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Insights 17: 19 May 2023
The Post: Eric Crampton on kicking trees out of the Emissions Trading Scheme
Podcast: Planning urban futures with Eric Crampton, Nadine Dodge & Peter Nunns
Newsroom: Oliver Hartwich on how democracy is on the line in Turkey

The ‘Yeah, right’ budget
Dr Oliver Hartwich | Executive Director |
New Zealand has just received its 2023 Budget.
Our Government has a clear predilection for spending. From infrastructure to education, cost-of-living relief to climate initiatives, the allocation of funds is once again substantial​. Incidentally, the Government’s outcomes often are not.
Still, the question arises, how will all this expenditure be financed? The answer: Higher taxes and increased borrowing.
The top tax rate currently stands at a hefty 39%​. Now, the Government is aligning tax on trusts with this figure​​.
Borrowing is being escalated, inflating our national debt to support their spending ambitions​​​. This is the paradigm of big tax, big spend.
Amidst these measures, the Government is attempting to reassure us with optimistic economic forecasts. They predict a rather rosy picture, in which inflation will drop to a mere 3.3% next year, and then decline further, to 2.5%, 2.3%, and 2.2% in the subsequent years​​.
With countries worldwide grappling with soaring inflation rates, the assertion that New Zealand will somehow buck this global trend is audacious. Or, to put it in words all Kiwis understand: Yeah, right.
The Government’s outlook for the burgeoning national debt is equally optimistic. They are set to borrow substantial amounts for infrastructure spending, including a significant $6 billion for a ‘national resilience plan’​​. Their ‘plan’ is to repay this mounting debt in due course, on the back of an impending economic boom.
Borrowing to fuel a spending spree, particularly at a time when interest rates are climbing, is a significant concern. We have seen the aftermath of such strategies in other countries, and the outcomes are seldom favourable.
To round it all off, the Government also believes that a return to strong growth is imminent. Yeah, right once again.
This ‘Yeah, right’ budget is a gamble. It hinges on the hope that everything will align perfectly. That inflation will conveniently fall. That the economy will grow robustly enough to manage and repay the debt. That prosperity will continue unabated. As I said, yeah, right.
For the collective welfare of New Zealand, we can only hope they are right. However, placing full confidence in this outcome, given the realities of the global economy, the precariousness of predictions, and the Government’s executive capability would be unwise.
This ‘Yeah, right’ budget is the Government’s last roll of the die before the 2023 election. And as everyone knows, you do not always roll a six.

With NCEA, nothing endures but change
Dr Michael Johnston | Senior Fellow |
It is two decades since NCEA became New Zealand’s qualification system for secondary school students. It replaced a very traditional, exam-based system – School Certificate and University Entrance-Bursary.
NCEA is anything but traditional. In fact, it is unique in the world. It offers a vast assortment of assessment options. Students undertake multiple assessments, called standards, in each subject they study. Each successfully completed standard contributes credits towards qualifications.
In just about every year since the full implementation of NCEA in 2004, there has been some change, minor or major, to the system. For the past five years it has been under review. Both the design of the system itself, and all the achievement standards are in the process of being replaced.
Recently, the Ministry of Education delayed the implementation of the new NCEA Level 2 and 3 standards for a year. They will begin to be used in 2026 and 2027 respectively. But the Level 1 standards will not be delayed. They will be introduced next year.
This is a strange move.
In 2024, Year 11 students will be assessed with the new Level 1 standards. But when they go onto Years 12 and 13, they will be assessed with the existing Level 2 and 3 standards.
The new standards completely reconfigure existing subjects, mashing some of them together. At Level 1, for example, Biology and Chemistry are to be assessed as a single subject. As a result, there will be a mismatch between the new and the old for next year’s Year 11s as they progress through the system.
In another strange move, the ‘refreshed’ New Zealand Curriculum won’t be fully implemented until 2027, the same year as the new Level 3 standards. NCEA is supposed to assess the curriculum. So, for three years, schools will be operating with assessments for a curriculum that does not yet exist.
Many schools are getting frustrated with the continuous emanation of chaos and uncertainty from the Ministry. St Cuthberts College has announced that it is giving up on both the Year 11 curriculum and assessment for NCEA Level 1. It is developing its own Year 11 curriculum and diploma.
Other schools gave up on NCEA some time ago. Many now use Cambridge International exams or the International Baccalaureate.
By the time the new standards and curriculum are fully implemented, there may be no schools left that want to use them.

Public health returns to form
Dr Eric Crampton | Chief Economist |
Meet the new public health. Same as the old public health.
Covid had no silver linings. But I had at least hoped public health would lay off hectoring us about food and drink for a little while. Surely they would have more pressing concerns.
Last week, the government resurrected its Public Health Advisory Committee. It would be tasked with one substantial research project for the year.
Would it focus on infectious disease or go back to trying to ban or tut-tut tasty things?
I’m betting you can guess. Public health has form.
Saying infectious disease had taken a back seat to lifestyle regulation in the decade leading up to the pandemic would be too charitable. Policy around infectious disease wasn’t in any back seat. It wasn’t even in the car. It was an unsecured bit of load bouncing around in the trailer, with nobody even checking the rear-view mirror occasionally to ensure it was still there.
The Ministry of Health hadn’t been able to ensure hospital workers were vaccinated during 2019’s measles outbreak. They blamed the District Health Boards, only two of which had bothered keeping records. But the Ministry of Health had been able to compel the DHBs to stop selling soda in the hospital cafeterias.
Infectious disease just wasn’t as important to the Ministry as soda.
Has the pandemic changed anything?
The big Covid policy response is over. But a lot of work could be done in preparation for worse variants or new viruses entirely.
Would improved ventilation standards, especially at schools, be cost-effective?
Are our medicine and vaccine approval processes nimble enough to handle fast-moving viruses?
I desperately hope we never need Managed Isolation and Quarantine again, but if we do, could we design a system that sucked just a bit less?
The Committee won’t be looking at any of that.
Instead, the Health Minister has asked it to investigate healthy food. Committee Chair Kevin Hague wants to know, “what would a fantastic food retail environment look like?”
I know what a fantastic food retail environment looks like. My favourite supermarkets deliver it every day. They make it easy for me to buy the tasty things I want to eat and drink. If they don’t, my business goes elsewhere.
There’s a tougher research question out there. Harder even than the ones I’ve suggested.
How do we get public health to stop pestering about food and drink when they can’t even keep on top of plummeting childhood vaccination rates?

On The Record

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  • Want more competitive markets? You should like deregulation
  • Want to ban foreign-flagged ships from carrying goods between NZ ports? The US has a few warnings about that
  • A tribute to Bob Lucas - one of the pantheon of the Econ-Gods
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