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Insights 33: 8 September 2023
Newsroom: Oliver Hartwich on why Brits want something radical to fix broken Britain
Podcast: Eric Crampton and Scott Wilson on the government's transport policy
NZ Herald: Roger Partridge on The myth of public service neutrality

Business slams NZ Government
Dr Oliver Hartwich | Executive Director |
Some surveys require interpretation. Others speak for themselves.

This year’s Deloitte and Chapman Tripp Election Survey of businesses is in the latter camp.

After years of polite grumbling, the Government’s performance was slammed by New Zealand’s business leaders.

Only six percent of respondents thought the Government had a coordinated plan to increase economic performance. In contrast, 85 percent of respondents answered ‘no.’

Business leaders overwhelmingly agree that government changes have ramped up operational costs in recent years.

A solid majority feel burdened by higher tax compliance costs and are sceptical of the government’s use of taxes for broader social goals.
Most doubt the projected economic benefits of policies like the Three Waters initiative.

There is also widespread concern over inadequate support for foreign investment and economic growth. Many are uneasy about rising energy costs and see government infrastructure policy as lopsided.

A significant portion believe that today’s education system falls short in equipping the next generation with the necessary skills, and trust in the current immigration system is low.

If these findings were school marks, the Government would receive an ‘F’.

Many business leaders believe the Government has failed to deliver on any key policy.

There is no denying that satisfying the business community is a challenge for any government.

Business leaders are used to making agile decisions, setting performance targets, and striving for efficiency. Government is not known for these things.

However, in most previous surveys, business leaders acknowledge when a government at least tries to do the right thing.

Seeing such a complete disconnect between Government and business is almost without precedent.

Whatever the outcome of this year’s election, there will be a lot of repair work to be done. Government and business are not on the same page and have not been for a long time.

One of the main problems over the past years was the lack of consultation. Significant policy changes have often happened without any warning. And the government did not consult stakeholders, it has made avoidable and costly mistakes.

Another problem has been Government’s erratic decision-making. It seems to have been guided by what makes good politics (i.e. headlines), not what makes good policy (i.e. outcomes).

Underlying all this has been a lack of coherent evidence-based thinking.

The next Government must be different: Guided by clear principles. Informed by consultation. Open to evidence.

Only then will the next survey of businesses show a more constructive working relationship between Government and business.

New Zealand’s AI Future
Dr Matthew Birchall | Research Fellow |
It is brave to invite an historian to speak at a conference about the future. As the Scottish historian Tom Devine once quipped, the future was not his time period. 

So it was with some trepidation that I addressed a full house at Wellington’s new Tākina conference centre last week for the policy forum Diplosphere’s conference on AI.

The conversation could not be timelier. Large language models such as ChatGPT have fuelled a sense of rapid progress, yet they have also evoked a sense of foreboding.

Regardless of one’s perspective, it is undeniable that AI is on the verge of reshaping how we live and work.

Given the enormous potential and profound implications associated with AI, it is important to consider whether New Zealand is well-prepared to harness the opportunities it offers.

The early signs are not promising.

A recent survey by Ipsos found that Kiwis are more sceptical of AI than the rest of the world, for example. It also found that we are more likely to think that AI will have a negative impact on the job market in the next 3-5 years.

Just as concerning is the apparent appetite for heavy-handed regulation – a sentiment I encountered frequently at Tākina. The EU’s draft AI Act is often cited as a potential model, adopting a “risk-based” classification of AI systems based on perceived threats to rights and safety.

However, the prescriptive approach pioneered by the EU is unlikely to keep pace with fresh developments and it may also hinder progress.

Richard Massey, Senior Associate at Bell Gully, told Newsroom this week that it was vital to strike the right balance. “There are a whole range of really exciting potential use cases that can be unlocked through appropriately regulated AI. And the key is to ensure that it’s not over-regulated in a way that loses some of the benefits or defers those benefits unnecessarily.”

A nimbler regulatory framework like the one proposed by the UK may be a better model to emulate. Such a framework grants existing regulators the flexibility to tailor their approaches to the practical applications of AI in real-world scenarios.

British computer scientist Stuart Russell notes that it would be unwise to bet against human ingenuity. If we want to cash in on Russell’s gamble, a good place to start would be exploring ways to maximise AI’s potential.

Utopia 2040
Dr Michael Johnston | Senior Fellow |
It was a sunny morning in 2040.

I got on my electric bike and rode through my Auckland neighbourhood. My destination was the local supermarket.

I fancied a hamburger for lunch. Although livestock farming had been banned in 2030, a tasty array of lab-grown meat was available. Some people preferred the more natural flavour of weta patties. They were a cheaper option too, ever since they had been added to the burgeoning list of GST exemptions. But I found them a little crunchy for my taste.

Aside from the odd electric bus, a colourful array of bikes were the only vehicles in sight. Petrol cars had been banned in 2032. An unforeseen consequence had been to drain the national grid as hundreds of thousands of people changed over to electric cars. So, a year later, those had been banned too – apart from a small fleet for the exclusive use of government officials. 

Had I been heading to the airport I might have used the newly minted light rail. This wonderous project had been completed in 2038, only nine years behind schedule and for just three times its original budget. It was widely hailed as a resounding success for the Ministry of Infrastructure.

I rode past one of the many free dental clinics established after Labour’s’ surprise landslide victory back in 2023. The clinics had proven popular. The only problem was a chronic shortage of dentists. Since the adoption of the 2024 science curriculum, the supply of secondary school graduates qualified to train for the medical professions had dwindled.

For a time, it looked as if immigrants from Equatorial Guinea might have been able to plug the gap. Unfortunately, problems at Immigration New Zealand had resulted in a 12-year waiting list for visas and they had all gone to Australia instead.

The next landmark on my journey was the now disused Paremoremo prison. The last prisoner had been released in 2034 after incarceration was banned as a cruel and unusual punishment. There had been a bit of an uptick in the murder rate, but it was a small price to pay for a truly progressive justice system.

Arriving at the supermarket, I joined the queue three blocks away. It had taken me just 15 minutes to ride to the supermarket, but now I faced a two hour wait to buy my lunch.

Life is all about trade-offs.

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