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Insights 15: 28 April 2017
The Overseas Catch: The state of recreational fisheries management abroad
NZ Listener on the housing crisis
Dr Oliver Hartwich on the state of New Zealand's economy - ABC TV

When government messes up, we all bear the costs
Dr Eric Crampton | Head of Research |
Businesses that fail as badly as government does would go bankrupt. But when government screws up, it gets more power instead. And that makes for some depressing dynamics.

New Zealand is getting a new pay equity regime.

As the Regulatory Impact Statement for the new Pay Equity and Equal Pay Bill explains, pay equity concerns are most substantial where an occupation has a dominant funder - typically, government. Elsewhere, competitive forces help ensure fair pay. Recruiters, for example, target workers undervalued by their current employers. That does not work so well when government is the primary funder.

But the draft legislation is hardly restricted to cases where there is a dominant funder. And it also provides the Employment Relations Authority with a rather difficult task: deciding which occupations are most comparable for pay equity settlements. And experience abroad suggests it will not be easy.

Things did not go well when Canada’s largest province, Ontario, implemented a far-reaching pay equity scheme in the 1980s. All firms were required to provide pay equity plans, rather than only those firms where pay equity claims had been advanced. It was not surprising then that administrative costs outstripped wage settlements for small firms.

Perhaps more surprisingly, there was no discernible effect on pay differences in Ontario.

The Ontario Tribunal that had to decide on pay equity claims had to choose which professions provided the most appropriate comparison for the group that claimed to be underpaid. The result, as one evaluation later put it, was a “litigation nightmare.”

New Zealand will face similar and substantial problems in assessing which occupations have similar skills and responsibilities, similar working conditions, and require similar levels of effort. While Treasury made the job somewhat easier by providing a hierarchy for selecting appropriate comparators, it would be surprising if New Zealand did not face litigation nightmares of its own.

In short, New Zealand learned little from Ontario’s experience. Neither Tribunals nor Authorities are well placed to set pay relativities between different occupations.

The main pay equity complaints are in government-dominated fields like health and education. Because the government did not sort out its own pay issues, the whole country is being given a regime that risks bogging down employment relations more broadly for years to come – and sets the Employment Relations Authority as adjudicator on what pay should be.

The number one step
Dr Rachel Hodder | Research Fellow |
Treating symptoms without diagnosing the disease can provide temporary relief but is not the best way to find the cure in the long run.

So it is with medicine, as it is with policy. It is difficult to solve a problem with policy if you do not know where the root cause of the problem lies.

New Zealand students are presenting with symptoms of ailing numeracy. At The Initiative, we want to diagnose the underlying cause so we can prescribe the best policy remedy to raise results in the short and long run. In particular, we wish to investigate whether teachers' numeracy abilities may be a contributing factor.

New Zealand’s flagging numeracy may come as a surprise to those who have been following recent news about soaring NCEA pass rates. Unfortunately, it seems that this NCEA success does not translate into student ability.

On international scales, the maths performance of New Zealand school students has been slipping. And many in the tertiary sector will attest to the poor maths ability of incoming students.

It is a troubling trend that warrants a policy response. However, knowing how to respond requires some understanding of the underlying cause. There are several possible contenders. Many commentators have blamed changes to education policy. But ultimately, if the teachers do not have a firm grasp of a subject, tinkering with different methods of teaching is unlikely to make much difference. 

This is not to say that a teacher needs to be a maths genius to teach students how to add and subtract. However, it is troubling that a third of New Zealand primary teachers are unable to correctly answer simple maths questions like adding fractions.

The Initiative is embarking on a series of education reports to help improve New Zealand’s education landscape. In our newest research project, we will be using data to see what has happened to the numeracy ability of teachers over time. If highly numerate people are being put off choosing teaching as a career, this should be a concern to the Government.

For a prosperous New Zealand, quality education is vital. Especially numeracy education. Curing our poor numeracy performance will require a dedicated treatment plan. Diagnosing the cause is the number one step.

Tuis, Kiwis and bus drivers
Briar Lipson | Research Fellow |
It has been two weeks since I started work in New Zealand, at the Initiative. Starting a new job in a new country, there are a few things to get used to. But I would not have guessed that the bus ride home would be such a highlight of my day.
For those unaccustomed to Wellington buses, this is what happens: Each time someone alights, they break the otherwise contemplative commuter silence and yell “Thanks driver!” all the way up to the front.
I had previously understood that the gentle Tui provides New Zealand with its sweetest song. That may be so in the animal kingdom. But the way that actual Kiwis thank their bus drivers is music to my ears.
Which is to say that as a former teacher, economist and Londoner, I am humbled by New Zealand’s good manners.
The English may be known for their politeness, but we do not always show it. Perhaps we are just too shy.
The English dilemma when riding a bus is this: Do you cast off the shackles of modesty and yell appreciations to the front of the bus? Or do you sacrifice norms of politeness to slip apologetically away into the night?
Needless to say, most of us opt for the apology-based solution such that now, you are classed a real weirdo if you bother to thank a bus driver in London.
Being in New Zealand has helped me realise that you should not think too much when it comes to friendliness. Or at least you should not let social conventions get in the way of thanking your bus driver.
As a recent arrival here, I am enchanted by this country’s egalitarian friendliness. It does not matter who you are and who you are dealing with. Kiwis invariably start from a place of openness and kinship, less inhibited by other conventions. That is a great starting point for any society.
The challenge is to transform such an egalitarianism of manners into an egalitarianism of opportunity. And that is what I will be working on at the Initiative – before catching my bus home each night.
On The Record
All Things Considered
  • Infographic of the week: British election tracker - track the parties' progress.
  • Who will buy the baby boomers' homes?
  • The price of a pint across New Zealand - how much is too much?
  • Dairy farmers unions in Canada and their statistical manipulations about supply management.
  • Will automation put truckers out of a job?
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