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Insights 40: 20 October 2017
The benefits of WorkSafe's programme do no stack up, writes Dr Bryce Wilkinson for the NBR
Daniel J Mitchell: What Trump's policies mean for New Zealand
Read Eric Crampton's essay on why New Zealand is an island of sanity in a mad world

A shoddy tale of irresponsible regulation
Dr Bryce Wilkinson | Senior Fellow |
A NZIER report released this week discredits a WorkSafe NZ safety programme that started in November 2011.  The programme aims to reduce workplace falls from heights of below 3 metres.
We all agree that safety is important. So is cost. Anyone who cares about safety has to care about the cost of achieving it. Otherwise they fail to spend where the safety gains are greatest.
The cost increases are material. A Kapiti Coast builder told us that campaign had needlessly turned a $4,000 roofing job for an elderly lady into a $6,000 cost. A BRANZ study in 2014 put the (discounted) cost to the community at $1 billion over 25 years.
The NZIER assessed the programme’s costs to exceed its benefits. Our July 2015 research note, A Matter of Balance: Regulating Safety, anticipated such a finding. It calculated that much greater safety gains could be obtained by improving road safety.
There are unintended consequences. Higher costs make housing less affordable. Poorer owners in particular will defer necessary maintenance, and more homes will be unhealthy. Some owners will become unsafe ‘do-it-yourselfers’.
Such considerations should be assessed before setting out to commander $1 billion of other people’s money. In a January 2015 article, we asked whether officials had done this. We found they had not. To impose such costs regardless is irresponsible.
Our 2015 angst turned into disgust following an OIA inquiry this year to MBIE.
First, it revealed that WorkSafe misrepresented our report in dismissively briefing its Minister in June 2015. It did not even tell him that a key concern was the absence of a proper evaluation before November 2011.
Second, we know now that the NZIER was planning to finish its analysis by November 2015. Why the delay? How much has it cost the community and whom is accountable?
Ministers cannot hope to make well informed decisions if officials do not even attempt to get the analysis right, and disparage the efforts of those who do.
Officials have let the community down badly. It should not happen again, but it will. Rigorous evaluations before launch should be mandatory.

Congratulations, New Zealand
Dr Oliver Hartwich | Executive Director |
Almost a month after the election, New Zealand is about to have a new government.

Yes, other countries take longer to negotiate coalitions. But it was the uncertainty arising from parallel negotiations which made our post-election haggling an agony. It is good it is over.

Congratulations to Prime Minister-designate Jacinda Ardern. Coming out of relative obscurity, she had promised the campaign of her life. She delivered it. Ardern first gained her party the support of almost 37 percent of voters and then also of Winston Peters. She can take credit for one of the most astonishing turnarounds in political history and now has a parliamentary mandate.

Labour has made it clear that solving the housing crisis will be at the top of their agenda. We could not agree more. We are glad Labour has adopted many of our housing recommendations. But we also hope that the new government will tackle the inequality in education outcomes and reform local government. If they still need any ideas, they can find them in the Initiative’s Manifesto 2017.

Congratulations, too, to outgoing Prime Minister Bill English. Many commentators had written him off after his bruising defeat in 2002. He, however, returned strong and determined. As Minister of Finance, he was the policy master of the National-led government since 2008.

As Prime Minister, running for a historic fourth term, English secured a strong election result of over 44 percent. This success did not translate into a mandate thanks to the MMP electoral system. But it remains his achievement after a spirited, and often single-handed, campaign.

New Zealand owes English a debt of gratitude. Without him, New Zealand would not have weathered the storms of the Global Financial Crisis and our natural disasters as well as it did. A look across the Tasman reveals how different our public finances would have looked under less competent management.

English also deserves credit for one of the most innovative policy ideas in recent times. The Social Investment Approach may still be in its infancy but this whole-of-government strategy of tackling social problems early has great promise. The new government should build on it.

Ardern and English deserve praise for their dignified statements last night. When they paid respect to each other, there was no doubt they meant it. Both enjoy a reputation of being personally decent and grounded. Their genuine humility in victory and defeat respectively underlined it.

New Zealanders can be proud that after an agonising month of politics, our political culture eventually delivered a dignified transition of power. It is testament to the strength and vitality of our democracy and institutions.

So congratulations, New Zealand. And our best wishes to the new government. Its success will be New Zealand’s.

Long live the interregnum
Dr Eric Crampton | Chief Economist |
If no person’s life, liberty or property are safe while Parliament is in session, what’s the rush to have a new government?

As I write this column, no coalition has been struck. Journalists stake out Parliament’s parking garage trying to divine the will of Winston from cryptic hints he might there provide. And if you took the newspaper headlines too seriously, you might think that New Zealand would sink under the ocean if coalitions weren’t formed by whatever date Winston teased about.

But everyone else simply got on with life.

The morning after the election was beautiful. Smiling people strolled along Wellington’s sunny waterfront, almost as though having a Prime Minister were not that important for anything that matters.

And while nobody has yet figured out the causal mechanism behind it, even the weather has been better since we stopped having a Prime Minister. I count about four good days for every terrible one since the election. We know you can’t beat Wellington on a good day, but it’s rare to have those good days in September and October. Since we stopped having a Prime Minister, they’ve been the norm.

Even political tragics could have been happier with the lack of result: the sorrow of losing outweighs the joy of political victory, and neither of the main parties had to reckon with defeat.

And those sceptical about government full-stop have been able to pretend we have none. Sure, the administrative state continues churning away in the background. But it is on auto-pilot. And auto-pilot can be a nice option when the broad policy settings are already basically right.

Outside of that locked and empty cockpit, people argue about daft things like whether it might be a good idea to break the aileron controls by requiring the Reserve Bank to target exchange rates rather than just inflation. The longer that door stays shut, the safer we all are.

The interregnum cannot last forever; the auto-pilot cannot land the plane. Broken policies around housing must be fixed, and Ministries and Councils cannot do that on their own.

But we should enjoy the reprieve from government while it lasts – and hope for more sunny days ahead.

Eric wrote this earlier this week. He stands by his statements.
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