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Insights 7: 3 March 2017
Fair and Frank: Global insights for managing school performance
Martine Udahemuka discusses Fair and Frank - Newstalk ZB
Dr Oliver Hartwich talks immigration numbers - The AM Show

Safety first, sanity later if at all
Dr Eric Crampton | Head of Research |
This week brought furore over the thirteen thousand (or so) youths neither in education, employment or training.

Employers complained of difficulty finding suitable candidates who can pass a drug test. The Prime Minister echoed their concerns. Migrant workers, according to reports, were more likely to show up on time and pass a drug test.

The opposition asked what the government is doing about youth drug problems, if those problems are indeed so prevalent, and why so few beneficiaries subject to drug testing wind up failing those tests. And a few people sensibly pointed to the inadequacy of marijuana tests in detecting current usage - the tests can pick up use that happened weeks prior to the test.

For all of the furore, nobody has stopped to ask why there is so much drug testing.

I have a hypothesis.

Company directors are liable for substantial penalties if they cannot demonstrate that they have taken all practicable measures to ensure workplace health and safety. If on-the-job impairment is a potential health and safety risk, a company director has to show how she has mitigated that risk.

A drunk worker is pretty easy to identify. A cannabis-impaired worker would be harder to point out – or at least not reliably. If an impaired worker had an accident, and the firm could not point to having a regime in place, the directors could be in substantial personal trouble.

What is the easiest solution? Overkill. Put in a drug testing regime, easily available from health and safety consultants. The directors can then tick the box showing that a risk mitigation regime is in place. The auditors will be happy. If something bad does happen, the company can point to the testing regime to show it had taken all practicable steps to mitigate the risk.

And it simply does not matter that much to the regulators that the tests would pick up all kinds of use that imposes no risk at all.

As Bryce Wilkinson’s report on scaffolding costs last year demonstrated, New Zealand’s health and safety regime encourages a cost-heavy, risk-averse approach that has little regard for cost-effectiveness, or for sanity.

If only there were testing to check whether Parliament and Worksafe were stoned when passing regulations. Perhaps we should collect urine samples before important votes, just in case.

Social bonds neither right wing nor left wing
Jenesa Jeram | Policy Analyst |
Resistance to the social bonds pilot has essentially boxed Labour and the Greens into a corner. Social bonds (or Social Impact Bonds as they are known internationally), after all, have traditionally been introduced by left-wing governments.

I understand that the role of the Opposition is to oppose. And there is potentially much to oppose in the execution of social bonds. But opposing social bonds in principle leaves fewer options for addressing entrenched social problems.

For those who have forgotten, social bonds are an innovative way of funding and delivering social services. Last week, Finance Minister Steven Joyce announced that New Zealand’s first social bond is now operational.

So what are opponents complaining about?

Opponents worry that the first social bond is providing employment services for those suffering mental illnesses, and that the government is ‘experimenting’ on a vulnerable group.

But participation is voluntary, which means opponents probably haven’t considered that some people suffering mental illnesses might actually want these services for themselves.

Especially when those services will be tailored, based on long-term outcomes, and designed to meet their unique circumstances.

Mental health might be a sensitive area, but it is also one where the government has admitted it has under-performed. Is it really so terrible that the government is trying to find better ways of doing things, while still being prudent with taxpayers’ money?

Opponents argue that social services should be funded by government, not privately funded. But not all social service providers want government funding, or more specifically, the strings and vulnerability attached. And not all public services are delivering the social outcomes expected, or value for money.

Opponents also point out that outcomes-based contracting can lead to perverse outcomes. That much is true, and this is where the execution of the model matters. A commitment to the social bonds pilot is a commitment to improving outcomes-based contracting.

And here’s where I think the Left have boxed themselves into a corner. Their aversion to innovative policy solutions, attracting alternative sources of funding, and measuring effectiveness and outcomes leaves only one welfare policy in their arsenal: spending money.

Our work at the Initiative has never pretended that social bonds are not without complications, and we were disappointed when the “first” first social bond collapsed at the negotiation stage.

But at least this Government is committed to exploring diverse welfare solutions: not just increasing spending (especially in an election year), but measuring and funding what works best for the people it serves.

That doesn’t sound overly right wing, does it?

A robo-tax
Dr Oliver Hartwich | Executive Director |
Microsoft founder Bill Gates copped a lot of criticism for demanding an income tax for robots. That is unfair. If anything, his proposal did not go far enough.

Mr Gates is obviously right to note that robots are replacing human beings in the workplace. Some experts predict almost half of all jobs may be made redundant by technological progress. Indeed, that was the motivation for Labour’s ‘Future of Work’ inquiry.

But a blunt income tax on robots is, of course, pure nonsense. It should at least tax the most productive robots a bit more than ordinary machines. Which means the tax ought to be progressive. This would also create a more level-playing field between humans and non-humans.

Because let’s face it: not having to pay income tax is only one of the advantages of robots. Robots also do not demand tea breaks; they do not go on holiday or parental leave; they do not get sick; they do not waste their time on the web; they rarely turn up late for work or drugged (just like migrants).

In short: They possess some unfair advantages over us humans, at least as far as productivity is concerned. Having said that, robots don’t cheer you up, you can’t have a chat over a coffee with them, and they don’t contribute much to a good working environment.

But to compensate for robots’ unfair productivity advantages, taxing them away is the least we can do for workplace fairness.

Mr Gates’ proposal is also timid in another sense. Robots are not only productive in themselves. They make everyone else around them more productive too.

So a worker who could produce 10 gizmos a day can now do 1,000 by programming a robot. But what does this make the robot? Well, precisely: a tool.

And here comes the rub: If you want to tax robots because of their productivity enhancing characteristics, why not tax other tools too?

So let’s tax the hammers that make carpenters more productive! Put a levy on meat grinders that help butchers! Introduce a shovel charge for gardeners who use them!

Indeed, let’s tax anything that has ever made us more productive. Think of all the office clerks made redundant by Excel, all the steno typists no longer needed because of Word, or whole legions of secretaries whose jobs were rendered obsolete by Outlook.

Which brings us back to Mr Gates. If he wants taxes on productivity-enhancing tools, let’s first confiscate the wealth his genius has created.
On The Record
All Things Considered
  • Graph(s) of the week: Higher education compared in US and UK.
  • Quiz: Which political party do you side with most.
  • Before you comment: Read the article, take the quiz.
  • Housing: It's not just a crisis in New Zealand.
  • Man-kind to human-kind: What other words is the University of Cardiff banning.
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