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| Dr Benno Blaschke | Research Fellow | benno.blaschke@nzinitiative.org.nz | ||||||||||||
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But a council can only borrow so much: about two to three times what it collects in a year. Once it hits that limit, it can no longer pay, so it uses its planning rules to say no. When land to build on is scarce, prices climb. Those who buy homes for the first time pay that price, if they can afford it. Others are locked out. Money flows to whoever happens to own the right field. There is another way to pay for the pipes and roads upfront: investors lend money. Those who move in pay them back slowly, through a small charge on their homes, like a mortgage for the pipes. The debt would sit with the project, not the council. The difference comes down to who loses money if things go wrong. Under the current way, ratepayers and taxpayers carry the loss. Under the alternative way, investors who backed the project would face the loss, and no one else. We used to pay for infrastructure this way. For most of the last century, a community could vote to tax itself, borrow the money and build. Harbour boards and power boards did it; roads and pipes were also built this way. If a project failed, lenders lost money, not the ratepayers or taxpayers. Then, between 1989 and 1996, we shut it all down. In 2020, Parliament brought the idea back. Yet, six years later, only three projects have used it. A contradiction at the heart of the model explains low uptake. The government has one foot on the accelerator: underwriting the model so investors will lend, retaining decision rights, and getting financially involved. But government also has one foot on the brake: routing every project through Cabinet with so many checks and costs that only a few large projects can afford this. The way out is a finance model that can let a project fail without hurting others. If one runs into trouble, the taps keep running for those already bought in, while investors take the loss. Build that, and the government can take its foot off the brake. My report, Finance Freedom, shows how. We knew how to do this once, and it built much of the country. To give people homes they can afford, we need to do it again. Explore Benno's research through our new research report, our NZ Herald column and our podcast. |
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| Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz | ||||||||||||
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Last week, Labour obliged. It would cap public transport fares at $20 a week in the big cities, and $10 everywhere else. Two numbers came attached: a cost of $65 million a year, and an average saving of $25 a week. So, I reached for a calculator, and that is where the trouble started. The announcement caused a bit of confusion in our office because there is more than one way in which you could read the policy. The first reading is small. If the saving really is $25 a week, then $65 million stretches to about 54,000 people, or one New Zealander in a hundred. A modest scheme for a lucky few. The second reading is enormous. Labour says 1.3 million people ride public transport each year, and if they all saved as promised, the bill would not be $65 million but well over a billion. On that reading, the $65 million is not a budget at all. It is a down payment. The third reading sits somewhere between the two, and it turns on figures Labour never gave us. How many drivers will switch to the bus, and how many riders already spend enough to gain anything? Nobody outside Labour can say. Three readers, three answers. We could not agree on what the policy was, let alone whether it was any good. The reason is simple. Labour gave a headline and kept the workings. No model, no spreadsheet, no table of who saves what and where. In fact, not even a problem definition. Without those, you cannot argue with the policy. You can only guess at it. Consider one mystery. Each morning, two trains pull into Wellington station. The one from Masterton carries commuters who would save thousands a year. The one from Palmerston North carries commuters who get nothing, because their line is “inter-regional”. Same city, same station, different outcome. Is that the plan or an accident? Nobody can tell, because the paper that would explain it was never written. Had Labour written that paper, it would have caught all this. Writing a policy down is how a party finds out whether it works. Commentators asked Labour for policy. But Labour only gave us a press release with a dollar sign on it. Parties that want our votes owe us their workings, not just their answers. |
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| Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz | ||||||||||||
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In the film’s world, nothing could be done without the correctly numbered bureaucratic form. But procuring the right form was almost impossible. Even officials enforcing compliance with the required forms needed their own correct forms. The heroic Harry Tuttle had little use for forms. He left the stifling bureaucracy, determined to fix air conditioning systems when they needed to be fixed – forms be damned. It didn’t end well for him, or for anyone. His world was too far gone. Ours might be too. New Zealand is also a place where nothing can be done without the proper form. And if the proper form does not exist, the thing simply cannot be done. Last week, Christchurch hot-sauce makers SpicyBoys explained their little slice of Kiwi dystopia on LinkedIn. They’ve started making a Chilli Gin to go along with their hot sauces. They have been able to get special licences to sell their gin at a couple of local farmers markets. But they also want to sell it online. The Sale and Supply of Alcohol Act did not envisage such a thing for a business like theirs. And so, it cannot be done. Selling alcohol as a manufacturer from your premises is allowed under section 32(1)(d) – if your principal business is the manufacture of alcohol. But their principal business is hot sauce. Selling remotely is possible under section 32(1)(c) if at least 85% of your income comes from the remote sale of alcohol. But again, their principal business is hot sauce. In principle, they could set up a separate gin-only business. But remote sales provisions are a subset of off-licence rules, which bring in premises-location requirements. Christchurch’s Local Alcohol Policy (LAP) forbids new off-licences in their area. The LAP allows an exemption if the primary purpose of the business is not the sale and supply of alcohol. But a licence under either 32(1)(c) or (d) requires that the main business is alcohol. I explained the problem at Select Committee last week, where revisions to the Sale and Supply of Alcohol Act were being considered. It was recess week. The room was empty, barring stenographers; MPs attended by Zoom. Without people in the room, it was hard to tell who, if any, cared. The correct form for escaping dystopia does not exist. |
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