The $7.5b question: tax cuts; election spend up; something else?


The biggest government surplus in a decade has political and economic commentators thinking: What will Treasurer Grant Robertson do with a $7.5 billion surplus?

A few certainties arise even before that question can be considered:

  1. 2020 is election year and there will no doubt be thoughts of holding at least some of it to throw at election promises in a years time
  2. Certain parties who do not need to be named are going to want – and indeed have already promised – tax cuts, specifically income tax cuts
  3. With a shaky world economy getting ever more jittery with every passing month and the domestic economy not looking so hot, economists and some politicians are suggesting that the government needs a spend up to get things moving

I have long had ideas about what to potentially spend on in the past, which have been largely social areas such as health, education and social welfare. My understanding is that the calls in 2019 are for greater investment in infrastructure critical to the 21st Century.

This suits me fine, as I have a few ideas of what it could be spent on:

  1. Research and development of a potential biofuel programme relying on the waste stream for an appropriate fuel source – take several years to get this started, but if successful modest scale biofuel plants could be established in Auckland, Wellington and Christchurch
  2. Research and development of a Waste to Energy plant for the West Coast, which would be self sufficient in terms of electricity use
  3. Examine electrification of the South Island segment of the Main Trunk Line
  4. Invest in 5G technology nation-wide instead of letting the telecommunications companies do so for reasons of national security
  5. A substantial acceleration of the billion tree programme that was announced by the Government in 2017
  6. Support a mini-home scheme

But what if the Government decided on tax cuts? Whilst there might be enough to justify some I am personally against income tax cuts because the wealthiest are always the winners, when all should be able to gain fairly from them. Such a move would certainly not be welcomed by the left wing of New Zealand politics, who believe with justification that this would only favour the very few.

A more intriguing alternative is one that almost never seems to be up for discussion. Despite the right talking about fiscal responsibility, under the last several New Zealand governments significant debt has been accrued and much of it is still outstanding. Has the ever so radical idea that New Zealand should actually pay moreĀ  of it back not strike one as a useful idea?

National swings to the right


Was it Donald Trump? Was it Simon Bridges or was it Boris Johnson?

At least one of these leaders today featured significantly in the economic policy outlined by National leader Simon Bridges. United States President Donald Trump can take the credit for an idea adopted by Mr Bridges as he seeks to swing National towards the 2020 election and the prospect of a one-term Labour led Government.

It is classic blue ribbon politics from National, seeking to woo businesses that might feel like they have been short changed by the Labour-led Government of Prime Minister Jacinda Ardern. Mr Bridges clearly not being of the same centrist cloth that saw Prime Minister John Key survive nearly three terms, has issued what to the conservative wing of New Zealand must seem like a call to arms.

In his outline Mr Bridges has made a number of pledges that point to an embracing of “free market” economics. Commentators have noted a swing towards Trumpian deregulation – an attack on “red tape” simply because they are regulations, and not necessarily because those regulations are bad. Mr Bridges has made a promise identical to one Mr Trump made after taking office whereby he would repeal two laws for every law introduced with the result being a 40% drop in new laws being made.

This willy approach raises as many questions as it does answer. National will claim that they are red tape, but if the past is the key to the future, it will most probably be attacks on occupational safety and health regulations, the Resource Management Act, banking and social laws designed to help the marginalized.

In a more ominous move that is likely to mobilise the Labour and Green Party base membership, Mr Bridges has also announced moves that will be seen as a clear and deliberate attack on the unions. By announcing a plan to stop unions getting Government preference in negotiations, Mr Bridges has attempted to undermine one of the key reasons for joining one in the first place.

National has gone one step further. At the risk of galvanizing the divided New Zealand First membership, they have chosen to raise the age of superannuation eligibility to 67. As a result in the next few days I expect to hear sermons from Winston Peters about the folly of doing so, and in the weeks and months to come as we start to look forward to the 2020 general election there will be clips of Mr Peters addressing his Grey Power constituents.

Instead of growing the economic pie as I have suggested by investing in research/science/technology and diversifying the export sector, they have decided to take an old, used and thus far not very successful knife out of the drawer. They have made it shiny and attempted to sharpen it in the hope that once again New Zealanders might be dazzled by the imagined allure of market economics.

Make what one will of these announcements, but I think we can be sure that the Government reaction will be substantial. It might not elicit new policy, but I expect to see a doubling down on existing policy and warnings to potential voters of what they might be playing with by voting for National. Maybe Mr Bridges is hoping that Labour, the Greens and New Zealand First will have forgotten by 2020 that these policies were announced. Maybe he is hoping to gain better traction and get the party moving again as a cohesive unit.

The 2020 election campaign might not officially start for several months, but the unofficial one is already revving its engine.

Chief Statistician resigns: But is that the end of the story?


Chief Statistician of New Zealand, Liz McPherson handed in her resignation to Minister of Statistics James Shaw on . Whilst Ms McPherson’s departure is definitely a step in the right direction, can we trust Statistics New Zealand and their treasure troves of statistical data? And if the answer is no, what will it take to restore that trust?

To briefly recap Ms McPherson’s chief task as the boss of Statistics New Zealand was to make sure that the 2018 Census ran smoothly. As is now very clear, that was anything but the case. Ms McPherson is now gone, but there are huge holes in the 2018 edition and considerable uncertainty no doubt exists among the many ministries and departments whose planning for the next few years has been thrown into turmoil.

Would it be better to simply organize a full brand new census for the earliest possible date and assume that the 2018 data is not able to be properly used? Possibly, but a new Census is not a cheap, logistically easy or rapid task to be carried out in terms of organizing it, never mind Census Night.

If not, do we know how much of the data is usable? How much data is missing? What data is missing? Are there minimum data amounts that must be maintained in order for particular data sets to be of use, and if so what are they? No doubt these questions have been taxing a lot of minds in Statistics New Zealand, as well as its Minister in Charge.

Let us assume the worst. The data sets for multiple agencies simply do not permit them to carry out appropriate planning and the next few years will be based on educated guesses rather than hard data. We will assume that it affects the Ministry of Health, Ministry of Education, Ministry of Social Development among other significant users and providers of data. I cannot help but wonder what health, social, and education programmes are going to be underfunded, under resourced or simply stop working because of this ineptitude.

To be painfully honest, I have no confidence in Statistics New Zealand. Unless Mr Shaw reruns the Census I believe he should hand back his ministerial warrant for that particular portfolio. In April of this year Ms McPherson acknowledged no Iwi related data would be released. She also admitted that that data collection was insufficient for what was expected of the set. She should have handed her resignation in at the same time.

Where is National on this? Where is A.C.T.? I would have expected both parties to be busy making political hay out of this. I would have thought that A.C.T. leader David Seymour would have been left, right and centre telling us what A.C.T. would do and why this Government is not fit for the tasks ahead.

Stuff reporter Thomas Manch suggested that it might take years to restore the level of trust we need to have in Statistics New Zealand and its leadership. Given that even with the handing in of her resignation, Ms McPherson was still trying to play down the gravity of the situation, I am inclined to agree.

Years.

 

Social Workers: Unappreciated workers in an unappreciated discipline


It must be tough being a social worker. Certainly New Zealand First Member of Parliament Darroch Ball certainly thinks so. In the general debate in support of a Bill of Parliament to allow foster parents or kin carers to approach Kiwi Saver to open an account on behalf of a foster child in their carer, Mr Ball alluded to the work done by social workers.

I agree with Mr Ball. Being a social worker is like being on a high rope above a pool infested with sharks. All of them would have you for dinner in a flash if you fell off. Somehow a social worker has to navigate a mine field that has any number and range of devices – distrustful parents/guardians/caregivers, a community quick to judge, terrified and/or stressed out children, among others.

They always have to be right in the eyes of everyone, who quite forgetting – possibly deliberately – that they are as human as we are, will most probably make a mistake they end up regretting at some point in their career. And even when they are right, are making all the right decisions and their clients are making progress, how many have actually heard someone say “hey, look mate, I know your job is a hard one but you are doing your best – keep it up”. It would make their day in ways I don’t think anyone but the worker in question would be able to appreciate.

They are meant to be the eyes, ears and trained practitioners doing work that increasingly teachers and other professionals such as General Practitioners who come into contact with children seem to be doing. And whilst these professionals can certainly be useful – a teacher who is dealing with a child that used to be well behaved and is now disruptive would be right to want to find out what is going on in their background.

Without doubt they have strict responsibilities to uphold. And just as in any employment there are one or two rotten apples who are just there to play the system or cause as much trouble as they can. Each case is going to be different from the preceding one.

The attrition rate must be high. Under paid, under valued, under staffed, under resourced would all be things that are true about the profession of social workers.

Parliament claims to care about social workers. And maybe it does, but how many of the 120 M.P.’s that sit in the chamber have actually sat down with a social worker in a neutral setting over coffee and just talked to them about their daily routine, the rewards and challenges that they face? And how many of them have talked to Child Youth and Family managers and tried to find out from the middle man what challenges their staff are reporting?

So, say what you will about social workers but they are probably in terms of the humanities, the least appreciated, most overworked and under paid people. But they do not need to be like this. We can do better. And if we want to improve the social statistics for New Zealand children, our mokopuna, our whanau, we must help our social workers.

Statistics New Zealand’s potential Census emergency


Some time ago I made mention of a major failing of Statistics New Zealand in their internal operation and failure to successfully run the 2018 New Zealand Census. In April 2019 the Chief Statistician Liz McPherson admitted 1 in every 7 New Zealanders failed to complete the compulsory survey that happens every 5 years and is essential for planning government services, spending priorities and performance targets.

At that time it was discovered that the agency responsible for collecting statistical data on New Zealanders had filled a hole in its finances by funnelling $10 million from insurance payouts and capital. Upon realising that it was short, S.N.Z. asked for another $20 million for the 2019-20 financial year, which was to fill in a funding short fall of 15%.

Now it has been found out that S.N.Z. actually needs considerably more money – between $33-$43 million more each year for subsequent years. As a result the Minister for Statistics, James Shaw is having to ask the Treasurer Grant Robertson for millions more in funding that no doubt both of them would have hoped they would not have to fork out.

If the money is not stumped up, S.N.Z. has a list of ten products it was going to cull or severely restrict. They included surveys for research and development, land occupancy/transfers, energy use among others. This would affect planning and spending priorities for a multitude of agencies and items in the budget.

Allowing it to continue suggests lax responsibility by the Minister of Statistics in overseeing the agency. It suggests that the incompetence of Ms McPherson is going to be tolerated. Sure it might not be the biggest mismanagement crisis we have had in a New Zealand government department, but after telling the Government a second time in less than a year that its financial problem is worse than it thought, can we really be expected to trust Ms McPherson and her senior S.N.Z. staff to know what is going on?

Ms McPherson is contracted to S.N.Z. until the end of 2021, but one has to ask whether that should still be the case. If priority targets were set and closely monitored with the threat of sacking hanging over her head, could we rely on Ms McPherson to display the necessary honesty when she originally tried to hide the issue? I am not wholly sure we can.

Mr Shaw needs to make a couple of tough decisions and he needs to make them quickly. The first one is whether Ms McPherson is worth the risk that goes with forking tens of millions of dollars more in terms of making sure that they do not end up being wasted. The second is – assuming the full extent of the problem has now been revealed – whether the data provided from the Census by those who did manage to complete is enough to fend of an emergency Census.

Drastic? Yes. Unnecessary? I hope so, but if agencies on whose well being people depend such as M.S.D. and the Ministry of Health suddenly find themselves unavoidably short on critical data, do we have a choice?

Possibly not.