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Insights 33: 6 September 2024
Submission: Dr Eric Crampton: Consultation Paper Retail Payment System
 
Newsroom: Dr Oliver Hartwich on Germany's far-right political surge
 
Webinar: Dr Tony Burton: Demystifying the State, 10 September 2024
Uber ruling: driving in the wrong direction
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
Last week, an Uber driver surprised me in a conversation about the recent Court of Appeal decision classifying four Uber drivers as employees rather than contractors. 

My driver was blunt. He has no desire to be an employee. He values his flexibility to take breaks and drive when and where he wants. In his view, the four plaintiffs who sued Uber were “ruining it for every other driver who values their flexibility like me.” 

His views highlight the disconnect between the Court’s recent ruling and the realities of modern work. The ruling goes far beyond Uber, potentially undermining the foundations of flexible work arrangements that have become vital to many businesses. It could have far-reaching consequences for other businesses in New Zealand, many of which may now need to reassess their worker classifications. 

The Court’s decision displays a worrying detachment from economic realities. It ignores the importance of flexibility in the modern workforce – not just for companies dealing with their workload but also for people working for these companies as it suits them. 

The government recognises these issues. The National-ACT coalition agreement outlines the government’s aim to maintain the status quo for workers who explicitly sign up for contracting arrangements. They want to ensure these contractors cannot challenge their employment status in the Employment Court. 

This part of the coalition agreement has become more urgent following the Court of Appeal's decision. Fortunately, in its Q3 2024 work programme, the government indicated that a law change in this area will be on the cabinet’s agenda in the coming months. 

A clarification of the status of contractors makes sense, and not just to protect flexible arrangements. It would also spare the Court of Appeal embarrassment should the Supreme Court not concur with its reasoning and repeal the decision. 

Employment relationships always require a ‘duty of loyalty’. But such a loyalty is hard to see where drivers routinely choose which jobs to accept from different platforms. The Supreme Court might review this and then reject the idea that such contractors are employees. 

By clarifying the legal status of contractors, the government can provide the certainty needed for businesses to innovate. It can also enable workers to choose the employment arrangements that best suit their needs.  

The economy certainly needs more flexibility in labour markets, not less. 
Government ownership: full, partial, or neither?
Dr Bryce Wilkinson | Senior Fellow | bryce.wilkinson@nzinitiative.org.nz
Local councils and central government are in some financial difficulty. They own and operate many commercial assets with mixed objectives and mixed success. 

What might they be doing differently?  

It is a topical question. In December 2023, BusinessDesk’s headline of an article by Pattrick Smellie read: “A Stampede of Local Government Asset Sale Proposals”.

Wellington City Council is debating selling its 34% shareholding in Wellington Airport. 

Auckland Council has sold 7% of its shares in Auckland Airport and its Mayor has proposed leasing the city’s port. 

Other city and regional councils are already considering such options.  

There are two broad questions: “When is it optimal for a council or central government to own an asset in full or in part?  And if it should own one, should it also operate it, or should that be contracted out? 

Deliberative public discussion of such questions is commonly difficult. It is a threat to those whose approach is primarily ideological. 

Yet only cranks would argue that government should own everything, or nothing. So, reasoned debate should be possible about where the ownership line would best be drawn between these extremes.  

That line can change over time because circumstances change.  The passions and circumstances that drove the original asset decisions might be long past. For example, the case for state-owned media is far less obvious today. The public has local and world news and commentaries at their fingertips. 

For the economist, the issue is about how ownership affects incentives. Politicians have different incentives from private owners. So do government agencies.  

These differences matter. For example, government ownership creates a conflict between its ownership interests and its regulatory responsibilities. It should not play favourites as a regulator, but its ownership interests almost ensure it will. 

Private ownership is also self-interested. Adam Smith eloquently pointed this out nearly 250 years ago. Against this was his critical ‘invisible hand’ insight; customer choice forces self-interested suppliers to provide value for money – if they want repeat business. It is competition that provides choice. 

The sound bite is that ownership matters, but customer choice matters more.  

Government ownership should be reassessed as circumstances change. Councils and governments should be encouraged, not abused, for reviewing what assets they should own and operate.  
Commerce Commission’s green crusade
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
No longer content with only overseeing human enterprises, the Commerce Commission has set its eyes on perfecting New Zealand’s flora and fauna. 

“We have found unfair advantages in New Zealand’s ecosystems,” said a Commission spokesperson. “It is time to level the playing field in our natural world.” 

First target: the silver fern. “There is an imbalance in national symbol representation,” the spokesperson explained. “We will enforce a quota system for fern species. No more forest monopolies!” 

The kiwi is next. Its night habits give it an edge in the worm market. “All native birds must follow an approved foraging schedule,” said the spokesperson. “No species should have an unfair food advantage.” 

Marine life is not safe either. “Some fish have too much access to good reef spots,” the spokesperson argued. “We will rotate coral hideouts. No more underwater land banking!” 

Plant life faces new rules too. Trees must account for their oxygen output and carbon dioxide intake. “This is gas market manipulation,” the spokesperson said. “We will conduct an extensive market study in this area.” 

The spokesperson continued, “We have noticed the Pohutukawa’s dominance in coastal areas. It is time to give other trees a fair chance at sea views.” 

Bees are not exempt. “Their monopoly on pollination services is concerning,” the spokesperson noted. “We will introduce other insects to the market to promote healthy competition.” 

The Tuatara’s longevity is under scrutiny. “Living for over 100 years gives them an unfair advantage,” said the spokesperson. “We are considering age limits to allow younger species a fair shot.” 

Even the weather is facing regulation. “Some regions get too much sunshine,” the spokesperson observed. “We will be redistributing cloud cover for a more equitable climate experience.” 

The Commission is also targeting New Zealand’s geothermal activity. “Rotorua’s dominance in the hot spring market is problematic,” the spokesperson stated. “We are exploring ways to ensure all regions have access to bubbling mud pools.” 

As nature adapts to these changes, many wonder if the Commission has gone too far. But they are just applying proper planning for natural outcomes as they do in other markets. In this way, they are determined to make a difference for New Zealand. 

In this new world of eco-rules, New Zealand’s wildlife will survive by following Commission guidelines. 

Who knows? We might even see Moa again. But it might first have to overcome barriers to entry.  
 
On The Record
Initiative Activities: ​
 
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