You are subscribed as | Unsubscribe | View online version | Forward to a friend

Insights 18: 26 May 2023
NZ Herald: Oliver Hartwich on New Zealand's road to economic recovery
Podcast: Eric Crampton and Scott Wilson on rail transport funding
Newsroom: Eric Crampton and Dennis Wesselbaum on fringe economics

Budget gets worse with age
Roger Partridge | Chairman & Senior Fellow |
The eight days since last Thursday have not been kind to Minister of Finance Grant Robertson’s budget. Initial assessments flattered to deceive. Sure, it was a big-spending budget – but it could have been worse.

But eventually, Stockholm syndrome wears off. Then dismay sets in. The size of the transgressions becomes more transparent. The ‘kindness’ proves to have been cynical.

Robertson’s first objective should have been controlling inflation. Rising prices hurt businesses, workers, and consumers.

Even in non-inflationary times, the Public Finance Act requires the Minister of Finance to exercise prudent fiscal management. A budgeted increase in non-Covid spending of 12.6% – nearly double the rate of inflation – with the economy at over full employment was hardly prudent.

On Wednesday, the Reserve Bank duly raised interest rates by 25 basis points. Governor Adrian Orr claimed the Bank has raised the OCR high enough to contain inflation. This is a heroic assumption. It required Orr to ignore the budget’s surge in spending and take projected future declines in expenditure as a percentage of GDP at face value. Yet Robertson has persistently failed to keep spending within past forecasts. 

But, even if those projections prove accurate, Treasury concluded that the budget will keep interest rates “higher for longer.” A cap on future rate rises is cold comfort for mortgage holders already hurting from high interest rates.

Then we come to the dollops of poorly directed spending. Universal free prescriptions and free public transport for children have superficial appeal. But for a Minister of Finance who has talked so much about wellbeing, they are little more than a cynical election bribe.

Had Robertson been motivated by wellbeing, his spending would have been more directly targeted. Free prescriptions for the residents of Remuera and Karori hardly address need.

The middle-class welfare was bad enough. But the budget’s huge helping of corporate welfare subsidising the video-gaming industry was unfathomable. Kiwi consumers don’t care whether their video games are made here or in Australia.

But perhaps the budget’s biggest fault is what it didn’t do. It failed to address the root cause of the housing affordability crisis. It offered nothing to ease the acute shortages of healthcare professionals. Nor the crime wave sweeping the country.

And while it included generous new allowances for schools, the spending was misdirected. Despite their appeal to politicians, the evidence suggests smaller classroom sizes are not what is needed to fix the education system’s woes.

All-in-all, the whiff from Robertson’s sixth budget just gets stronger. He’ll be hoping, come October, that voters don’t sniff him out.

Back to the farm
Dr James Kierstead | Research Fellow |
Spread out over 8, 000 acres (hence ‘the Farm’), Stanford University’s campus is an impressive sight. Palms line the triumphant main drive. Sleek modern buildings ring a historic core of sandstone quads. Sprinklers soothe the manicured lawns.

I was lucky enough to spend six years at Stanford, and a couple of weeks ago I got the chance to go back for a conference. The campus seems as serene as ever.

But all has not been well on the Farm.

In March, Trump-appointed judge Kyle Duncan was shouted down by students at Stanford Law School as he tried to give a talk. The students were encouraged by Tirien Steinbach, an Associate Dean for Diversity, Equity, and Inclusion, who told the students that Duncan had ‘caused harm.’

The episode seemed to encapsulate the threat posed by powerful DEI administrators sceptical of free speech.

Then, though, there was something of a wind-change. After national and even international outrage over the deplatforming, Dean Jenny Martinez sent a 10-page memorandum to students in which she mounted a robust defence of free speech.

The First Amendment to the US Constitution did not, Martinez reminded students, cover heckling or shouting down. The Federalist Society, which organized Duncan’s visit, had the same rights of free association as any other student group.

For some, Martinez’ statement did not go far enough. No students were disciplined for their role in deplatforming Duncan, even though their actions clearly crossed the line established by Stanford’s own policies as well as First Amendment law.

Martinez did, though, announce a half-day training session on free speech that would be mandatory for all law students. Steinbach was suspended.

Given the dire straits in which academic freedom currently finds itself, that in itself represents a significant turnaround.

What’s more, there are signs that Stanford isn’t the only college that’s finally finding its nerve. The same month as Duncan’s deplatforming, Cornell’s President Martha Pollock vetoed a student attempt to mandate trigger-warnings. Meanwhile at Harvard, 90 professors co-founded a new Academic Freedom Council.

Opulent American colleges like Stanford may seem a world away from New Zealand’s public universities. But prestigious institutions often make the weather when it comes to the attitudes that hold sway on campuses – not only in the US, but across the Anglophone world.

And that might just mean sunnier days ahead for academic freedom not only in the US, but in New Zealand too.

The spirit of forgetfulness
Dr Tony Burton | Research Fellow |
As we get older many of us are a bit forgetful. Keys, glasses, schools and Crown entity subsidiaries. Who has not left one on a shelf next to the front door, only to find it missing when they pop out to the shops?

I am not sure if the Public Service Commission (PSC) has problems with keys and glasses, but they definitely have a problem with the last two. Their website boasts “Te Kawa Mataaho Public Service Commission leads the public sector in the service of our nation”. (I always thought the leader of the state was the elected Prime Minister, but maybe age is getting the better of me?)

Anyway, the organisation proudly boasting of its leadership of the public sector also has a webpage where it “maintains an up-to-date list of all central government organisations”. (link below in “All Things Considered”)

Except they do not. Rather endearingly they tell us they do not on the same webpage that declared their list up to date. More precisely, they note there are “Approximately 150 Crown entity subsidiaries” and “Approximately 2,416” school Boards of Trustees.

I leave expertise on education to my New Zealand Initiative colleague Michael Johnston, but find the schools themselves hard to miss: classrooms, a playground, and hordes of children stand out in ways glasses and keys do not. You would definitely bump into one if it were on that shelf by the front door.

Crown entity subsidiaries are harder to see, though no less important for all that. The last time the PSC tried to count them (2018) they found “approximately 150” was at least 166.

Crown Entity subsidiaries are a bit of a mix. They include Truffle Investment New Zealand Ltd - I am not making that up – whose website is one of those with flash animation that tell you very little. Another is Massey Ventures Limited whose “role is to commercialise intellectual property and innovative research within [Massey] University. To … turn their innovative ideas into real-world commercial opportunities.”

You do not have to be a PSC believer in the state sector trinity of Commissioner, Leadership and the Holy Spirit of Service to think these companies might be important. At the very least, the leader of the “public sector in the service of our nation” could know how to count them?

In any case, I found my glasses, my keys are in my pocket and I have a bit of time. Think I might invest in a truffle.

On The Record

Initiative Activities:   
All Things Considered
Copyright © 2024 The New Zealand Initiative, All Rights Reserved

Unsubscribe me please

Brought to you by outreachcrm