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Insights 19: 2 June 2023
Webinar report launch: Paving The Way - Learning from New Zealand’s Past to Build a Better Future
Podcast: Dr Michael Johnston and Prof Gary Hawke on the evolution of teacher training in New Zealand
NZ Herald: Roger Partridge on why Auckland Council should ditch its emissions reduction policy

Memo to Hipkins: Taxpayers’ money is not free
Dr Bryce Wilkinson | Senior Fellow |
When I was a lad in the 1950s, I absorbed from adults the notion that it was shameful to be reduced to applying for a state handout. Self-reliance was virtuous. It respected others.
Reading the Prime Minister’s speech to his party faithful last week was a salutary lesson in how attitudes have changed. Today, making handouts more freely available is virtuous, self-reliance is in the past.
Hipkins’ speech extolled Labour’s litany of handouts. He mentioned paid parental leave, free school lunches, increased benefits, free subscriptions, free public transport, free early childhood education and much other spending and a raft of subsidies for this and that.
I counted over a dozen such spending items. Each might make sense if taxpayers’ money is free, but it is not free and the speech ignored the question of overall value-for-money.
When it comes to government handouts, what is free to the user invites waste.
To pick up a prescription medicine is one thing, to follow the prescribed treatment is another. Expect more unused pills in households’ medicine shelves.
As the late Milton Friedman famously quipped, “there is no such thing as a free lunch”. Price is one thing and cost is another. Someone must pay for the lunch because food is scarce.
When the ancient Romans subsidised bread, some fed it to pigs because the price was so low. Some of the wheat from conquered Egypt was wasted.
Taxpayers work long and hard to earn the income that is taxed. They go without worthwhile things to pay their taxes.
All governments should hold themselves responsible for ensuring that their spending provides commensurate value for taxpayers. Taxpayers are not geese to be plucked with a minimum amount of hissing.
Taxpayers are already paying vastly more in taxes than Labour told them to expect back in 2017. Under its electioneering fiscal plan, it proclaimed that its policies would only increase Total Crown tax revenue for the five years ended June 2022 by $10.2 billion. We now know the actual increase. It is $29.3 billion.

The full cost is much greater. That is because Labour’s planned five-year spending increase of $11.7 billion was much greater at $65.3 billion. The extra borrowing represents deferred taxation..
Take a bow Mr Hipkins.
Everyone is demeaned when governments hand out money as if it is free.

University challenge
Dr James Kierstead | Research Fellow |
Last week Victoria University of Wellington announced that it was looking to cut some 230 to 260 jobs as part of its plan to tackle a $30 million deficit. The news followed an announcement by the University of Otago that it would shed ‘several hundred’ positions in an effort to fill a $60 million dollar hole in its budget.
As an academic at Victoria, I’m dismayed at the news. Colleagues who have worked long hours fostering students and expanding our knowledge are now in scope for ‘review.’ The university, and in many cases the country, will lose valuable knowledge and skills as highly qualified scientists and scholars are given notice.
What exactly has led to this is already the subject of debate. Some factors (low unemployment, high Wellington rents) were surely beyond the control of university management. Others just as surely weren’t – including some questionable spending priorities, from fancy new buildings to expensive re-brandings.
A short piece like this obviously isn’t the place to settle that debate. But it might be the place to supply some data on one issue that isn’t getting that much attention.
This is the size of our universities’ administrative bureaucracies. In a forthcoming report for the Initiative (co-authored with Michael Johnston) we reveal that the majority of staff at New Zealand universities are non-academics.
Indeed, New Zealand universities have the highest percentage of non-academics as a proportion of their workforce (59%) of any of the countries we looked at. One other country (Australia) also employed more non-academics than academics, but by a smaller margin.
Academics earn higher salaries, on average, than administrators, so New Zealand universities spend less on non-academic pay than they do on academic salaries. Still, at roughly 40% of total salary expenditure, spending on non-academic staffing represents a significant outlay.
With more blue-collar employees like cleaners increasingly outsourced by universities, much of this is spent on managerial staff. A sizeable amount goes to senior administrators, including vice-chancellors, though the average vice-chancellor salary in New Zealand (some $556,000 in 2021) is substantially lower than in Australia and the US.
These senior administrators are now going to have to make some very tough decisions. And debate will no doubt continue on how these universities got into the dire situation they now find themselves in.
But it’s in everyone’s interest to have as accurate a picture as possible of what our universities spend their money on, including administration.

Kiwi diplomacy as clear as mud
Dr Oliver Hartwich | Executive Director |
If there is one constant in New Zealand’s foreign policy, it is its unpredictability. But last week, Defence Minister Andrew Little asserted that New Zealand “knows which side we’re on.”  

Which was news to us. Well, it was good news, somehow. Now, if only Little would be so kind as to explain which side that was. 

One might liken New Zealand’s international policy stance to a prolonged game of hide and seek. While we Kiwis are still diligently counting, the other nations have moved on. They’ve enjoyed a leisurely cup of tea, completed a second round and are now perusing the rule book for the next game.  

And us? Well, we are still counting. 

Yet, there’s no cause for alarm, because Little just assured us we have selected our side. Our allegiance, we’re told, is with “international law,” “principles,” and “values.” Hear, hear. 

But does this clear things up? Because there is no country on earth saying it does not care for international law, principles and values. Unfortunately, those foreign values and principles might not be ours. 

Little’s statement is about as helpful as saying we’ve decided to support whichever team kicks the most goals in a football match. We will know once the final whistle blows. 

So let’s engage in a thought experiment, shall we? Australia and, just for the sake of the argument, Denmark enter a heated dispute over sustainable farming practices.  

Where do our allegiances lie here: with our trans-Tasman frenemies or the environmentally diligent Danes? Evidently, we shall remain unwavering to our principles and values. Whatever they might be in this scenario. 

Truth be told, deciphering New Zealand’s foreign policy is like attempting to map the Bermuda Triangle on a foggy morning in Invercargill. Yes, it’s somewhere in there, but you’d need a state-of-the-art GPS, a military-grade compass, and an expert team of cartographers to make headway. 

But worry not, for according to Little, we’ve picked a side, and we’re sticking to it. Because that is what our decisive, independent foreign policy is all about. 

So, let us relax, dear Kiwis and international observers. Solemnly New Zealand has taken a stance, for once. 

Never mind it is as clear as a muddy puddle, subject to the whim of the tides, atmospheric pressure, and the latest All Blacks score.  

But rest assured, it’s there. A resolute, unwavering and utterly cryptic side. The right side. For New Zealand. 

And honestly, that’s just the Kiwi way, isn’t it? 

On The Record

Initiative Activities:   
All Things Considered
  • Graph of the week: if baseball positions had been named by the British
  • New homes consented down for the third month in a row
  • Why Britain doesn't build
  • How would you even try to satirise this hot mess?
  • The biggest problem with the subsidy for NZ Steel? They weren't thinking big enough. Nuclear steel. Think about it.
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