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Insights 22: 25 June 2021
Radio NZ: Roger Partridge on the law change needed to dismiss poorly performing senior managers
Podcast: Steen Videbeck on his career as an economist and a teacher and his new research project on literacy in NZ
Research Note: Nothing costs nothing - unjustified dismissal laws by Roger Partridge

Mental health another casualty of government ineptitude
Dr Bryce Wilkinson | Senior Fellow |
A news item this week reported the Minister of Health was “enormously frustrated”.

We can think of quite a few in the private sector who know that feeling. There is a major difference: the Minister is frustrated with the agencies that serve him; the others are frustrated with the government’s policy ineptitude.

The list of activities now disrupted by harmful government policies include offshore oil and gas exploration, electricity, rental housing, vehicle leasing, electricity generation, pastoral farming and employment. It may include some local authorities and health boards facing forced amalgamations.

But back to the Minister. He was enormously frustrated to discover how little had been achieved in mental health since 2019. Reportedly, in answering a written parliamentary question he was obliged to reveal that of $235 million allocated in 2019 to provide new mental health facilities, only 0.2% had been spent. Less than half the $145.3 million allocated to reduce hospitalisations had been spent.

As it happens, I agree with Budget 2019 -- improving support for mental health should be a major priority. Mental health problems affect many and are devasting for wellbeing.

The problem with the Budget Speech was that it gave no reason to expect new overall spending of $1.9 billion would be effective. Are mental disorders caused by colonialisation - the current scapegoat for every ill - or by unrelated treatable neurological disorders? Does the government know or care which it is? It should. Otherwise, it will fund ineffectual programmes, in which case the less it spends the better for wellbeing.

Unwillingness to disclose relevant information is another red flag. Journalists are frustrated at the obstructionist responses to OIA requests. The Ministry of Health reportedly succeeded in excising ‘negative’ mental health outcomes from a recent much delayed annual report. Why do that if it cares about improving outcomes?

The Budget Speech reads as if taxpayers' hard-earned money is a free resource and good intentions are all that matters. Implementation is either taken for granted or unimportant. Effectiveness is an even more distant consideration. If the programmes are ineffectual, well, ‘at least we tried’.

Even more galling, the government touted this Budget as a world-first “Wellbeing Budget”. But a deep concern for wellbeing must be accompanied by an intense focus on implementation and effectiveness. Why was the current or previous Minister not on top of either aspect?

Unjustified dismissal and the Peter Principle
Roger Partridge | Chairman |
According to the Peter Principle, people in a hierarchy tend to rise to their "level of incompetence."  While intended as satire, many people will have their own story of the Peter Principle in practice. Of a boss not up to the role they have been promoted to fulfil.
And as countless boards and business owners will attest, getting rid of an underperforming manager can be fraught with difficulty. Mediocrity is no longer enough to justify dismissal under the personal grievance provisions of New Zealand’s employment laws.
The problem of poorly performing managers is not just a problem for individual workplaces. In its 2014 report, An International Perspective on New Zealand’s Productivity Paradox, the Productivity Commission singled out the low quality of New Zealand’s managerial capabilities as a cause of our poor record of productivity growth.
The Initiative’s latest report, Nothing costs nothing: Why unjustified dismissal procedures should not apply to the highly paid, makes the case for fixing that problem.

Statutory unjustified dismissal provisions were first introduced in the 1970s. Their aim was to protect vulnerable workers from being unfairly fired. Subsequently, in 1991, the Bolger Government extended unjustified dismissal protections to all employees.

But, by protecting the jobs of poorly performing senior managers, unjustified dismissal laws introduced to protect the jobs of vulnerable workers may be placing those very jobs at risk.
The difference between a C-grade and an A-grade manager may be the difference between business success or failure. And that may be the difference between preserving the jobs of workers or losing them.

Before firing an underperforming manager, employers must jump through a complex series of hoops. The process can take many months - or even longer. And even at the end of the process, mediocre performance may not be enough to justify dismissal.
To address this problem, the Government should follow the Australian approach and exclude “high-income earners” from statutory unjustified dismissal laws.

The Initiative recommends a high-income threshold of $250,000. This is the starting salary for Ministers of the Crown who can be dismissed at will by the Prime Minister. It would capture less than the top 1% of income earners. But it would cover the CEOs and senior managers whose roles have the biggest impact on firm productivity and performance.
By making it easier for employers to dismiss those who have been promoted beyond their level of competence, firms, workers and wellbeing will be the winners.

The report Nothing costs nothing: Why unjustified dismissal procedures should not apply to the highly paid can be read on the New Zealand Initiative website here.

The orange revolution
Matt Burgess | Senior Economist |
I am increasingly convinced that our impressive economic recovery from COVID is being led by orange cones.

The things are everywhere, clogging up our roads and cycleways and footpaths. Only rarely do these orange monstrosities seem to protect actual people doing actual work. It is as if the cones are there to stop somebody trying to get somewhere.

What explains the orange invasion of our town and cities?

Perhaps this is the government’s ambitious new climate change strategy. We will lower global emissions by channelling all of the world’s oil reserves into the production of road cones.

And I do mean all of the world’s reserves, judging from the mess on Thorndon Quay this morning.

Perhaps some poor soul at NZTA put an extra zero on the order form and now there is no more room at the storage depot. Rather than admit clerical error, the agency is randomly distributing cones across perfectly serviceable roads and even arranged trucks to turn up with flashing lights to seal the illusion that any of the cones are necessary.

I suppose the best explanation for all the cones is health and safety. Yet the cones seem to arrive weeks or months before the trucks and shovels. It is as if agencies feel the need to warm us up to the idea that the road will have to close at some point in the future by closing the road now. Brilliant.

Theft is a real problem for orange cones. That is because they can do so much more than cause traffic jams.

For example, club cricketers love orange cones. Forgot to pack the stumps for today’s game? No problem, use cones instead.

Or perhaps you’re next in to bat and realise to your horror you have forgotten your box. Again, no problem. Wear that cone with pride, brother. This is how much you love cricket.

At their current growth rate, I estimate orange cones will cover the entire country by January 2025. Unable to move, we will finally be completely safe.

It is hard not to see the metaphor in all those cones defending undug trenches and absent workers. They are a promise of future work, like a Beehive press release on mental health. The cones are safety for its own sake, safety in place of work and living.

On The Record
Other Initiative activity:
  • Podcast: Steen Videbeck on literacy. He reflects on his career as an economist and a teacher and his new research project on literacy in New Zealand   
  • Submission: Transport emissions - Pathways to net zero by 2050
  • Research Note: Nothing costs nothing. Why unjustified dismissal laws should not apply to the highly paid
All Things Considered
  • Graph of the week: All of the world’s money and markets in one visualization
  • Wellington media management on serious health-care issues reaches new heights
  • Hate speech and what legal elites sometimes miss about the law
  • Schools footing the bill to teach teachers new literacy approach
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