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Insights 18: 19 May 2017
Dr Eric Crampton - Immigration and unemployment - Newstalk ZB
 
Fran O'Sullivan: Kiwi bosses set off in search of secrets behind Swiss success
 
The Overseas Catch: The state of recreational fisheries management abroad

Asset sales and fiscal trevails
Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz
Infrastructure financing can be tough for fast-growing councils hitting up against their debt limits. When interest payments, as a fraction of expenditures, are up against the cap, new borrowing for infrastructure has to quickly provide a return that offsets the interest costs.

Auckland’s inability to lay out infrastructure to meet the needs of a growing city largely come down to problems with financing and those interest limits. Council asset sales, and central government assistance, are both worth considering.

The macroeconomic effects of Auckland’s housing crisis are felt throughout the country. If Auckland could better accommodate growth, central government would reap the resulting income tax and GST revenues.

Immigrants pay more in tax, on average, than they receive in government services – but those estimates do not include the infrastructure costs that fall on local government. If Auckland’s infrastructure mess forces central government to close the door on immigration, that could easily be to the long-term detriment of central government finances.

But councils coming cap-in-hand to central government for help face a fair bit of scepticism for the simple reason that councils have not been making some of the harder choices necessary to finance their own growth.

During the Christchurch earthquake recovery, some of Christchurch City Council’s pleas for more central government funding rang a bit hollow. National campaigned in 2011 on a programme including partial privatisation of state-owned enterprises to help fund other programmes. Meanwhile, Christchurch Council refused to consider privatisation of Lyttelton Port of Christchurch or a host of other Council-owned assets.

From a central government perspective, some of the calls for help sounded a bit like your kid asking for financial help while refusing to replace his flashy car with a more thrifty model – after you have already traded yours in.

Phil Goff’s willingness to consider partial privatisation of the Ports of Auckland is then a very welcome first step. But Auckland Council could be bolder. The land under Auckland Council’s golf courses alone is worth over a billion dollars. Selling that land for housing development would not just provide more houses. It would also provide funds to service further intensification and further greenfield development.

And if Auckland were doing its share, we would hope that central government might consider doing its bit as well by passing on some of the benefits it receives from a thriving Auckland.


Show me the evidence
Martine Udahemuka | Research Fellow | martine.udahemuka@nzinitiative.org.nz
The football season has begun. Not the FIFA cup, but the political football that is education.

And when it comes to the fate of partnership schools, the Labour team’s position has been ambiguous, at best. The survival of these schools, if Labour gets into Government, has been changing from one day to the next, and from one member to the next.

Two Sundays ago, Labour list candidate Willie Jackson, who helped set up a partnership school, suggested that Labour would keep the schools open but may call them something else.

When pressed two days later, party leader Andrew Little could not confirm if his policy to abolish partnership schools would see Jackson’s school shut.

By the following Sunday, Little sounded more convinced of his position: Partnership schools that teach the New Zealand curriculum and employ registered teachers might be safe, and Jackson’s school meets these standards.

But all of these exchanges have distracted from a fundamental question that was implied, but not discussed in detail.

Are partnership schools actually delivering on their promise to deliver better academic outcomes than state schools?

The test is simple. For each partnership school student, there are many others like him or her in traditional state schools. Students from both types of schools can be matched on circumstances known to contribute to achievement, and then their progress can be tracked.

Student achievement results at the end of the year would show whether the partnership school student had kept pace, lagged, or outpaced when compared to similar students.

And if the results show that the schools are doing a better job for students, the next question should be ‘why’? To answer this, factors that make the two types of schools different, such as funding mechanisms, teaching resources, and curriculum choice need to be considered.

These are empirical questions yet to be answered.

One could argue that, ultimately, the long waitlist for places in the schools are testimony to their success. But parents who value academic progress deserve better information to help them make these critical schooling choices.

If the core goal of our schools is to give all students the best possible education, then surely it pays to first find out how current providers are faring before discussing who stays and who goes.


Beating a dead gift horse
Dr Rachel Hodder | Research Fellow | rachel.hodder@nzinitiative.org.nz
You should never look a gift horse in the mouth. Nor should you publicly bag the gift horse and accuse it of causing misery across the country.

Surely everyone would agree to that. If someone is giving you money, you don’t insult them, you get on your knees and lick their boots.

It is therefore baffling that there has been such a hubbub when Associate Housing Minister Alfred Ngaro said something to that effect.

Ngaro threatened NGOs to not play politics with the Government. “We are not happy about people taking with one hand and throwing with the other... If you get up on the campaign trail and start bagging us, then all the things you are doing are off the table. They will not happen”

He, like many good Government faithful, are sick of people talking endlessly about this make-believe housing crisis.

If all these homeless people really want somewhere to live, they should build the darned house themselves. It is not like there are any regulatory barriers stopping ordinary Kiwis getting into an appropriately zoned, resource consented, building code compliant, council approved house of their own.  

But really, what is so wrong with refusing to give money to someone who bags you? You would not return to a supermarket if the cashier called you mean names. You would not give money to beggars who hurl abusive slurs at you. Is it so much for the Government to ask that the organisations they give money to also toe the party line?

Ngaro later backtracked from his earlier stance. He clarified that he only meant that NGOs should be “mindful” of how criticism of the Government might affect their working relationship.

See? Totally reasonable. If Government is giving you something, it is only reasonable that you are mindful not to criticise it.

Indeed, everyone should be a bit more mindful of criticising Government. How will that affect our working relationship when we use the roads, schools, hospitals, and all other myriad services it charitably bestows upon us? It would certainly make it easier for IRD if their ‘customers’ were more appreciative.

There is no reason for Ngaro to apologise. If anything, the public owed the Government an apology for how ungrateful it has been. We will be sure to be mindful of what we owe them come election day.
 
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