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Insights 17: 12 May 2017
Dr Eric Crampton on individual freedom and personal responsibility - Radio NZ
Dr Bryce Wilkinson: Natural disaster horror stories and similar breakfast reading
The Overseas Catch: The state of recreational fisheries management abroad

Time for a New Zealand first
Dr Oliver Hartwich | Executive Director |
The September election is still a few months away but politicians, pollsters and pundits are already speculating on the outcome.

Of course, forecasts are difficult, particularly about the future. However, one thing seems certain: It will be a close race.

A continuation of the current National-led government with its smallish support partners is possible but perhaps not too likely. It is also improbable for Labour and Greens to command a parliamentary majority of their own.

Few people are yet prepared to even consider a National-Greens arrangement, and so everything points to NZ First holding the balance of power.

These are the general post-election possibilities which most observers take as a given.

There is only one problem with this list: It is incomplete.

The best option in a scenario with no outright centre-left or centre-right majority might well be a formal coalition between National and Labour.

Of course, I know that many readers will object instinctively at this point. A National-Labour coalition would never, ever work, they would say. The personalities are too different. The two parties are both competing for the centre ground. It would tear them apart.

That is all correct – except that the very same objections were made in Germany before their 2005 election.

Back then, Angela Merkel’s Christian Democrats entered their first Grand Coalition with the Social Democrats. It was the government which steered Germany through the GFC.

Merkel later presided over a more traditional, smaller coalition between 2009 and 2013. For the past four years, she has formed yet another Grand Coalition – and we might well see a continuation after Germany’s own election in September this year.

None of this is to say that Germany’s Grand Coalitions are perfect (they are not). But they show that two parties which traditionally regarded each other as archrivals can work together if there is the political will to do so.

New Zealand once borrowed its electoral system from Germany, so why should it not also import its Grand Coalitions? Not as a permanent fixture but as a temporary fix.

Over the next parliamentary term, many tough nuts need to be cracked, chief among them the overhaul of our planning laws. What better way to go about such seminal reforms than with a large majority?

The year 2017 could be the time for a true New Zealand first: a Grand Coalition.

Social investment is about changing lives
Jenesa Jeram | Policy Analyst |
“Too often, past governments have judged success only by what they spent, rather than what difference that spending made to people’s lives. Yet changing lives is the whole point.”

Prime Minister Bill English did not shy away from acknowledging past government failures in his pre-Budget speech last week. With a focus on social investment, English was sending the message he had already made many times as Finance Minister: it is not the spending that matters, but its effectiveness.

If you ever get bogged down by academic debates and political commentary around social investment, the above quote is worth keeping in mind. The simplest understanding of social investment is that it refocuses success from measuring spending to measuring results.

It is important to keep that in mind, because the more you look into social investment, the more complicated and nuanced the public debate gets.

The most novel aspect of social investment is the use of data to identify those most likely to suffer poor life outcomes in order to target and tailor social services. Data will also be collected to measure effectiveness in order to identify the programmes that make a real difference, and those that do not.

Social investment is not without its sceptics. One critique is that reducing society’s most vulnerable to fiscal costs and data points is dehumanising and lacks empathy. Critics see a data-driven approach as potentially ignoring the complexities of people’s lives.

But effective social policy cannot be based on good intentions alone. And it is difficult to see how the new approach is any less empathetic than the current approach of the government spending money then turning its back.

The difference between social investment and older approaches is that now both the government and public will know when things are not working and whether unintended consequences are emerging.

Besides, analysts might be knee-deep in data, but they will not replace the hard-working and compassionate people working on the frontline.

There is, of course, much more that could and should be said about social investment. And much more to be done to really see the approach move from theory to practice. The Initiative will be discussing both in the coming months.

In the meantime though, it is easy to see why it is not just data nerds talking about social investment, but anyone who believes New Zealanders should be served better in their times of need.

Competition matters
Dr Eric Crampton | Chief Economist |
The Commerce Commission is nothing if not clever. While it kept everyone busy watching for its rulings on media mergers, it quietly cornered the market on competition policy conferences.

I wonder whether it’s time to break things up a little.

The Commission’s 2017 Competition Matters conference has a stellar line-up – and a price that more than matches it.

The Early Bird price for the two-day conference is $1175, with a $1295 fee for later registrations. If we take a perfect competition benchmark, this kind of price discrimination would be impossible. And any difference between blackboard models and the real world suggests something foul is afoot. Something in need of investigation – and potentially action.

The programme lists two parallel sessions of speakers. Has the Commerce Commission inappropriately merged what could have been two separate and competing conferences?

Even worse, there is evidence that New Zealand’s Commerce Commission has colluded with Australia’s in this anticompetitive activity. The Australian Competition and Consumer Commission (ACCC)’s Commissioner, Roger Featherston, will be presenting with the NZ Commerce Commission’s General Manager for Competition, Antonia Horrocks, in a panel session inappropriately tying the two separate conference streams together.

Quis custodiet ipsos custodes? Who ensures the Competition Commission is not behaving anticompetitively? What agency might break up their cartelised conference so competition consumers might have more affordable seminars?

Just think about the policy issues that could come up without the monopoly stranglehold on competition conferences.

An education session could cover the government’s near-monopoly, and the teachers’ unions’ role in stymieing competitors. The Productivity Commission tells us that tertiary education regulation creates market power, local monopolies, and cartel structures: the kinds of things that the Competition Commission is elsewhere supposed to stop.

Another session could stress the importance of not letting the Retailers Association use a lower GST threshold to block potential competitive parallel imports through non-tariff hassle barriers at the border.

There could be a plenary session on the effects of the government monopoly on kiwifruit export.

And imagine applying competition policy to politics. If National starts looking too dominant, maybe ComCom should unwind the inappropriate 1936 merger of the Reform and Liberal parties. Tell me with a straight face that coalition agreements are anything other than illegal cartel arrangements.

In a world of competitive Competition Policy conferences, these kinds of topics might get a reasonable airing.

It’s time to break the monopoly.
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