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

Insights 8: 17 March 2023
Research Note: Made by Government: New Zealand’s Monetary Policy Mess
Podcast: Oliver Hartwich and Malcolm Alexander on localism and tax sharing
Newstalk ZB: Leighton Smith and Oliver Hartwich discuss the issues New Zealand faces

Localism: The initiative that has won over the nation
Dr Oliver Hartwich | Executive Director |
No matter how good an idea, it takes time for the entire country to hear about it.

But that time has now come for localism.

When the Initiative started in 2012, we were a lone voice in promoting ‘localism’. Even the term ‘localism’ was unknown in New Zealand back then.

What we meant by the word was empowering communities to make decisions about their own development. To put local people in charge. To give their councils financial incentives to grow.

So it was with great excitement that this week we received the results of a new opinion poll, commissioned by the Taxpayers’ Union.

The Taxpayers’ Union asked a representative sample of New Zealanders if they support sharing the proceeds of growth between central and local government – a key tenet of localism.

This was their precise question:

“When people build new houses or shops, the Government in Wellington receives money from taxes like GST and income tax. At the same time, local councils must fund things like roads, parks and services that are needed for the development. Would you support or oppose at least some of the extra tax revenue from new developments staying in the communities where it is generated instead of going to central government?”

In response, 70% of New Zealanders said they support such localist revenue sharing.

The number of supporters was almost the same among men (69%) and women (71%).

It was similar among young (68%), middle-aged (73%) and older New Zealanders (69%).

It was supported by a majority of National (74%), Labour (68%), ACT (80%) and Greens (72%) voters.

It was popular in Auckland (65%), Wellington (64%), Christchurch (59%). It was even more popular in provincial cities (70%) and towns (78%).

New Zealanders do not want Wellington to run their lives, and they do not want to be governed by distant bureaucrats.

Instead, New Zealanders have expressed overwhelming support for localism. They want their communities to have a greater say in local development and reward them for their hard work in making their communities grow.

Localism has become a mainstream idea. That is encouraging, and we may expect political parties to incorporate localist policies into their election manifestos for this year’s election.

After a decade of promoting the idea, we at The New Zealand Initiative are proud to have moved the debate on localism forward.

It is a great idea whose time has come.

To find out more about how the idea of localism grew in New Zealand, listen to the podcast conversation between Malcolm Alexander, former CEO of Local Government New Zealand, with Oliver Hartwich

The mess the government has made of monetary policy, and the task ahead
Dr Bryce Wilkinson | Senior Fellow |
Inflation is a problem for the first time in 30 years. Property prices have whiplashed. The Reserve Bank of New Zealand (RBNZ) has cost taxpayers $9 billion, for no clear net benefit.

What underlies this mess? This week the New Zealand Initiative published my report addressing that question.

At the start, I thought that responsibility for these developments lay mainly with the Governor. Along the way, I found that the Minister of Finance had played a more directive role than I had thought.

Concerning the Governor, the smoking gun behind the current breakout in inflation is the failure of the Bank’s experts and models to forecast the rise in inflation. Inflation was unintentional.

A serious effort to improve the Bank’s forecasting models should be a priority, but I have not seen evidence of that.

Indeed, the Bank’s employment priorities have been elsewhere. Whereas staff numbers in the Reserve Bank of Australia (RBA) rose a mere four percent between 2017 and 2022, the rise in the RBNZ was 80 percent. Yet, the number of the RBNZ’s “economics” staff in 2022 was less than in 2013.

The report documents the Governor’s advocacy position on controversial and distracting political issues such as climate change and ethnicity.

Another concern is how underpowered the RBNZ is at the top levels and on the critical Monetary Policy Committee, compared, for example, to the RBA.

However, documents released under the OIA show that the Minister of Finance had instructed the Bank to hire based on gender, with no mention of merit. He has also reaffirmed the bizarre policy of not appointing external monetary policy researchers to the key Monetary Policy Committee. And he had taxpayers underwrite the gamble that lost $9 billion.

The government further undermined the focus of monetary policy by introducing contending considerations—maximum sustainable employment and “more sustainable” house prices.

The Minister has also blithely required the RBNZ to use monetary policy to “promote the prosperity and wellbeing of New Zealanders … “. Such open-ended instructions invite presumption and distraction.

The only thing monetary policy can reliably control is medium-term inflation. That needs a tight focus.

The bottom line is that the next Minister of Finance faces a big task to turn things around.

The report, “Made by Government: New Zealand’s Monetary Mess”, can be accessed here

Down the memory hole
Dr Michael Johnston | Senior Fellow |
You may recall New Zealand’s sixteen former Institutes of Technology and Polytechnics (ITPs) being merged to form the mega-Polytech, Te Pūkenga.

But if you do, it is a false memory.

Repeat the following until you believe it:

Te Pūkenga has always been the only Polytech in Aotearoa.

In George Orwell’s Nineteen-Eighty-Four, events inconvenient to the totalitarian government are thrown down a ‘memory hole’ in the Ministry of Truth. Once committed to the memory hole, it is if the offending event had never occurred.

Te Pūkenga Chief Executive Peter Winder has built a memory hole of his own. In a new ‘style guide’, his staff are told that they should not refer to the merger. “We always refer to ourselves as Te Pūkenga”, they are admonished.

In fact, though, referring to employees of Te Pūkenga as ‘staff’ may get me into trouble with Winder’s thought police. As the new style guide makes clear, Te Pūkenga does not have staff. It has ‘work friends’.

Work friends who teach courses at Te Pūkenga are not teachers, but ‘learning facilitators’. People enrolled in those courses are not students, but ‘ākonga’, which means ‘students’.

It is very important to use the right words. And the right words at Te Pūkenga, are those dictated by the style guide.

The importance of using the right words actually has little to do with what those words mean. In fact, the right words and the wrong ones often mean exactly the same thing.

Orwell understood that controlling what people say is the best way to control what they think. In part that is because human thought is largely expressed in words. It is also because compelling people to use particular words establishes an attitude of supine obedience.

Winder assures us that there have been no complaints about the style guide. Citizens of Soviet Russia didn’t complain to Stalin about queuing to buy bread, either.

The recent spate of linguistic cleansing at Te Pūkenga follows another incident of censorship at the institution. Last week, Te Pūkenga staff – sorry, work friends – were told not to publicly express political views, because they are public servants.

Some wrong-thinking academics from other institutions have claimed that this pronouncement violates academic freedom. Clearly, these troublemakers are not keeping up with the programme.

At Te Pūkenga, academic freedom is just another old-fashioned idea that’s been thrown down the memory hole.

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