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Insights 42: 11 November 2022
NZ Herald: Oliver Hartwich on NZ's broken education system
Podcast: Oliver Hartwich and Josie Pagani on NZ this week
The Platform: Oliver Hartwich and Sean Plunket talk education

How to make a problem worse by spending money
Dr Michael Johnston | Senior Fellow |
Spending money does not, on its own, fix problems. It matters how that money is spent.

Perhaps you think that is obvious. Unfortunately, it doesn’t seem so obvious to the government.

Last weekend, the Prime Minister announced an additional $189 million for early childhood education (ECE). The money will be spent on subsidies for families.

At least some of the subsidy will be offsetting the effects of inflation. At the same time as inflation has been pushing people into higher tax brackets, it’s also been pushing people out of eligibility for ECE subsidies.

So, an inflation adjustment makes sense. But there is an underlying problem. The sector simply does not have enough teachers.

There has been widespread commentary from the leaders of ECE bodies on the urgent need to address teacher supply.

Without more teachers, the new funding, even if it’s just offsetting the effects of inflation, will increase pressure on an already strained ECE sector. That will mean longer waiting lists and reductions in quality.

There are ways that a portion of the $189 million could have been spent to increase teacher supply.

The preferred approach of the ECE sector is to increase ECE teachers’ salaries to match those of kindergarten teachers. There is a strong case for doing that, but it won’t be enough on its own.

We could and should train more ECE teachers. That solution will have a lag time, however, and there’s no guarantee that enough people will be interested.

We might also wonder whether 50% of ECE teachers really need to be qualified. But that is a topic for another day.

A third approach would be to make it far easier for ECE centres to recruit internationally.

When an ECE centre advertises a teaching position at present, most applicants are international. Unfortunately, the process of recruiting them is bureaucratic, expensive and time consuming.

First, international applicants must apply for their qualifications to be assessed by NZQA, at a cost of $445. Then they must apply to the Teaching Council for registration. Only then can they apply for a visa.

ECE centres can’t wait for all that to happen. They need teachers now.

We should trust ECE centres to make pragmatic recruitment decisions and release them from red tape. This approach wouldn’t even cost anything. In fact, it would likely save money.

Sometimes the best solution to a problem is also the cheapest.

Real-time Inflation and Optimal OCR Tracker launch
Dr Christoph Schumacher | Adjunct Senior Fellow |
Inflation is the hottest topic in economics right now, with economic powerhouses like the US, Germany or UK about to hit (or have already reached) double figures. Even our once-called ‘rock-solid’ economy is trending in this direction, yet our reserve bank seems reluctant to take the necessary monetary policy measures.
Part of the uncertainty and anxiety caused by inflation is the lack of real-time values. We know that at the end of the September quarter, NZ inflation was 7.2%. The RBNZ suggested that we have reached the peak and inflation will fall soon, but unless we know today’s value, we have no idea if this is true.
To finally add real-time data to the important inflation discussion, my team at Massey’s Knowledge Exchange Hub yesterday launched the NZ Live Inflation Tracker ( This publicly available AI-powered tool uses daily industry data to track inflation in real-time.
Our tool uses huge amounts of data. Every night, we receive information about the previous day’s financial transactions in the economy. We have trained software to analyse that data and distil key economic figures from it.
In this way, we can estimate not what GDP or inflation were last month or in the last quarter. We know with a high degree of precision what these figures were yesterday.
With our tool, we know how the economy is ticking. We can then also track the Reserve Bank’s cash rate against what a Taylor Rule would recommend.
Real-time inflation and optimal OCR values will remove uncertainty about our economy’s health and increase accountability. Go and check out these new tools that we have added to our live GDP tracker (national, regional and industry), and you might be surprised at what you see. The rise of inflation is slowing down, and today tracks at 7.3%, suggesting that we haven’t reached the peak yet. To contain inflation, a Taylor Rule would have our OCR at 7.4% but it currently sits at less than half this value.
Our current quarterly GDP growth is lower than expected, but the rise of inflation is slowing down. However, my biggest concern is the record-high gap between our current OCR and where it should be to get a grip on inflation. If you don’t believe me, see for yourself (Gap to optimal OCR tracker on It puts the reappointment of our Reserve Bank Governor in a different light.

Was the Spanish Inquisition ever a thing?
Dr James Kierstead | Research Fellow |
SATIRE: As Monty Python reminded us, you never expect the Spanish Inquisition. So its appearance in a New Zealand Initiative Insights column might well seem a little unsettling.

When it comes to reports of a free speech crisis in English-speaking countries today, though, the Spanish Inquisition can help reassure us that talk of ‘cancel culture’ is all smoke and no fire.

The Spanish Inquisition, you see, has generated a lot of hot air. One historian has referred to Medieval Europe as “a persecuting society.” But how many people were actually persecuted?

Sure, some heretics got burned at the stake. But how many such episodes were there? As Jacob Mchangama reveals in his recent history of free speech, there were probably not more than three thousand – not many when you think of all the people who weren’t roasted alive.

And sure, up to two million Muslim books may have gone up in flames in Granada in 1499. But again, we need to think of all the Christian books that got away scorch-free.

In 1277 the University of Paris did issue a list of 219 ideas that couldn’t be discussed or even listened to. As modern fans of ‘deplatforming’ have pointed out, though, banning discussions within universities doesn’t mean they can’t be held outside of them.

The main thing that so-called ‘cancel culture’ and the Medieval Inquisition have in common is the pitifully small number of people affected. We hear of two inquisitors, for example, who managed to question a mere 5 471 people – in 201 days of work!

You might worry, of course, that these kinds of investigations could have a broader chilling effect on speech, even in times like ours, where firings are mercifully metaphorical.

Thankfully, the sceptics of modern cancel-culture are on hand to remind us that most people throughout history have reacted to reports of peers being censored, questioned, or investigated by just shrugging their shoulders and carrying on saying whatever they want.

That’s what makes it so useful to think about the Spanish Inquisition today (even if you still never quite expect it).

According to the historian Juan de Mariana, some Spaniards described being ‘deprived of the liberty to listen and talk freely’ during the Inquisition as ‘the most wretched slavery and equal to death.’

Just like anyone who complains about the wider effects of censorship today, they were obviously a bunch of snowflakes.

On The Record
Initiative Activities:   
All Things Considered
  • Chart of the week: Gap to optimal OCR tracker on
  • Chart of the week:  NZ journalists' political views
  • It's important to have goals. Like eating a whole rotisserie chicken every day for forty consecutive days
  • Taxing banks’ excessive profits – be careful what you wish for
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