains options outweigh the benefits.  

“We didn’t agree that this was in the best interest of the country to go the full extent, particularly in the business area, taxing share gains which result in double taxation,” he said.

“To get a valuation for all business assets in all parts business and all business will easily cost over a billion dollars in compliance costs. The amount of revenue you’ll get is relatively minor.”

As for taxing shares, Mr Oliver said it would result in New Zealanders who invest in New Zealand companies paying more tax when foreigners investing in New Zealand companies will pay no more tax. Furthermore, New Zealanders investing in foreign companies will pay no more tax.

“The obvious conclusion is New Zealanders will own less New Zealand companies and more foreign companies, and foreigners will own our companies,” he said. . . 

The proposed tax is no panacea for fairness:

Deloitte tax partner Patrick McCalman warns that a CGT is not a panacea for tax fairness.

“At one level, there is an attractiveness in the argument that a ‘buck is a buck’ and everyone should bear the same tax burden on every dollar earned. However, when one delves into the detail of the design, other issues of fairness emerge,” says Mr McCalman.

“For example, is it fair that property could pass on death without an immediate CGT cost, while gifts made during one’s life would be taxed? For family businesses, wouldn’t it be more productive to be able to pass assets from generation to generation before death,” he says.

“Accordingly, we need to be cautious as to how much ‘fairness’ a CGT will introduce. It may simply change where the ‘unfairness’ is perceived to sit within the tax system, creating new tax exemptions that would distort where investments are made.”

Complicating matters further is the political dimension. And MMP only exacerbates the political difficulty and increases the likelihood of whatever ultimately sees the light of day being less coherent from a policy perspective. . . 

The Deloitte paper raises several questions about fairness:

At one level there is an attractiveness in the argument that a “buck is a buck” and everyone should therefore bear the same tax burden on every dollar earned. However, when one delves into the detail, other issues of fairness emerge including new tax exemptions which would distort where investments are made – in effect, in seeking to create fairness, the proposal creates a number of layers of unfairness. For example:

    • With a CGT applying at full rates with no inflation indexation, is it fair that someone who buys an asset is taxed on the full amount of any gain when part of that gain is simply inflation? How will they be able to re-invest in a new asset if the inflation element is taxed?
    • Is it fair that the family home and artwork are excluded but most other property is not? Consider a plumber who has a $500,000 house and a $500,000 commercial building who would be taxed on the disposal of the commercial building. Should they have instead bought a $1,000,000 house, rented a business premise and enjoyed a tax free capital gain?
    • Is it fair that that investors in New Zealand shares would pay tax on capital gains but investors in foreign shares would continue to be subject (as they are presently) to the 5% FDR rate (even if gains are less or more)?
    • Is it fair that small business (turnover less than $5 million) could sell assets and defer the CGT bill if they reinvest the proceeds, while medium and larger size business cannot?
    • Is it fair that property could pass on death without an immediate CGT cost but gifts made to children during one’s life would be taxed?
    • Is it fair that there are proposed tax reductions for KiwiSaver to compensate for CGT but not for other forms of investment?

At one level, true fairness can only exist if all asset classes and forms of remuneration are subject to the same tax rate. But even then, anomalies will always arise. . . 

The proposed tax would be especially bad for farming and farmers:

Federated Farmers has said from the outset that a capital gains tax is a mangy dog, that will add unacceptably high costs and complexity.

“There is nothing in the Tax Working Group’s final report, released today, that persuades us otherwise,” Feds Vice-President and Commerce spokesperson Andrew Hoggard says.

“A CGT would make our well-regarded tax system more complex, it will impose hefty costs, both in compliance for taxpayers and in administration for Inland Revenue, and it will do little or nothing to ease the housing crisis.”

It is notable that even the members of the working group could not agree on the best way forward, with three deciding a tax on capital gains should only apply to the sale of residential rental properties and the other eight recommending it should be broadened to also include land and buildings, assets, intangible property and shares.

“Federated Farmers believes that the majority on the tax working group have badly under-estimated the complexity and compliance costs of what they’re proposing, and over-estimated the returns.”

The recommended ‘valuation day’ approach to establishing the value of assets, even with a five-year window, will be a feeding frenzy for valuers and tax advisors, “and just the start of the compliance headaches for farmers and other operators of small businesses that are the driving force of the New Zealand society and economy. . .

Farm succession is difficult enough as it is.

A CTG would make it harder still and encourage older farmers to hold on to their farms. That would lead to more absentee ownership and leasing with less investment in improvements as happens in other countries.

New Zealand doesn’t have a lot of many wealthy people and while those relatively few would pay more with the CGT as proposed, if their accountants and lawyers didn’t help them find ways to minimise their liability, they’d still be wealthy.

The many small business owners and more modest investors would not. They’d have the reward for their hard work and thrift cut back and lose enough of the value of their investments to hurt – unless they’d invested in art, cars or yachts which would be exempt.

That sends the message that such luxuries are good while investing in businesses and productive assets is not.

Where’s the fairness in that?


KiwiBuild is KiwiFail again

January 24, 2019

A report from the New Zealand Initiative calls KiwiBuild Twyford’s tar baby:

  • Relative to income, dwelling prices in New Zealand are among the highest in the OECD. This is New Zealand’s housing affordability problem in a nutshell.
  • High population-driven demand growth has collided with inflexible supply-side constraints.
  • Land prices have sky-rocketed, but construction costs are also too high.
  • KiwiBuild cannot hope to materially increase home ownership proportions – the original 2012 objective. Additional housing, if achieved, will likely lift renting and ownership more or less in tandem.This report explains why KiwiBuild – defined as the government’s pledge to build or deliver 100,000 homes within a decade – fails against all the objectives set for it:
    • It is not about social housing to help those at the bottom.
    • Nor is it about helping struggling first-home buyers. They cannot afford KiwiBuild homes at current costs. KiwiBuild is for the relatively well-off.
    • It is intended to be subsidy free, since wealth transfers to the well-off are hard to justify. But its inducements to attract private developers are subsidies.
    • Even more paradoxically, if there were no subsidy, there would be no gap for KiwiBuild to fill. Private developers will meet unsubsidised market demand.
    • It cannot hope to increase the housing stock sustainably. Only enduring lower property prices can induce people to own more dwellings than otherwise. KiwiBuild reduces neither land values nor construction costs at the margin.
  • The enduring effect of the policy is a changed composition of the housing stock by decree rather than by public demand.
  • KiwiBuild is floundering having no clear public interest objective. It constitutes a massive political and bureaucratic distraction from what is really needed – direct action to reduce land values and construction costs.

The government should not be in the business of subsidizing property developers and people on well above average incomes.

It purports to be focused on helping the poorest and most vulnerable.

Instead, policies like KiwBuild and fee-free tertiary education waste millions on people who aren’t poor, many of whom are or will be wealthy.

Not only is it a bad policy, it hasn’t a show of meeting its target to build 1000 houses by July.

KiwiBuild is KiwiFail again.


$1 in 3 wastefullly spent by govt

September 19, 2018

The New Zealand Initiative’s Fit for Purpose? Are Kiwis getting the government they pay for? shows we’re not getting value for money.

Dr Bryce Wilkinson explains:

Taxes in New Zealand have risen four times faster than incomes in the 20th century. Taxes now take more of our income than in almost any country outside Europe. We have become a high tax country.

We, the public, need the government to spend our tax money well.

Government is a dominant provider of many activities, including health and education. Poor performance here would harm current and future New Zealanders.

Government also dictates much resource use through ownership and regulation. It is a major landowner, and there are 50 times more Parliamentary Acts now than in 1908.

It should aim to get the best possible outcomes for New Zealanders from its assets. It should also regulate wisely and administer those regulations well.

The report’s focus on value for money is not ideological. Who would not want to see government doing the best possible job for New Zealanders?

This shouldn’t be ideological or partisan, but the left does too often mistakenly equate more spending with better spending.

How well is government spending our tax money?
The quality of much government spending is poor. The Productivity Commission’s inquiry into public sector productivity showed why. Public sector agencies are not focused on productivity. Measures are too often lacking or neglected.

A 2013 report published by a Canadian think tank, the Fraser Institute, assessed outcomes compared to spending in 192 countries. South Korea came out on top. Its government was spending 27% of GDP to achieve a performance score of 7.5. In New Zealand, government was spending 38% of GDP for a score of 5.5.

Perhaps, one-third of New Zealand government spending is wasteful. That represents around 13% of GDP, or $20,000 per household, annually.

Every cent not wasted is a cent more to spend on something we need, or to leave in taxpayers’ pockets.

Imagine the positive impact of that money being spent where it has a positive impact instead of being wasted and/or of each household keeping more of what they earn.

A 2009 OECD report similarly assessed spending efficiency in school education. The indicated level of waste in New Zealand spending on education was one dollar in six.

Less waste would mean more money to improve outcomes. Currently, around 17% of 15-year-olds can barely read. The government has likely spent more than $130,000 on each of their schooling. Few would regard this as an acceptable outcome.

Nearly a fifth of children getting through school unable to read and write is appalling. There will be many reasons for this failure and wasting a sixth of the budget will be one of them.

That extra dollar in six spent well could improve pay and conditions for teachers and support staff, provide extra help for pupils who need it and/or do away with at least some activity fees and fundraising.

In health, even official reports acknowledge a lack of focus on productivity. The OECD has also assessed the efficiency of health spending across member countries. A 2010 report indicated that New Zealand could spend 2.5% of GDP less a year for similar outcomes. Of the order of one dollar spent in four looks like waste.

One dollar in four wasted – that’s 25% of health spending that’s not getting spent where it should be.

Such findings from international comparisons are only motivational. They do not show what New Zealand would need to change or whether such changes are plausible. Their value is in inviting us to learn from countries that seem to be doing better.

In some cases, government providers would be more focused on productivity if users had more choice of providers. Government providers can fail to give value for money when users are captive. Users will be more empowered if they have a wide choice of providers and if state funding follows them. The funding of pre-school education has this feature.

Choice tends to improve competitiveness and performance but this government isn’t keen on it.

How well is the government doing as a regulator?
The Crown’s performance as a lawmaker and regulator is flawed. There is widespread dissatisfaction among regulators with the quality of the law they have to administer. The statute book has become too prescriptive and too detailed. Parliament cannot hope to keep it up to date and fit for purpose.

It needs to be easier for lawmakers to resist the pressures to legislate poorly. Greater reliance on simpler laws of a more general nature is desirable. Prescriptive law quickly becomes out of date. Change is unlikely as matters stand.

Bad law leads to added costs and unexpected consequences.

What about our high international rankings?
Many international agencies assess countries’ outcomes for aspects of wellbeing and economic performance. New Zealand enjoys top-tier world rankings in many of these measures.

Does this mean government is doing a great job? Yes, and no.

We rank among the best for many but not all aspects. The report identifies 20–30 government-dominated areas of weakness. Some are no surprise. These include overseas investment and aspects of labour market laws. Infrastructure quality is another weakness.

Labour law changes on the table now are going to make matters worse and the redirecting of fuel taxes from roads to public transport and cycleways will too.

More surprising is the weakness in our legal system. We rank poorly in the ease of enforcing contracts and resolving insolvency and the quality of judicial processes.

There is no excuse for our 54th ranking by the World Bank for the quality of our judicial processes. Gallingly, Australia is ranked first.

The bottom line is there is compelling evidence of much government waste. It is occurring for many reasons, but a major symptom is a lack of focus on efficiency.

Were the state to do a better job, it could use the savings to raise wellbeing by:
• maintaining government outputs, while cutting tax revenues; and/or
• increasing government outputs from unchanged government spending.

Those options are outside the scope of this report. The first task is to achieve the savings.

National managed to get some improvement in some areas during the GFC – requiring the public service to do more with less.

Under Bill English’s social investment regime the government focused on treating causes, acknowledging that sometimes you have to spend more in the short term to get savings later.

It also set measurable targets and reported on progress towards them.

But all parties need to focus on getting better value for taxpayers’ dollars.

It would help if all of them acknowledged that the government isn’t always the bet option for providing services; that governments aren’t good at picking winners and that the quality of their spend is far more important than the quantity.

It would also help if more of us didn’t think of the government as the first or only source of support.


NCEA not achieving literacy & numeracy

March 5, 2018

The New Zealand Initiative looks at the costs of NCEA:

Ministry data shows that between 2001 and 2016 the difference between the percentage of Māori and All students achieving Level 3 (or its equivalent) has narrowed. However, in the more meaningful benchmark of University Entrance, the gap has grown even wider.

International PISA data shows that since testing began in 2002, New Zealand’s educational equity has worsened and our 15-year-olds’ reading, maths and science scores have almost constantly declined. This contrasts starkly with the same period’s NCEA data, which shows ever-improving performance and rising equity.

If NCEA data can paint a picture of constant improvement, while almost all other measures expose decline, there is reason to believe we have a problem.

Added to this, 2014 research by the Tertiary Education Commission found that within a sample of 800 Year 12 students with NCEA Level 2, 40% failed an international test of functional reading and 42% failed it in numeracy. How can students be succeeding in NCEA when they lack basic skills in reading and maths?

In pursuit of flexibility and inclusion, NCEA all but abandoned the idea of a core curriculum requirement. Instead, nowadays, students need only ten loosely defined Level 1 credits in literacy and in numeracy. Beyond this, all subjects – from meat processing to mathematics – are valued equally.

This means well-advised or motivated students can still achieve a broad and valuable education. However, for poorly-advised or less motivated students, NCEA also offers a plethora of ‘safer’ alternatives. These will maximise NCEA success by avoiding academically challenging content. With pressure on teachers and schools to drive up NCEA pass rates, some students may even be encouraged towards these safer choices.

This way, NCEA’s flexibility ensures almost all students achieve a qualification, and creates glowing headline figures for government and schools. However, the downside is that NCEA also masks huge variation in students’ achievements; it widens disadvantage while hiding it behind an alluring façade.

A system which shows improvements while literacy and numeracy rates are declining, enables pupils to take less challenging subjects that count as equal to more challenging ones, masks variations in achievements and widens disadvantages would, by NCEA’s measure get a not achieved.

It’s not just pupils who lose with NCEA:

NCEA exerts unintended negative consequences on the most important interaction in schooling: that between teacher and student.

For example, although chunking enables course flexibility, it also increases assessment volume. And because most assessment now happens internally, NCEA increases teachers’ workloads.

‘Teaching to the test’ describes the practice of coaching students in the detail of exam questions and selected content, to boost their short-term performance in assessments rather than their long-term learning. Some teaching to the test is inevitable with any high stakes assessment. However, at least three features of NCEA’s flexible design exacerbate the practice.

And NCEA doesn’t achieve for employers either:

Many employers are vexed by NCEA’s complexity and disappointed by school leavers’ skills. Although University Entrance restricts NCEA’s flexibility, too many students miss out because they fail to realise the implications of their choices. Universities also reverse-engineer NCEA data to create crude, yet life-defining rankings.

The Initiative makes seven recommendations that will:

 . . .raise expectations and equity by creating a safety-net of core subjects all students must master. They will reduce teachers’ workloads and the volume of assessment, reduce the opportunities and incentives to teach to the test, and improve teaching and learning.

Recommendation 1Raise English (and Te Reo) and maths requirements: The government should amend NCEA so that achievement at Level 1 or higher requires a minimum number of Level 1 credits in the core subjects of English (or Te Reo) and maths. This new list of eligible standards should replace the current literacy and numeracy requirements. It should also demand levels of mastery that ensure all students with NCEA also meet international benchmarks for functional literacy and numeracy.

Recommendation 2Expect a broader core of subjects: The government should signal higher expectations of the breadth of core subjects all students must master in school (two suggestions as to how this might be achieved are given in the final chapter).

Recommendation 3Reduce the number of standards: The government should reduce the number of standards so that within a particular subject there is minimal to no choice and each standard covers a bigger and broader set of skills and knowledge (there is far less ‘chunking down’). The optimal size and number of standards may vary for different subjects, to be determined by subject and assessment experts. However, broadly the ambition might be set to reduce the number of standards in a subject at each level from 6–8 to 1–3.

Recommendation 4Make it harder to teach to the test: The New Zealand Qualifications Authority (NZQA) should rely more heavily on the reassurance provided by elements of norm-referencing (e.g. PEPs and the cut score procedure during grade score marking) to move away from such close matching of external assessment to past assessments and specifications. Instead, they should inject elements of ‘surprise’ that encourage teachers to teach the breadth of their subject’s curriculum, rather than to its assessments. Reference tests could also be deployed to help examiners identify national level changes in students’ performance over time.

Recommendation 5: Reduce reliance on internal assessment: The government should reduce NCEA’s reliance on internal assessment, so it is used only where external assessments cannot capture performance in essential areas.

Recommendation 6: Use Comparative Judgement software: NZQA should use Comparative Judgement (CJ) software to improve the reliability and efficiency of the processes available to judge external and internal assessments. CJ would also better capture genuine quality in essay-type assessments, and equip assessors to ask more open-ended and creative questions.

Recommendation 7: Commission independent analysis: The Ministry of Education should openly evaluate NCEA’s effects by commissioning and publishing independent analysis (various suggestions are given in the final chapter).

Recommendations 1-5 trade some of NCEA’s flexibility for higher equity and standards. In the short term, they may generate a drop in NCEA achievement. However, in the longer-term, these recommendations will raise expectations, equity and outcomes across the board.

Education, especially literacy and numeracy, is one of the surest pathways out of poverty.

The current assessment system is failing pupils, over-burdening teachers and is not helpful for potential employers.

Knowing what a pupil has achieved in details might be helpful for practical subjects, for example an employer at a clothing factory might want to know a prospective employee can sew button holes.

But for general subjects the details don’t matter. Employers who looked at a CV and saw a pass mark in University Entrance geography, knew the pupil could read, write and reason. By contrast NCEA results would show a lot of detail that meant nothing and could mask that the pupil was illiterate and innumerate.

NCEA isn’t achieving. It must change and change quickly.

 


Quote of the day

March 18, 2015

In self-proclaimed intellectual circles, it has long been fashionable to belittle the idea of economic growth. “GDP is not the same as happiness”, some critics of growth will explain. Others will warn that excessive growth could destroy the environment and leave our planet uninhabitable. Others still will warn that the finite nature of our resources does not allow continuous growth in any case.

This kind of critique has become a pastime of the chattering classes. It is now part of polite conversation in the better suburbs of developed world cities. To question the value of growth at dinner parties in air-conditioned or heated houses while sipping French champagne and eating Italian prosciutto presumably adds a sense of intellectual gravitas to one’s physical well-being. These people probably do not even realise the self-contradiction in condemning economic growth while enjoying its blessings.  . .

Economic growth is no silver bullet to all the world’s problems. But it comes close. There is overwhelming evidence that the unprecedented economic expansion humanity has experienced roughly over the past three centuries has been a great force for good. It has made our lives better in ways that would have been unimaginable to previous generations.

This should also be the response to the aforementioned critics of growth. At which stage in history do they believe we should have proclaimed the end of economic development? Certainly not in Plato’s time (4th century BC) since that would have prevented the invention of the canal lock (3rd century BC) and paper (2nd century BC). Development should not have stopped at the time the Gospels were written either since otherwise we would not even have invented the wheelbarrow (2nd century AD).

To move to more modern times, had economic development stopped when Ernst F. Schumacher suggested it should (Small is Beautiful was published in 1973), we would have never seen CD-ROMs, the Internet or the first vaccine for meningitis. And even if we had only stopped to grow and develop when Pope Francis told us to in November 2013, we would have never seen the first human clinical trials in the United States for a wearable artificial kidney – or the new iPhone 6.

Economic growth is the driver behind all of these developments because at its core, economic growth is not mainly about the production of more but about the discovery of better (though often it is both). Economic growth helps us to find new and improved ways of combining resources. The outcomes could be a new medicine, a faster way of travelling, a healthier way of eating or a better way of learning. . . Dr Oliver Hartwich

This is an extract from the New Zealand Initiative’s report The Case for Economic Growth by Eric Crampton and Jenesa Jeram.

 


Quotes of the year

December 31, 2014

Offering to trade fines for sexual favours is not simply sleazy as the judge seemed to view it. It’s about a principle which is absolute, regardless of its nature or monetary dimension. It behoves the Police Commissioner to appeal against this ridiculous sentence so wiser heads can send a vitally important message, namely that corruption is corrosive, strikes at the heart of civil society and will absolutely not be tolerated. Sir Bob Jones

“I love to observe how they process the high school situation. Over the last couple of months I’ve just started to realise that, wow, people in the real world don’t care if your legs aren’t perfect.” Lorde

”I find the chances of it being stolen are pretty minimal, but the chances are even more minimal of it disappearing by itself through two paddocks surrounded by deer fencing,” Bill Keeler

It’s been said that the New Zealand economy is likely to be the “rock star” of 2014 but we all know what happens to rock stars who spend all their money on having a good time. I’ve said it before – the only way we’re going to become a top-tier First World country is by growing the pie.

Sadly, we’ve always been much better at eating them. – Colin Espiner

To judge the dead may give some comfort to the living, but no matter how fervently the misdeeds of previous generations are condemned, they cannot be undone. Therefore, whatever justice we seek to do here and now, let it be to right the wrongs of the present – not the past.

We fair-skinned Polynesians are not – and can never be – “Europeans”. Just as contemporary Maori are not – and can never be again – the Maori who inhabited these islands before colonisation. Both of us are the victims of historical forces too vast for blame, too permanent for guilt.

And both of us have nowhere else to go.Chris Trotter

 

Just 380,000 individuals pay half of all income tax.

If you earn more than $80,000 you are in that group. Most tax is paid by businesses through corporate tax or receipted GST payments. Possibly 80 per cent of the country is taking more from the state than they are contributing.If you are a net contributor most of your money will go to paying for the welfare of others.Most of those who seek to reduce their tax obligations are net contributors to our society. The only complaints against them are they do not pay enough.Beneficiary cheats, by contrast, are providing nothing to start with and seek to enrich themselves further by deception and dishonesty.Judges understand this, which is why beneficiary cheats go to jail for longer, as they should. – Damien Grant

Democracy, certainly at candidate selection level, isn’t generally a process of exquisite delicacy, scrupulous manners and sensitivity to hurt feelings. Oftentimes it’s just a few steps removed from full-on internecine civil warfare, albeit conducted largely out of sight. – Southland Times commenting on Labour’s selection process for the Invercargill electorate.

“The other analogy I have learned quite a lot is this idea that life’s like the drafting race because you learn quickly, farming, all the things that begin with D like drenching and drafting, docking and dagging, getting into debt and dealing with DOC. If you go up the drafting race, even for a ewe you have to look good: You mustn’t limp, head up, eyes forward don’t show your teeth if they aren’t terribly good, clean bum, good digestion, good tits – the whole way – because you want to go to the right, to the mixed age ewe mob, because [then] you get kind dogs and good food. Straight ahead is not much fun because you will end up a chop on the table. – Christine Fernyhough

“Nah, no tear in the eye. I’m from south Dunedin,” he grinned. Brendon McCullum

‘‘A government is a periodic monopoly that needs the threat of other entrants to get it going.’’ – Bill English

We must avoid complacency that might flow from believing today’s good times are permanent.

We don’t want to make a habit of doing the hard work under pressure, then putting our feet up just when the serious long-term gains are within our reach.Bill English

If there are going to be on the ground and social media campaigns, they needs to be led by Australians.  We need to get Australians saying that they want the best products at the best price.  We need Australians to demand choice instead of supermarkets telling them what they’re allowed to buy.  We also need Australians to see how deeply cynical the supermarkets are by reinforcing the values we share, namely, freedom of choice.  This needs to turn Coles and Woolworths market research on its head and hit them where it’ll hurt the most; market share.  That’s the only language they understand.  It is also by reinforcing that Kiwis are kin, something the centennials of the Great War will strongly affirm. – Bruce Wills

Personally, I’ve never heard of an economy taxing its way to greatness but I have sure heard of economies taxed into oblivion.Willy Leferink

And perhaps that’s the every day wisdom of parents at the fore – it’s the minestrone soup solution of life – if you’re short of meal options, throw all the vegetables into a pot, with a sprinkle of flexibility and the seasoning of life, and see what you come up with. – Tariana Turia

The notion that environmental protection and economic development are potentially conflicting goals is not, in my view, a recipe for success. It removes any expectation that businesses should take responsibility for protecting the environment; or that environmentalists need to consider social or economic costs of environmental outcomes.

In my world, economic and environmental considerations are two sides of the same coin. It is hard to be green if you are in the red; but you cannot have long-term social or economic prosperity if you undermine the natural capital you rely on to create it. – Lynda Murchison

People’s first consideration when buying food was price, despite claims they might buy based on factors like organic growth, she said.

While people might think buying organically or from the farmers market was environmentally friendly, research showed carbon dioxide emissions were higher buying that way, Prof Rowarth said. – Jacqueline Rowarth

. . . Even during booms some businesses will fail, and even during recessions some businesses will soar. That is because what ultimately determines the fate of companies is not whether the economy grows 1% or shrinks 1%, but the quality of management and their ability to anticipate and handle changing conditions be they for their markets, their inputs or their processes. . . Tony Alexander

Members of the Opposition believe monetary fairies can make the exchange rate settle permanently lower by forcing interest rate cuts and printing money while letting inflation therefore go up. Given the non-zero possibility that such economically ignorant policies get introduced it is worth getting inflation protection by investing more in property – not less. Tony Alexander

 The global financial crisis was the worst economic meltdown in living memory.

“The 1987 crash was a a blip on the charts by comparison.”

On top of that, the Christchurch earthquakes dealt a massive hit to the government books. “The mythical observer arriving from Mars who saw the accounts in balance after two thumping great shocks like that – you’d have to say someone had navigated pretty smoothly through that.” Donal Curtin

Two thirds of the [welfare] liability came from people who first got a benefit under the age of 20. “So it confirms what grandma told you. “Don’t let those young people get off the rails because when they do it’s very expensive.” – Bill English

That it can sweetly awaken, and joyously strengthen and that you need to give it to get it. Sarah Peirse answering the question: what do you know about love?

“I don’t think our native species care too much as to whether it is public land or private land. Whether it be iwi, or whether it be Sir Michael Fay, what we’re interested in in these partnerships is maximising conservation gain.” Nick Smith

Federated Farmers is an apolitical organisation – “we don’t care who is in government as long as they agree with us”.Conor English

. . . Taxes are not the price we pay for a civilised society. At best they are the price we pay for a civilised government. But they are also the price of overly bureaucratic procedures, unpredictable outcomes, and the loss of freedom to make our own decisions. – NZ Initiative

I make no apology for being a male. I hope I’m seen as a considerate, compassionate and communicable male; I make no apology for that. If I have faults, and I’m sure I do, well I don’t think  I can blame my gender for my behaviour without it being a cop-out. There ain’t nothing wrong in being a bloke if you behave yourself properly! – Chris Auckinvole

Mr Speaker, my second point I wish to make is the importance of valuing hands on learning within our education system. We must appreciate these very important students who in the future will fix things, build things, be it trucks, motor cars, be it buildings, be it bridges, roads, essential infrastructure and all manner of other things.

To do this the education system must equally value these people as much as we do doctors, nurses, lawyers and accountants and design an education curriculum accordingly. Putting it simply, we want to create many Einstein’s, but to create an Einstein you also need 1000 skilled technicians to make those things. – Colin King

“Talking about ponies and horse races, if you think of the economy as a horse race, you know it would be silly to put the hobbles on one of the leading horses so the rest can catch up,”Alister Body.

“I don’t think a party that’s on the extreme edges one way or another is going to be beneficial for Maori,” . . . “I think we as Maori also need to realise that compromise is a part of political involvement in New Zealand politics,”  . . .  Dr Lance O’Sullivan.

. . . if democracy means anything, it means suppressing the savage within and submitting the issues that divide us as individual citizens to the judgement of the electorate as a whole. Even more importantly, it means accepting that collective judgement – even when it goes against our individual contribution to its formation.Chris Trotter

HONG KONG | How did this small city-state of 7.3 million people go from having a per-capita income of only a few hundred dollars per year to a per capita income that is equal to that of the United States in only 50 years? The simple answer is they had the British common law legal system, strong private property rights, competent, honest judges, a non-corrupt civil service, very low tax rates, free trade and a minimal amount of economic regulation. There was no big brother government looking after the people, so they had to work hard, but they could keep the fruits of their efforts. . . Richard W. Rahn

One of our human limitations is that we look at the problems ahead through the eyes of our current technology and from this perspective they can look overwhelming. This myopia traps us into negativity – we think we must go backwards to achieve our goals – Dr Doug Edmeades

For the health-conscious, the prevailing wisdom is that natural food is the best food. But no matter what studies of GMOs say, one scientific fact is inescapable: basically none of our dietary staples are natural. Some 10,000 years ago, our ancestors picked tiny berries, collected bitter plants and hunted sinewy game, because these are the foods that occurred naturally in the wild. Then came agriculture, and with it the eventual realization that farmers could selectively breed animals and plants to be bigger, hardier and easier to manage. David Newland

. . . Most of all they should embrace the modern age and recognise that social and economic salvation and uplifting the underclass does not simplistically lie in ever increasing taxes on the industrious and thrifty and their transfer to the indolent. There’s nothing positive or progressive about that. . . Sir Bob Jones

We think it’s pretty legal, we think these guys are just having a crack and have a bit of an eye for the main chance because it’s an election campaign. – Steven Joyce

I won’t be wanting to see any hint of arrogance creeping in.” . . .

. . . “One of the big messages I’ll be wanting to give incoming ministers and the caucus is that it is incredibly important that National stays connected with our supporters and connected with the New Zealand public.” John Key

“Make sure you know why you’re in it – politics is not about celebrities. And nurture your self worth.

“You can’t afford to mortgage out how good or bad you feel because of tomorrow’s headlines.” – Julia Gillard

New Zealand is not perfect, but we do now have a multicultural society based on a bicultural heritage.Philip Burdon


%d bloggers like this: