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Insights 22: 16 June 2017
Dr Oliver Hartwich: A tale of two countries - NBR
MPI defends camera quality for fisheries prosecutions - RNZ
The Overseas Catch: The state of recreational fisheries management abroad

Monetary policy needs public scrutiny
Dr Oliver Hartwich | Executive Director |
Unless you are closely following New Zealand monetary policy, you might have missed a BusinessDesk story last week. The newspaper revealed an astonishing correspondence between Reserve Bank governor Graeme Wheeler and BNZ’s chief executive Anthony Healy.

The exchange had been triggered by a preview of the Reserve Bank’s Monetary Policy Statement, prepared by the BNZ’s chief economist Stephen Toplis. In this briefing, Mr Toplis expressed his views about RBNZ policy which Mr Wheeler read as a personal criticism.

This prompted a letter from the RBNZ to BNZ effectively asking them to rein in Mr Toplis, arguing his commentary was damaging not only to the RBNZ but also to the New Zealand financial market.

It is not obvious that Toplis’ comment amounted to anything but a fair comment on monetary policy. But even to the degree it may have been critical of the RBNZ, this in itself should not be unusual or problematic.

The decisions of central banks are by their nature often subject to disagreements and strong views. In other countries, where decisions on monetary policy are not solely consigned to the person of the central bank governor, such strong disagreements happen within the banks’ respective monetary policy committees, and they are openly reported.

Central banks must be subject to public scrutiny. There may not be quite as many self-styled monetary policy commentators as there are would-be rugby pundits, but there is certainly no shortage of views central banks’ actions. And these debates are important.

Central banks have a crucial role to fulfil in our economies. This role thus deserves public scrutiny and debate. Given the RBNZ’s independence, external commentary on its actions is the most effective check on its operations.

For these reasons, it is not acceptable for the governor of the RBNZ to attempt to stymie such scrutiny. With his complaints about a bank economist, the governor has overstepped his role.

As former RBNZ economist Michael Reddell correctly pointed out, the RBNZ’s dual role as both a monetary policy body and a banking regulator means that the governor’s letter to a bank CEO carries additional weight. It could easily be interpreted as “be careful what you say; don’t upset the central bank”.

So perhaps there is one good thing coming out of this incident. It might trigger a debate on whether RBNZ’s governance arrangements are fit for purpose.

One of the problems with 21st century skills
Briar Lipson | Research Fellow |
Over the past week, TVNZ aired a series of interactive programmes exploring the future of society and work. It is an appealing idea: that in the future, life and work will look dramatically different.

In fact, so enchanting is this idea that it has been used around the world to justify changing the school curriculum: away from teaching subject knowledge and in favour of ‘21st century skills’.

The argument goes that since many of our children will one day work in jobs that we cannot even imagine, then there is little point trying to give them knowledge. This is because by the time they get into the workplace that knowledge will already be out of date. And so, in place of teaching knowledge that will become outdated, we should instead teach transferable skills such as problem solving, creativity and collaboration.

Of course we want our children to have these skills when they leave school, but there is no evidence that teaching the skills explicitly is the best way to achieve them. Indeed there is a risk that we confuse the means of education with its ends.

Research tells us that solving problems and thinking critically requires us to know facts about a subject. Facts which should be acquired throughout a child's time in school.

In the words of cognitive scientist Dan Willingham: ‘thinking well requires knowing facts…. The very processes that teachers care about most – critical thinking processes such as reasoning and problem solving – are intimately intertwined with factual knowledge that is stored in long-term memory.’

To bring this to life, one suspects that Lions coach Warren Gatland would be pretty good at thinking critically and creatively when it comes to a rugby scrum. But he may well be less skillful when asked to critique Britain’s pre-Brexit trade talks. This is not because Mr Gatland lacks skills of critical thinking, or indeed creativity: it is rather because he lacks knowledge of European trade.

It is hard to think critically about something you do not know. Equally, the more you know about a subject, the more sophisticated your thinking becomes.

As elsewhere, the movement to teach 21st century skills has gained significant traction in New Zealand. We can only hope that our teachers think critically before deciding what exactly they teach.

Police protection
Dr Eric Crampton | Chief Economist |
Tenacity is normally a virtue. But when that tenacity is in pursuit of the kind of thing that has gotten you in trouble before, it is just a bit less virtuous. The tenacious toddler’s pursuit of a forbidden cookie is cute at first, but it gets annoying pretty quickly.

Wellington’s police are nothing if not tenacious on the alcohol front. But it seems they just cannot cop a break.

Back in March, the Alcohol Regulatory and Licensing Authority effectively told the police that they needed to stop extorting “voluntary” licence conditions from bottleshops.

Police are meant to report to the District Licensing Committee on licence applications and renewals. But the Authority, on appeal, worried that police had been objecting to licence renewals simply because the licensee had not agreed to conditions the police sought to impose.

Threatening to drag applicants through the appeals process if they did not agree to the police’s preferred licence conditions looked to be an abuse of the police’s statutory reporting role.

The Authority warned that the practice risked creating the impression that they were usurping the powers of the District Licensing Committee.

Having that route blocked, the police seem to have found a new one.

This week’s Dominion Post reported that the police have been canvassing Aro Valley, warning residents that a new bottle shop there could lead to higher crime. They also provided how-to guides for residents, encouraging them to object to the bottle shop’s licence.

The Authority chided the police for pressuring licensees directly. It will be interesting to see whether this new tactic winds up as part of another appeal to the Authority.

You might say that providing people with information about how to make submissions is a healthy part of the democratic process. But when it is done on the public dime, by the police, with template letters whose only options are objections to the licence, it looks a little less healthy. If someone in the neighbourhood welcomed a shorter walk to a bottleshop, the template does not provide an option for saying so.

The police have gone past the cute phase here. The Authority’s deserved sharp critique of police behaviour seems to have changed police tactics rather than their aims. Perhaps a time-out is in order.
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