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| Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz | ||||||||||||
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The speech ostensibly charted a path forward. However, conspicuous by its absence was any meaningful acknowledgement of its responsibility for New Zealand’s current economic predicament. The presentation was long on technical details but short on accountability. The latter is emblematic of the RBNZ’s broader stance on its role in three critical problems: the worst inflation in three decades, the country’s dismal economic performance and the staggering $11.5 billion losses from the Bank’s reckless money printing in 2020 and 2021. In its own self-review, published in late 2022, the RBNZ had given itself a pass mark for its actions during the pandemic. But despite engaging two peer reviewers (both former central bankers), this was never going to be an independent, critical assessment. It certainly did not come across like that. Criticism of the RBNZ’s policies is not merely hindsight. The New Zealand Initiative, with other economists, has been sounding alarm bells for years. In August 2019, we published The Unreserved Bank of New Zealand, warning about the risks of unorthodox monetary policies and the RBNZ’s shift away from its previous focus on price stability. Throughout 2020 and 2021, we cautioned against the RBNZ’s aggressive monetary stimulus. In April 2020, we emphasised that “deficit spending funded by borrowing from the central bank that is not expected to be reversed is a route to financial instability”. By May 2021, we were already warning that the new era of RBNZ policy would “end in tears and inflation”. We were not alone. Tools like GDPLive provided real-time data and Taylor Rule calculations, clearly showing the RBNZ’s deviation from prudent monetary policy. The RBNZ chose to ignore these warnings. The consequences now are severe: New Zealand faces home-grown inflation, economic stagnation and a massive burden on taxpayers, affecting everyday lives. The RBNZ's reluctance to own up to these failures is concerning. Its attempts to shift blame onto external factors do not stand up to scrutiny. In politics, significant failures often lead to demands for accountability. Why should it be any different in monetary policy? The RBNZ’s decisions have profound impacts on the national economy. To restore confidence and set a course for recovery, we must demand more and better from the RBNZ. The road back to 2% inflation requires more than technical analysis and forward-looking projections. It demands a clear-eyed assessment of past errors, a commitment to learning from them and a strong focus on the Bank’s price stability remit. New Zealanders deserve a central bank that learns from its mistakes, not one that buries them. |
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| Dr Michael Johnston | Senior Fellow | michael.johnston@nzinitiative.org.nz | ||||||||||||
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We were tasked with making recommendations for English and mathematics in the primary and intermediate school years. This focus was to ensure that deep problems in the teaching of early-years literacy and mathematics are addressed swiftly. As Minister Stanford is well aware, each year that passes without reform sees another cohort of young people sold short. Later we were asked also to consider the first two secondary years. Minister Stanford made it clear that she wants a knowledge-rich curriculum, informed by the science of learning. Perhaps the most general educational principle from the science of learning is that knowledge that is essential to later learning must be reliably consolidated in long-term memory before attempting to build on it. Failure to do that risks overwhelming students’ short-term ‘working’ memory, leading to feelings of confusion, frustration and, eventually, demotivation. This principle guided many of the MAG’s recommendations. One recommendation was for a carefully sequenced curriculum, specifying rich, but carefully selected knowledge. Teachers cannot teach everything. The curriculum must therefore be selective. It must ensure that truly foundational knowledge is emphasised. Careful sequencing ensures that knowledge is learned in an appropriate order and in sufficient depth to support further learning. We also recommended merging the curriculum and common practice model in one document. That will ensure close correspondence between the knowledge to be taught and effective ways of teaching it. The teaching of early literacy, especially, will benefit from this approach. The MAG’s report was made public early last week, and the Minister has approved most of its recommendations. Writing of the English and mathematics curricula is now well underway. Wider curriculum reform is also in train. Last week, the Ministry of Education called for nominations to write the science curriculum. Other subjects will follow. The principles the MAG recommended will guide the writers in each subject. There is much water to go under the bridge before our school system is restored to its world-beating heights of the mid-twentieth century. Many devils will lurk in the detail of implementation. Nonetheless, for the first time in two decades, we are rowing in the right direction. |
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| Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz | ||||||||||||
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We can remind ourselves that decades of poor incentives facing councils don’t build strong organisations. Who’d want the job when so much of the job is to be yelled at by central government? Change the incentives to change the game. The game’s last few innings haven’t been great. This week, a Hamilton city councillor opened a rather challenging round of Wheel of Fortune. Radio New Zealand reported on Councillor Bydder’s submission to the Waipā Council about the placement of a bridge. RNZ reported that Bydder’s submission asked, "What the f**k are you r******d s*****c c**ts doing?" Bydder stated, in his defence, that “it is the only way to get their attention.” The unredacted submission left less to the imagination – using a $ and an & in place of two of the letters. But the Bowdlerised version fit for the nation’s public broadcaster left me flummoxed. What might lie between the s and the c was a complete mystery. Had it been a real round of Wheel of Fortune, I would have been the hapless contestant staring at the letters asking to buy a “U”, while fans at home shouted obscenities at their screens, hoping to help me. Meanwhile, Wellington Council had been on form. Minister Bishop had signed off on the Council’s liberal and enabling district plan to allow for a lot more building. Spontaneous fountains from footpaths and roadways have seemed less frequent. And Council had decided to sell its share of the airport – great news in a city that needs to redirect capital for other work and faces substantial seismic risk. A shaky-day fund consisting of shares in an airport that will need a lot of work come the big shake isn’t a reliable shaky-day fund. After deciding to sell its shares, the Council started tearing itself apart, relitigating the decision. Councillors have needed the Council version of the Official Information Act to get information from officials – a situation that Local Government Minister Simeon Brown found “appalling”. Wellington Council’s long-term plan passed just as Insights went to press, but the past week has been shambolic. Not a world-class innings. But there’s still hope. A central government committed to localism will want to set the pitch for better innings to come. And at least it wasn’t a council repair crew that forgot that power pylons need nuts and bolts to remain standing. |
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