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Insights 16: 13 May 2022
NZ Herald: Michael Johnston on a tale of two crises in education
The Platform: Sean Plunket chats with Eric Crampton about taxes, congestion charging and more.
The Australian: Oliver Hartwich on the foreign policy lessons NZ can learn from Germany

Budget previews
Dr Eric Crampton | Chief Economist |
One key to happiness is not letting your expectations run ahead of what is possible, as that only leads to disappointment.

But what has been announced thus far makes for a depressing Budget Day.

You might have hoped that inflation running close to 7% might finally trigger a long-overdue overhaul of the income tax thresholds.

Minister Robertson has already ruled that out. Inflation-adjusting the tax bands would give more to richer people than to poorer people, so he will not do it. A worker at the median wage and salary income now hitting the 30% tax band on the last few dollars earned may not find that comforting.

If a business told staff that, because an inflation adjustment to wages would give more money to the executive team than to minimum wage workers, nobody will get any inflation-adjustment at all, workers would quit. New Zealand loses people instead.

The government’s ring-fencing of revenues from the Emissions Trading Scheme last year finally set the stage for a carbon dividend. It could follow Canada, rebating ETS revenues back to households.

It got my hopes up at least.

But adjust your expectations downward. They’ll be using it for an environmental slush fund, with no guarantee that any of the projects will do anything to reduce the country’s net emissions. At least it will be great for the country’s climate central planners.

What might have been a pleasant Budget Day surprise was instead announced at a pre-budget speech this week. Immigration New Zealand’s visa processing backlog is substantial, and the borders are reopening. Fortunately, the agency will be getting a funding boost to staff up and to digitise processes.

Treasury may need a similar boost. It has warned that the government’s new budget rules will require closer attention to whether spending delivers real value for money. And if the rumours of a cash-for-clunkers scheme paying people to wreck their older cars are right, Treasury needs stronger economist firepower.

Wellbeing gurus attuned to the Living Standards Framework might find a way of supporting cash-for-clunkers, but economists concluded that America’s scheme a decade ago was an expensive debacle.

One very welcome Budget Day surprise would be the absence of policies like cash-for-clunkers.

But we should not get our hopes up. Better to be pleasantly surprised than to need an even bigger glass of whisky to get through Budget Day disappointments.

New Zealand Initiative hosts literacy symposium
Dr Michael Johnston | Senior Fellow |
The New Zealand Initiative hosted a symposium on literacy education practice and policy yesterday. The attendees numbered about one hundred and included teachers, representatives of literacy advocacy groups and a representative from the Ministry of Education. Education spokespeople from all political parties represented in parliament were invited, and Erica Stanford (National) and Chris Baillie (ACT) were in attendance.

Emeritus Professor James Chapman (Massey University) opened the day with a history lesson. He explained that there has been a clear scientific consensus for more than two decades, that a focus on word-level decoding skills, including the systematic teaching off phonics, lays the strongest possible foundation for children’s literacy.

Professor Chapman’s colleague, Dr Christine Braid, runs professional development programmes for teachers across the country, training them to use literacy teaching methods based on the scientific consensus. She explained that ‘constructivist’ methods of teaching literacy remain dominant in New Zealand, leaving many children struggling to develop literacy. Dr Braid explained that it is often difficult for teachers to let go of these methods. “Unstitching, teaching practice is painful”, she commented, “but we need to start with the phonics”.

We were joined by two Australian guests, literacy expert Dr Jennifer Buckingham and John Gardner, who, until recently, was the Education Minister in South Australia. They talked about the political process of reforming literacy teaching. In South Australia, an approach emphasising phonics has been implemented, with national testing data now showing its benefits.

Dr Helen Walls, a consultant Cognition Education, spoke about the teaching of writing. She echoed the necessity of moving away from constructivist ideology in literacy teaching and argued for a stronger focus on technical skills in writing. “It’s a false dichotomy to pit a technical focus against the view that writing ought to be creative. Writing is a creative act, but without the technical skills, creativity cannot be expressed”.

Olwyn Johnston, Deputy Principal at Tawa School, and Jan Johnstone from the Southern Institute of Technology, spoke about research and practice with older students who have not successfully learned to read. They both emphasised the importance of strengthening understanding of phonics and showed data evincing the success of their approaches.

Finally, Helena McAlister from the New Zealand Graduate School of Education spoke about her methods of training new teachers to be effective in literacy.

The day added to a growing momentum for change in our approach to the teaching of literacy. There is a clear consensus amongst our experts that using ineffective methods would be both ignorant and unethical. The Initiative will be keeping up pressure for evidence-informed change for the sake of our young people.

Bridges to Ukraine
Dr Oliver Hartwich | Executive Director |
International junkets for public servants are not my cup of tea. But I will make an exception for the New Zealand Transport Agency, Waka Kotahi. Let’s send their infrastructure team to Ukraine.

Waka Kotahi’s trip will not be about showing solidarity with Ukraine. That is what politicians do. Justin Trudeau just visited Kyiv, so maybe Jacinda Ardern will soon follow.

Waka Kotahi will not share lessons from its ‘Road to Zero’ campaign with the Ukrainian government, either. President Zelensky would probably not spend $10,000 on two large red prop ‘zeros’ as Waka Kotahi has just done.

No, Waka Kotahi’s trip to Ukraine will focus on learning about infrastructure delivery.

Yes, you read that right.

While news from Ukraine has mainly been about infrastructure destruction, a small miracle is taking place in the war-torn country. As Putin’s forces continue to bombard their cities, Ukrainian authorities have already begun reconstruction.

“Ukraine is rebuilding cities as fast as Russia destroyed them,” reported the Washington Post on Monday.

The article featured stories from places like Bucha, where Russian troops had massacred hundreds. The road holes where the shells exploded have been repaired. Water and electricity are back on.

Amazingly, even large pieces of infrastructure have been rebuilt. Among them were road and rail bridges that were destroyed by the Russians in the first weeks of the war.

Irpin’s main bridge is now replaced with a temporary bridge measuring nine meters wide and 245 meters long. It took five days of uninterrupted work to complete it. Even the BBC reported about the newly restored train connection from Kyiv.

This is where Waka Kotahi comes in. In the past, it has demonstrated a passion for bridges. Unfortunately, sometimes it had trouble delivering them.

Auckland’s cycling bridge, for instance, began as an idea of an $8 million clip-on to Auckland Harbour Bridge. It then morphed into something which would have cost close to a billion dollars to build. By the time the project was abandoned, Waka Kotahi had already spent $52 million. That is a lot of money for no bridge.

I am not sure how much the restored bridges in Irpin were, but I have a feeling they were not quite as expensive. Plus, they were actually built. In a few days.

So let’s send Waka Kotahi to Ukraine. And if they find Ukraine’s infrastructure secret, we may allow them to return to New Zealand.

On The Record
Initiative Activities:   
  • Podcast: Oliver Hartwich on learning from Germany’s foreign policy errors
All Things Considered
  • Graph of the week: NZ’s inflation expectations: ‘Pretty anchored’, at least by 2026. It’s all good. The Remit of the Reserve Bank only requires that inflation be ‘pretty anchored
  • Removing GST from food: A bad idea that never goes away
  • What the heck went wrong with J.D. Vance?
  • What if they gave a nuclear war and no one came?
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