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Insights 21: 14 June 2019
Oliver Hartwich writes on Newsroom about an interesting political manoeuvre in European politics: Denmark's new leadership
We are delighted to have appointed Barbara Chapman as Deputy Chair of our Board of Directors
In an interview with Australia's ABC Business, Oliver Hartwich explains why The Treasury and RBNZ have been under fire

From Kiwibuild to Kiwis Building
Dr Eric Crampton | Chief Economist |
At its heart, Kiwibuild was a promise to end the housing crisis. The set of reforms Minister Twyford is overseeing can fulfil that promise, if he has the chance to see them through.

The housing crisis has nothing to do with government failing to build enough homes. It stems instead from a nasty mess of perverse incentives facing growing councils, debt limits, infrastructure financing problems, and difficulty in revising district plans under RMA processes – as a starting point.

If the prior National government understood any of it, there was scant evidence of that understanding in policy. While Kiwibuild also missed the point, the policy is only a minor part of the government’s housing supply agenda – despite the disproportionate attention it draws. Focusing on the notable failure of one part of the package makes for great political sport but does nothing to advance housing reform more generally.

Last February, I warned in this newsletter that Kiwibuild could never solve the housing crisis. The targets set were utterly unrealistic and the fundamental blockages lay elsewhere. In response, the Initiative produced a report sharply critical of the programme.

But my Insights column also said that the government should be given a pass on its likely-to-be inevitable failure to hit its building targets, but only if it made sufficient progress on the rest of the supply agenda.

That more fundamental reform is coming. It has been slower coming than we would like, in part because Kiwibuild has proved to be a distracting millstone. But, done properly, the coming changes to infrastructure finance will be transformational.

Infrastructure supporting new development will be financed by bonds backed by levies on the properties benefitting from the infrastructure rather than depending on overstretched Council balance sheets. It will enable leapfrogging of existing landbanks and help unlock housing affordability.

No Member of Parliament understands New Zealand’s housing policy problems as well as Minister Twyford. Shuffling him from the Housing portfolio might bestow a political win on National, but it will come at substantial cost to everyone harmed by broken housing policies.

New Zealand has to build its way out of the housing crisis. Enabling that building is the most important task. And Minister Twyford’s broader agenda is our best hope of getting there. Focus less on how many houses the government builds, and more on the development enabled by the coming reforms.

Let them have fun
Natanael Rother | Research Fellow |
“Nothing good happens after 3 am,” Auckland’s top-ranking police officer once said.

“Facts tend to be overanalysed,” his Wellingtonian counterpart claimed.

Unfortunately, personal opinions and anecdotal evidence like this about opening hours and alcohol licences of bars and party venues often decide the direction of policy proposals for regulating the night-time economy.  

Yet, such arbitrary behaviour is typical – abroad and in New Zealand.

For example, in 2014 the government of New South Wales introduced new controls for the nightlife across large parts of Sydney. They were obviously motivated by the tragic fatal one-punch attacks on young Thomas Kerry in 2012 and Daniel Christie in 2013.

Tragic cases make for bad laws. Assaults had been declining since 2008.

The modus operandi is similar in New Zealand. One example is the debate in Wellington about opening hours that started in 2013. There was no substantial reason to prefer a 4 am or 3 am closing time over 5 am for bars and night clubs. In fact, the share of people consuming alcohol has decreased significantly in the last decade. But measures to reduce alcohol supply remain a favourite tool in the wowser’s arsenal. 

One reason people put so much faith in policies based on such shaky grounds is a moral one. In today’s world, paternalism expects us to always behave rationally. Going out till late does not fit this picture.

Social pressure also tends to find its way into politics. Proponents of an all-caring nanny state believe people need to be guided to a better lifestyle. The argument goes that revellers underestimate the damage of their fun nights out (for themselves and others in society). Or, that addicts cannot change their behaviour even though they may know it is in their best interest to do so.

Whatever the nature of the paternalism, it should not be used as a tool to create public policy. It restricts the freedoms of those who willingly and responsibly choose to go clubbing, meet friends in a bar, or enjoy a midnight snack with a beer in a food market.

Undisputedly, a thrilling nightlife comes with associated problems that need to be tackled. Just think of nuisance and litter management. The focus however must not lie solely on restricting nightlife but also facilitating it for the associated social and economic benefits.

Who knows, someone somewhere might have fun after 3 am. Hardly a terrible thought, is it?

Always look on the bright side of Brexit
Dr Oliver Hartwich | Executive Director |
English is not my native language – not that you can tell by my German name or accent. I did learn the language, but the journey was most unusual.

My teachers were the strict-but-brilliant Frau Voß and Monty Python. The latter turned out to be particularly instructive since they also prepared me for the absurdities of British life. Without Monty Python, I would be even more hard-pressed to make sense of Brexit.

Just think of the Conservative Party’s circus to find a new Leader and Prime Minister.

In other countries, this would be a serious matter. Not in Britain. It is more like Monty Python’s sketch about the “Upper Class Twit of the Year”. If you have never seen it, google it now.

For a start, there are the characters: Vivian Smith-Smythe-Smith with an O-level in camel-hygiene. Nigel Incubator-Jones, whose best friend is a tree and who works as a stockbroker in his spare time. And Gervaise Brook-Hampster, who is used as a wastepaper basket by his father.

Any similarities to Conservative MPs are, of course, entirely accidental.

The contestants in Monty Python’s Flying Circus must attempt and fail at various challenges – challenges such as walking along a straight line, kicking a beggar and, finally, shooting themselves.

In real life, the leadership hopefuls must deliver coherent policy pledges and insult their opponents before admitting to their past drug use. In a previous episode, Michael Gove even managed the impossible and killed himself while simultaneously knifing Boris Johnson. John Cleese could not have done any better.

Watching the Conservative leadership race also reminds me of Monty Python’s “People Falling From Building”. Two office workers notice people flying past their window only to conclude there must be a board meeting upstairs.

Instead of rushing to stop the madness, the workers start debating who would fall next. Then, in true British fashion, they bet on it, cheering on their favourite next victims.

Well, Monty Python’s Flying Circus and reading the London Daily Telegraph’s live update on the Conservative leadership election deliver the same guilty pleasure.

But maybe for the Tory hopefuls, it’s all more like Life of Brian? “Crucifixion? Good. Out of the door. Line on the left. One cross each. Next.”

And then let the parliamentary party sing: “Always look on the bright side of life. Always look on the right side of life.”

The right side? If only.

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