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| Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz | ||||||||||||
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With these words, Treasury Secretary Iain Rennie signalled a welcome return to sound economic principles in his speech launching the draft Te Ara Mokopuna 2025, the Treasury’s Long-term Insights Briefing on how to manage government finances sustainably. The Treasury is returning to its role as guardian of public funds. They even suggest supplementing its work with an independent fiscal watchdog. After years of shifting away from careful economic analysis, this change is overdue. What stands out in Rennie’s speech is the clear focus on sustainable government finances. He emphasises keeping debt levels manageable to provide flexibility for future crises. The message is refreshingly straightforward: New Zealand must spend less than it earns “on average over time” and build up savings between economic downturns. This marks a deliberate shift. Treasury now correctly recognises that interest rates (managed by the Reserve Bank) should usually handle economic ups and downs, with government playing a supporting role only when necessary. The Initiative has expressed concern about Treasury’s less-than-rigorous approach for several years. We had noted a worrying move away from routinely assessing the costs and benefits of government spending. Most concerning was the sense that Treasury’s methods were becoming disconnected from its primary purpose. A framework that covered too many bases risked failing to properly evaluate whether spending proposals delivered value for money. The draft briefing addresses many of these concerns. It shows a renewed focus on financial rigour backed by solid analysis rather than aspirational language. Treasury’s honest assessment of our debt situation is especially welcome. Acknowledging that New Zealand has spent roughly 10% of GDP per decade responding to crises provides a clear benchmark for responsible financial management. Most importantly, the briefing emphasises that government responses to crises should be “timely, temporary and targeted.” Economists have long recommended this practical approach as essential for effective government action. Rennie’s experience during the reform era brings valuable perspective to today’s challenges. His willingness to speak plainly about difficult choices shows the kind of clear-headed analysis New Zealand needs. If maintained, this renewed focus on economic discipline will make New Zealand resilient against future shocks. It will also help ensure that taxpayer money is spent where it can do the most good. That is something all New Zealanders should welcome. |
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| Dr James Kierstead | Research Fellow | james.kierstead@nzinitiative.org.nz | ||||||||||||
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One aspect of social cohesion is cooperation. Studies have repeatedly shown that ethnically diverse societies are worse at some types of cooperation, especially when it comes to providing public goods. A public good is one that everyone can enjoy even if they haven’t helped provide it. Security is a common example. As long as there are enough soldiers to defend the borders, I don’t have to lift a finger to enjoy the security they’ve provided. People who enjoy a public good without contributing are called ‘free-riders.’ One way that societies can discourage free-riders is through social sanctioning: giving free-riders a bad reputation, withdrawing personal favours, and so on. Research by Georgetown economist James Habyarimana has suggested that these dynamics can help explain why diverse societies can struggle to provide public goods. During his fieldwork in Uganda, Habyarimana found that people tended to socialise with those of the same ethnicity. That meant it was easy for them to apply social sanctions to co-ethnics, but not to individuals of other ethnicities. That, in turn, meant that cooperating with people of other ethnicities offered free-riders an opportunity. If they were collaborating with co-ethnics, free-riders would fear incurring social sanctions from friends and family. If they were working with people of other ethnicities, though, they had less reason to care, since those people were unlikely to be part of their social world. Habyarimana’s research not only identifies why social cohesion can be lower in diverse societies, but also suggests how it might be enhanced. If social networks are what’s crucial for cooperation, all we have to do is make sure that our social networks cross racial boundaries. That, of course, is easier said than done. The Helen Clark Foundation report found that only 64% of New Zealanders (compared to 81% of Australians) saw their local area as ‘a place where people from different national or ethnic backgrounds get on well together.’ On the other hand, the Initiative’s 2017 report The New New Zealanders found that we have relatively little residential clustering by ethnicity. That might make it easier for us to take some easy steps towards greater social cohesion by simply connecting more with neighbours – especially those that look or talk differently. |
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| Nick Clark | Senior Fellow | nick.clark@nzinitiative.org.nz | ||||||||||||
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Yet Easter can be a trap for the unwary. This evening, people will be going to bars and restaurants and the supermarket, and you will be able to purchase alcohol like any other day of the week. And then tomorrow, Friday, you won't. Then, on Saturday, you will. But on Sunday, you won't. You can have a tipple with a ‘substantial meal’ – not just a bowl of fries or a hot cross bun. You must be in and out within two hours in case, heaven forbid, someone has a drink while not eating. The law varies across the country. It can be a confusing mess of contradictions. It is a bizarre arrangement. Why is it that on Good Friday and Easter Sunday, different rules regulate how alcohol can be served than on other days of the year? It seems to be a hangover of a bygone era when most New Zealanders identified as Christian and desired to preserve Easter's sanctity. But as a country, we are no longer so devout. At the 2023 Census, 52% said they had no religion. Only 32% identified as Christian. Rather than church attendance, people these days are more likely to indulge in egg hunts and egg painting. Many attempts have been made to liberalise Easter trading, including a recent Members’ Bill by ACT MP Cameron Luxton. His Bill, and others, have come unstuck in the form of an (un)holy alliance between the religious and the unions, who fear that relaxing restrictions on Good Friday and Easter Sunday will result in more places being open and more people being ‘forced’ to work. Labour MP Kieran McAnulty, who is Catholic, has played Easter Bunny and come up with a compromise. His Members’ Bill, which passed its first reading last week, would allow licensed businesses already permitted to open on ANZAC Day morning, Good Friday, Easter Sunday and Christmas Day to sell alcohol under their usual licence conditions. Mr McAnulty’s Bill is common sense and it will make a difference. However, it falls short of the liberalisation needed. Why not relax all Easter trading and compensate workers so they are better off for working on these holidays if they choose? But in the meantime, enjoy an Easter egg with your friends and family and raise a glass (if you can) to some sanity. |
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