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Insights 7: 8 March 2024
Newsroom: Dr Oliver Hartwich on Scholz and Macron's clash, and Europe's disunity
Podcast: Dr Eric Crampton and Danyl Mclauchlan on the state of politics and Wellington's issues
NZ Herald: Roger Partridge on why we need to talk about the Supreme Court

Localism or centralism?
Dr Oliver Hartwich | Executive Director |
Last week, we applauded Housing Minister Chris Bishop for his housing policy proposals.

Incentives for councils to promote growth perfectly match Prime Minister Christopher Luxon’s repeated calls for localism. To address New Zealand’s housing shortage effectively, it champions local solutions to local challenges.

However, a disconcerting report emerged over the weekend in The Post. In the article, Bishop appears to support the idea of amalgamating Wellington’s councils.

Considering the government’s stated commitment to localism, this revelation is startling. It raises concerns about the potential loss of local communities’ and councils’ ability to address their own problems.

Local government, particularly Wellington City Council, is undeniably in trouble. People following Wellington’s local politics are aware of the city’s infrastructure and fiscal issues.

Nevertheless, combining all the region’s councils into a single entity would be fundamentally misguided.

Such a merger strategy would fail to acknowledge the diverse  communities within the Wellington region. As a result, local autonomy would be diminished, and decision-making could become more distant from residents.

The 2015 Local Government Commission’s decision against a similar amalgamation underscores this risk. The decision reflected a clear preference among residents for maintaining local democracy, following strong opposition to the amalgamation proposal.

References in The Post’s article to the Auckland ‘Super City’ as a model for Wellington’s potential amalgamation further complicate the narrative.

Auckland’s experience with increased efficiency and streamlined governance has been mixed at best. Staff numbers and operational costs have increased, challenging the assumption that larger administrative structures result in better outcomes.

Efficiency in local government is not merely a function of size. In its 2022 research note, the Infrastructure Commission found no significant correlation between council size and cost efficiency.

The New Zealand Initiative has long maintained that bigger is not necessarily better. Amalgamation does not guarantee improved efficiency and may, in fact, detract from the quality of local governance.

There are alternatives to amalgamation that would enhance operational efficiency without compromising the integrity of local governance. Through collaborative efforts and shared services, councils can achieve efficiency gains while preserving local autonomy.

Forced amalgamations risk consuming significant resources and attention, diverting focus from pressing issues such as housing, infrastructure, and transport.

Rather than spending energy on amalgamation proposals that may not deliver benefits, Wellington’s councils should focus on addressing these immediate challenges through collaboration and innovation.

It would fit better with the Government’s localism narrative, too.

On the move
Dr Matthew Birchall | Senior Fellow |
On Monday, Transport Minister Simeon Brown released the long-awaited draft Government Policy Statement (GPS) on Land Transport. The GPS outlines the Government’s priorities for investment in New Zealand’s transport network over the next ten years and how it expects NZTA and local authorities to manage the $7 billion annual National Land Transport Fund.

Replacing the previous Labour Government’s draft GPS, released for consultation in August 2023, this draft plan serves as a preliminary transport budget, targeting investments in state highway construction and road maintenance.

The central plank of the draft GPS is the reinstatement of the Key Government’s Roads of National Significance (RoNS) programme, with 15 new projects earmarked for construction. A $500 million fund for pothole repairs has also been established. Although RoNS fulfills an election promise, it is concerning that the projects have been announced without proper costings and cost benefit analysis.

The draft GPS also dials back government spending on public transport services and infrastructure, with the expectation that those who benefit from public transport will contribute a larger portion of the costs.

Over the past five years, the private share of funding for public transport has decreased from 32 per cent to 11 per cent, resulting in road users increasingly subsidising public transport – a trend Minister Brown aims to reverse.

In addition, the document refocuses attention on core “activity classes” that contribute to economic growth and productivity. Activity classes, such as rail and safety, categorise different types of transport-related projects.

Under the previous Labour Government, their scope had begun to spiral out of control, resulting in a lack of focus and ineffective spending on initiatives like coastal shipping.

Minister Brown’s announcement represents a return to a more tightly focused transport agenda.

Just as significant are the signals Brown has sent regarding the replacement of fuel tax with an electronic road user charge system, offering a funding model that accounts for factors such as distance, vehicle type, time of travel and location. Although the phase-out of the fuel tax would likely not occur until the end of the decade, this shift in approach marks a significant step forward. 

As the Initiative argued in The Price is Right, a universal road user charge system would help New Zealand build and maintain a road network that is responsive to user demand.

Brown has outlined the Government’s direction of travel. Now, the focus must shift to ensuring that these plans are successfully executed.

The New Zealand Initiative's report, The Price is Right: The road to a better transport system, was published on 5 November 2019

WEF cracked it
Dr James Kierstead | Research Fellow |
Readers will no doubt be aware of the WEF and of the many interesting and informative articles and posts about the organisation that can be found online.

You may be aware, for example, that Canadian Prime Minister Justin Trudeau, as well as being the secret love child of Fidel Castro, is a WEF puppet. That WEF founder Klaus Schwab is planning to make us all subsist on an unvarying diet of insects. And, of course, that Bill Gates, in partnership with the WEF, has found a cheap and effective way to distribute the COVID vaccine via our drinking water.

The third Insights column is usually reserved for a little light satire, but not today. Today, we can sensationally reveal that two of our Initiative colleagues are actively conspiring with the WEF. Yes, that’s right: the Waikato Economics Forum.

They’re not even hiding it.

‘Panel at the WEF seemed to go well,’ our Chief Economist, Eric Crampton, stated breezily as he sauntered back into the office.

‘Yes, my talk seemed to go down well, too,’ our Senior Fellow Bryce Wilkinson added in his usual cheerful way.

Unfortunately for them, we in the end office had been doing our own research. We knew that it would only be a matter of time before we were ordered to remain only 15 minutes away from the office at all times, before our drinking water was rationed, and before the cake at our coffee mornings was replaced with writhing bowlfuls of bugs.

Admittedly, none of this has actually happened. But that just shows how smart these guys are.

Now, you might find it hard to believe that a two-day-long conference in Hamilton is dictating the policies of innumerable governments around the world.

One of my closest friends was similarly sceptical. ‘Come on James,’ he pleaded, ‘This just isn’t reasonable. Obviously, the people who speak at the WEF will have some influence through the talks they give at the event, and they’re going to do a bit of networking. But it just wouldn’t be possible for them to micromanage economic policy the world over even if they wanted to.’

So now one of my closest friends is working for the WEF too!

Of course, I may have gotten this all wrong. Maybe everything on earth isn’t being run by the Waikato Economics Forum.

But I like to think it is. It’s just so much simpler that way.

On The Record

Initiative Activities:
  • Podcast: New Zealand's infrastructure deficit, Dr Oliver Hartwich talks to Dr Matthew Birchall about New Zealand's infrastructure deficit, delivery and management, 8 March 2024
  • Podcast: What's going on with Wellington?, Dr Eric Crampton talks to Danyl Mclauchlan about Wellington's pipes, housing, heritage and the state of politics, 5 March 2024

‚ÄčTo listen to our latest podcasts, please subscribe to The New Zealand Initiative podcast on iTunesSpotify or The Podcast App.
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