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Insights 28: 31 July 2020
TVNZ Breakfast: Eric Crampton proposes a voucher system to safely scale up border entry
Podcast: Bryce Wilkinson on why Pharmac matters to Kiwis
Research Report: Pharmac - The right prescription?

The infinite price of free
Dr Eric Crampton | Chief Economist |
This week, the Government announced that the real price of entering New Zealand for many returning Kiwis, for loved ones trapped abroad, and for others who might wish safely to join this lifeboat, is infinite.

No amount of money will get anyone else into the country. The Government has even told Air New Zealand to stop taking bookings because there is no space at the inn.

The lucky few who are allocated one of the scarce spaces, whether at no charge or with a user charge defraying some of the costs, will be able to enter.

Those who have not presented a sufficiently heartrending case to The Powers That Be – or a sufficiently economically compelling case – will have no other option.

The price of entry for those barred by the lack of spaces in managed isolation is neither zero nor the $3100 they might have paid under the user charge regime. It is infinity dollars.

Many of them will bear incalculably large losses, even if the Powers that Be try to accommodate those in the direst circumstances. And the overall costs to New Zealand will not be small either.

The biggest problem with the Government’s proposed user charges scheme is not who is charged and who is not. And it isn’t the amount of the charge.

Rather, it is that the fee scheme does not enable the system to scale up.

Under a better system, the Government would provide fees-free returning Kiwis with a voucher equivalent to the cost of a stay at a basic managed isolation facility. It would charge the facilities for the cost of the Government’s provided services. And it would allow facilities to set their own prices.

Such a system would encourage more costly hotels and resorts to switch into the managed isolation game, creating more spaces for those relying on vouchers to cover their costs.

About a million Kiwis live overseas with the right to return. Less well known is that over 27% of Kiwis – one and a quarter million of us – were born overseas and may wish to see families again sometime before a vaccine is available.

Safely scaling up managed isolation matters. And nothing announced this week provides grounds for optimism.

Schooling’s unspoken trade-off
Briar Lipson | Research Fellow |
The Ministry of Education has “heard concerns” that some schools are “too focused on academic achievement.”

To fix this shocking scandal, the new Education and Training Bill will ensure boards of trustees “re-orient their focus.” Now they must focus more on students’ wellbeing and the Treaty.

While learning new things can be fun, most learning of any value takes perseverance and self-discipline. Many children do not relish practising piano scales, rugby drills or times tables. Yet, evidence suggests that homework and teacher-led instruction work by trading some short-term pain for a student’s long-term success.

Unfortunately, the Bill ignores this evidence in favour of making children feel good. It is a terrible trade-off.

Another such example is NCEA. Introduced in the early 2000s, NCEA redefined what school success looks like. Rather than expect all children to put in the work necessary to master English, maths and crucial cultural knowledge, NCEA lets students sail through school picking courses that make them feel good. Nowadays, lessons must be relevant, engaging and fun. Knowledge, and the practice needed to remember it, are too painful for 21st-century children.

The trade-off was bound to have an effect. A decade later, the Tertiary Education Commission found that 40% of Year 12 students with NCEA Level 2 struggle to read or do basic maths. Their wellbeing in school may be dazzling, but we can only imagine what their adult life will be like.

Another example is school attendance. Tremendous effort goes into making teachers feel more like whānau and classrooms more like living rooms. But, the hard data suggests that kids feel so relaxed they often don’t even show up. For example, last year just 58% of students attended school at least 90% of the time. This was down twelve percentage points from 2015 and compares to 87% in England. No matter how good students feel, they cannot learn anything if they are not in school.

If New Zealand were Singapore, where standards are already high, then efforts to highlight wellbeing might be well-timed. However, standards in New Zealand are miles behind Singapore’s, and for the last two decades they have been falling.  
Wellbeing and attainment do not only go hand in hand. So long as our goals are excellence and equity, students must learn to be comfortable with struggle. Policymakers and the Ministry must urgently learn this too.

Tax is love?
Luke Redward | Research Intern |
In a predictable statement earlier this week, the Green Party co-leader declared her party’s undying love for taxation.

A rather Orwellian take on the libertarian war cry of “tax is theft,” Marama Davidson said those who fork out money to the state are world-saving humanitarians since “tax is love.”

In the spirit of this wonderful reframing of charity, I propose a few more ideas so Kiwis can help spread the “love.”

A good place to start is property rights. It really is silly to still have a pre-conceived notion that ownership means a person will work harder to maintain a plot of land. That’s not love! It’s high time to open all doors, remove all locks, and give everybody access to all property. The guy across the road from me has an excellent backyard.

But let’s not stop there. What if a fellow loving citizen really needs your laptop? It really is selfish not to hand it over. So, do the kind thing and just let them take it from you. Think of it as an “unplanned donation.”

And while on the topic of kind actions, New Zealand’s speech laws need updating. After all, insults are never loving, so we should ban all types of language that could possibly lead to an insult. The aroha would flow down the streets.

You know what else isn’t loving? Getting a stitch at a sports game. We should ban athletes from drinking anything but water. But let’s not stop there, why not get rid of sugary drinks altogether?

Now, you may laugh, but I have heard strikingly similar ideas from Green Party supporters.

Yet of course people should not be applauded for paying tax. It would not be loving for a charity to demand donations at gun point and then pat the donor on the head after having done so.

Charity is virtuous, and more importantly, charity is voluntary. There is nothing virtuous or voluntary about paying tax, and to suggest it is more than a necessary evil is ludicrous.

Taxation is not charity and should not be treated as such. A part of living as a society is an acknowledgement that citizens pay a portion of their income to help run the system. But raising the tax level by force and pretending like it is charity?

No, that doesn’t spark love.
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