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Insights 14: 29 April 2022
Newstalk ZB: Many students leave school without basic skills, says Michael Johnston
Podcast: Oliver Hartwich on climate change corporate welfare
Newsroom: Eric Crampton says getting to Net Zero is more costly than it needs to be

A victory for democracy?
Roger Partridge | Chairman |
A week is not just a long time in politics. It is a long time for democracy.

Last Friday, Attorney-General David Parker released his advice on the Rotorua District Council’s proposals to rearrange local voting rights. The proposals found their way into a Government bill that passed its first reading earlier in the month.
To strengthen Māori representation on the Council, the bill proposes changes to the way the Council’s ten members are elected. Three would be voted for by voters on the general roll. Three would be elected by voters on the Māori roll. The remaining four would be voted for by all voters, whether on the Māori or general rolls.

However, there are only 21,700 voters on the Māori roll for the three Māori ward seats but 55,600 on the general roll for the three general ward seats. Consequently, voter representation under the proposed arrangements would not be proportional.

As Attorney-General, Parker was obliged to advise the Government on whether the bill is consistent with the rights and freedoms affirmed by the New Zealand Bill of Rights Act 1990.

Not surprisingly, he concluded it was not.

Section 19 of the Bill of Rights affirms the right to freedom from discrimination on the grounds set out in the Human Rights Act. Ethnicity is a prohibited ground of discrimination under s21 of that Act.

Parker’s conclusion that the bill’s distinction between voters of Māori and non-Māori descent was discriminatory was unavoidable. The bill favours voters of Māori descent because the number of elected Māori ward members would not be proportionate to the Māori electoral population.

But this conclusion was not the end of the matter. Where a bill infringes the Bill of Rights, it is still permissible if the infringement can be “demonstrably justified in a free and democratic society.”

However, based on the information available to him, Parker considered the provisions of the bill failed to meet this threshold. Instead, he concluded there “may be alternative representation options that limit the right to freedom from discrimination to a lesser degree, whilst still achieving proportional and fair representation.” A Māori ward with seats proportionate to the Māori electorate population is the most obvious alternative.

On Tuesday this week, the Deputy Prime Minister, Grant Robertson confirmed that the bill would now be “paused and reassessed.”

With the Attorney-General concluding that the bill “detracts from the key constitutional principle of equal representation in a representative democracy,” the pause should be indefinite.

The “Revolution” in economic thinking
Dr Dennis Wesselbaum | Senior Lecturer, University of Otago |
Revolutionary economic policies used to be reserved for centre-right politicians.

The Zeitgeist was best expressed by Ronald Reagan: “We've gone astray from first principles. We've lost sight of the rule that individual freedom and ingenuity are at the very core of everything that we've accomplished. Government's first duty is to protect the people, not run their lives.”

Accordingly, the Washington Consensus on economic policy set the stage for a free-market paradigm and decades of human flourishing. According to Our World in Data, 1.9 billion people, 36% of the world’s population, lived in extreme poverty in 1990. By 2015, only 730 million people, or just under 10%, did – despite population growth.

But the more recent Zeitgeist holds that mainstream economic policy thinking is failing and a “New Economics” is needed – an economics that discredits GDP, increases taxes on the wealthy, provides more social transfers, and creates a circular economy.

Productivity Commission Chair Dr Ganesh Nana tells us that GDP is “not a great measure of anything useful”. Ministry of Primary Industries Chief Economist Dr van den Belt calls herself a “GDP-growth sceptic”. MBIE Chief Economist Donna Purdue says that Doughnut Economics (a concept which balances achieving twelve social foundations while not exceeding planetary boundaries) is urgently needed.

It also appears that New Economists view economics as encompassing a single dogma. On the contrary, economics is a discipline that includes many schools of thought.

Even more frustrating is that New Economists do not have a (mathematical) theory that can be debated in detail or tested empirically. Doughnut economics or “systems thinking” are examples of this. Even its advocates acknowledge that it cannot be tested empirically, which is very convenient.

You want another example? Take the “Modern Monetary Theory” (MMT). According to MMT, in short, the government can spend as much as it wants by printing money. The problem is that it has a silent “T”, in that there is no actual theory we can debate or test. I am not aware of any peer-reviewed publications about MMT. Why does this matter? Think about peer-review as a clinical trial of a drug. Without it, we must believe that it works (increase GDP) without side effects (inflation, default).

This is a dangerous development. It gives bureaucrats and politicians a rationale for ignoring evidence and implementing any policy they want.

We must develop and test theories and policies by adhering to the highest standards in the profession. To quote from Matthew (7:15), “Beware of false prophets, which come to you in sheep's clothing […]”.

Winning the Government’s lottery
Dr Oliver Hartwich | Executive Director |
If only the Government’s public relations staff were as good as Lotto New Zealand’s.

Twice each week, Lotto asks us to imagine those millions of dollars coming our way in the Powerball draw.

Lotto also places small trophies at newsagents selling winning tickets. After that, they share glimpses of the luxury lives enjoyed by their winners.

Well, the winners of the latest lottery run by the Government only receive a media release from energy minister Megan Woods. No trophy, no photo shoot, no extravagant party.

It is grossly unfair. Those Government lottery winners are even luckier than your average Lotto millionaire.

The Government’s hand-picked winners didn’t even have to buy tickets. They just did their normal jobs.

Consider the case of ANZCO Foods, which won $1,081,000 from the Government Investment in Decarbonising Industry (GIDI) Fund.

There is an aging coal boiler at ANZCO’s Kokiri site, which needs to be replaced. Not only because it is aging but also because, with current carbon prices above $70 a tonne, it no longer makes sense to burn coal.

Therefore, ANZCO swapped its old, carbon-intensive equipment for an electric boiler and a high-temperature heat pump.

That the Government then subsidised this business decision would have been like a first division lottery price for the company.

Congratulations, ANZCO. You got money for nothing.

The same is true for DB Breweries: half a million dollars for a heat pump to reduce its gas consumption. A good business decision that wins the company some extra government cash at the same time. As they say, “Yeah, right.”

How ironic that DB Breweries is mostly owned by the Dutch Heineken family. Who knew that even foreigners can win the Government’s lottery?

But wait, it gets better.

The Government also claims that all their wonderful GIDI funding saves carbon emissions. But because of the cap in our Emissions Trading Scheme, any emissions saved from these projects will be transferred to other emitters. The net effect is zero.

Oh, and by the way, funding for the Government’s GIDI lottery comes from ... drum rolls ... the Covid Response and Recovery Fund. Who knew what a pandemic can be good for?

Finally, if the Government does not celebrate its idiotic lottery enough, at least BusinessNZ did it for them with a gushing media release. As if business subsidies could replace good policy.

Cash for business-as-usual. Cash for no overall carbon reductions. Cash for foreign-owned private companies. Cash for climate projects from the Covid fund.

Why write satire these days when this is official government policy?

Oliver Hartwich and Ben Craven discuss this latest round of climate change corporate welfare in this week's podcast.

On The Record

Initiative Activities:   
  • Podcast: International Outlook: Oliver Hartwich discusses Putin's influence on the French election
  • Podcast: Oliver Hartwich on climate change corporate welfare
  • Submission: Managing exotic afforestation incentives by Eric Crampton
All Things Considered
  • Graph of the week: Immigration by country, as a percentage of the population
  • What is the $50b Covid Response and Recovery Fund being spent on? Combatting wallabies, controlling wilding conifers, and even funding for the Commerce Commission
  • The decolonisation of education in New Zealand
  • Innovation prizes: when they work, and when they don’t
  • New literacy and numeracy standards for NCEA will increase rigour, but may expose poor education of young people in these key skills
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