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Insights 19: 31 May 2019
Eric Crampton writes in The Dominion Post about the Budget 2019 and the importance of evaluating outcomes
Briar Lipson discusses on Education Central the recent NCEA Change Package announcement
Latest Policy Point: Biting education bullets

Delivering Wellbeing
Dr Eric Crampton | Chief Economist |
The Wellbeing Budget came in the government’s proclaimed year of delivery.

But whether this budget will deliver the wellbeing outcomes everyone has been led to expect is a bit up in the air.

While the wellbeing policy process highlighted by Minister Robertson emphasises the importance of evidence-driven policy, and of policy evaluation, Budget 2019 was far weaker on evaluation than we might have hoped.

Policy evaluation matters. Without it, it is impossible to tell whether any improvement in the areas targeted by this budget’s big spending lines are due to that spending. If mental health improves with the $1.9 billion committed to the area, is it because of the efforts of some community service providers rather than others? Which kinds of interventions have worked, and which have not? And how should Budget 2020 reflect what we might learn this year?

That is even more important when, despite discussion of an evidence-base for spending prioritisation in this year’s budget, there was little evidence of anything approaching cost-benefit assessment on substantial spending items.

Unfortunately, the budget not only provided scant detail on programme evaluation, it also hit the core infrastructure necessary for it. Statistics New Zealand sees a budget freeze despite an expectation of a substantial increase in users of its microdata.

And while Treasury sees a $5 million annual increase to “deliver core functions and the wellbeing approach”, repairing the damage to core Treasury competence wrought under Secretary Makhlouf’s tenure – and regularly documented in this newsletter – seems a rather more substantial task.

Without proper evaluation of the outcomes of this Budget’s spending, is it really the transformational initiative Labour promised?

Every government canvasses priorities when establishing its budget framework and each one will couch those priorities within its own rhetorical flourishes. National combined its rhetoric and evaluation within the mantle of the Investment Approach. The Wellbeing Approach still needs a stronger policy evaluation framework attached to its own substantial initiatives and sufficient funding for the Integrated Data Infrastructure to enable the necessary work.

Bringing the wellbeing framework up to its promise requires rebuilding a Treasury capable of delivering the required policy evaluation. That task can only begin on the appointment of a Secretary of the Treasury up to the substantial task ahead.

Then delivery can begin.

The power of quantifying emissions policies
Matt Burgess | Research Fellow |
It has been four weeks since the Interim Climate Change Committee (ICCC) delivered to Minister James Shaw its analysis of the government’s 100% renewable electricity policy.

If reports from a conference presentation given by the committee’s chair in April are correct, the results are not kind to the government’s commitment.

The ICCC’s analysis seems to suggest the policy will substantially increase the retail price of electricity – by 14% for households and by 39% for industry. This is completely in line with findings from the Initiative’s report Switched On! on the 100% renewables policy released earlier this year.

Worse, 100% renewable electricity could block far greater emissions cuts through the electrification of transport and parts of industry. Emissions from these sectors are five times those from electricity, but higher electricity prices could prevent rapid electrification of these sectors.

Short story: The government’s renewables commitment might be well-intentioned but it also makes it harder to achieve New Zealand’s emissions goals.

That is probably not the advice the government had hoped for from its independent and highly credentialled committee. The question now is how the government will respond.

It is a big question. Governments rarely back off environmental policies because their political opponents – and supporters – can easily paint a back down from a bad environmental policy as a back down from the environment itself.

A decision to scrap the commitment to 100% renewables, a flagship policy enshrined in the coalition agreement between Labour and the Greens, would be momentous.

In view of the committee’s findings, let us hope the government drops 100% renewables and instead seeks lower emissions through other more effective channels.

The government can already take considerable credit for allowing scrutiny of its high-profile policy, and for carefully protecting the independence of its expert committee. That is what a sound policy process should be like. More please.

Let us also hope the government’s opponents resist the urge to portray a decision to back down from a bad policy as a failure, and instead recognise it for what it is: a significant win for the environment and for Kiwi households, and entirely consistent with a serious commitment to lower emissions.

Perhaps the committee’s greatest contribution will be in demonstrating the power of measurement to create political rewards for good environmental policies.

Don’t stop now, Minister.

Matt Burgess’ report, Switched on! Achieving a green, affordable, and reliable energy future is available here.

A penny for your thoughts
Dr Patrick Carvalho | Research Fellow |
Once upon a time, the pursuit of happiness was a personal duty. Not anymore. We now have politicians ready to nudge us in the right direction.

Earlier this month, a group of British MPs made a formal proposal to charge shoppers an extra penny to use self-checkout machines. This policy, so they promised, would “counteract potential damage caused by a lack of everyday contact between people”.

The £0.01-levy proposal is part of a range of actions suggested in an interim report called Heal the Generational Divide, published by the All Party Parliamentary Group on Social Integration.

Previously it was a penny for your thoughts. Now it is a penny for not being asked if you would like a receipt.

Well, actually, the British politicians believed that more meaningful conversations happen at the check-out.

In their report, they seriously suggest that “some of the technological changes…[that] can come at the expense of valuable everyday human contact”.

“Self-service checkouts have closed off what might be for some people the only chance to talk to someone during the day”, the cross-party report alerts.

I will reflect on it the next time I queue when at the cashier.

But perhaps it is good we now have such caring and considerate politicians helping us live more fulfilling lives.

Hopefully, New Zealand will copy the idea soon – and even take a few steps further.

Just think about the infinite taxes and nudges to boost our community feelings: From ATM-levies bringing back joyful teller interactions to carpool-inducing surcharges on drivers to outright bans on single servings in restaurants.

I am not quite sure whether to tax Oscar, Air New Zealand’s chatbot. Okay, he is not human. But you can have a better conversation with Oscar than with most other airlines’ representatives.

Maybe we could take the British suggestion to its logical conclusion: To tax all activities one does on one’s own that could also be joyfully done with someone else.

I will leave it to readers to think of examples.

Back to Britain: If British MPs are so concerned with people’s wellbeing, perhaps they could just do their bit to help their constituents from going crazy. Finding a solution to Brexit would be a good start.

It would allow a return to ordinary small-talk about the weather.

On The Record
All Things Considered
  • Graph of the week: Centrist liberals gained the most power in the EU Parliament.
  • The earth has its problems, but a lack of resources is not one of them.
  • ‘Wow, what is that?’ Navy pilots report unexplained flying objects.
  • Charge shoppers 1p to use self-checkout machines to heal Brexit divisions.
  • These cities have the best quality of life.
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