The Post: Ideas for the electricity market the Government didn’t come up with

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Early in my career, I received an email from an inattentive – or possibly just confused – fan delighted by all this anti-inequality work being carried out “by Max Bradford”.

The unintended joke, which older readers will have got straightaway, is that that Max was not an egalitarian commentator but a 1990s politician perfectly happy to see inequality rise, as long as it served his Cabinet’s attempts to remake government in the image of the market.

Bradford was, in particular, responsible for the market-based reforms that gave us the current electricity system. And it is this system that is now dominating headlines – “the only game in town”, as one insider put it to me last week.

Power prices are forcing regular factory closures, while over 350,000 households endure energy poverty. Next year’s election will take place after what could be another politically brutal winter, and the government knows it.

Not that its response this week suggested as much. Torn between Act’s Bradford-esque desire to fully privatise electricity supply, and New Zealand First’s pro-nationalisation rhetoric, Energy Minister Simon Watts delivered a grab-bag of incoherent tweaks. Commentators were unimpressed: even the generally pro-business NBR said he had “failed to deliver a solution”.

Apart from a vague plan for extremely expensive imported gas, and even-vaguer noises about toughening regulation, Watts’s main promise was to give the state-owned gentailers more capital if they want to boost generation. Yet these are organisations loaded with cash.

As the Council of Trade Unions (CTU) pointed out earlier this week, the gentailers have paid shareholders over $13 billion in dividends since they were part-privatised 12 years ago. That is at least twice their capital investment in the same period, the CTU estimates. The gentailers could have built more capacity, but have chosen otherwise.

Critics have described Watts’ proposal as, in essence, a feeble plea for profit-oriented firms to go against their basic nature and disturb a system that suits them well. And it is certainly true that, in recent decades, the world has learned just how hard it is to get private firms to pursue the public good – via the fabled “invisible hand” – in areas where there is no natural market.

Evidence review after evidence review has found no overall positive effect from privatising prisons, schools, buses and the like. In Britain, Margaret Thatcher’s carelessly privatised, debt-laden and heavily polluting water companies are among the great policy disasters of our age, right up there with America’s grotesquely privatised health system.

Unsurprisingly, then, global efforts to challenge the status quo are gradually reviving. The Frontier report into our electricity sector, which the Government commissioned but then effectively buried this week, may have recommended full privatisation. But it also displayed a striking clarity about the sector’s problems, proposing other, more useful interventions that could have seriously curbed the gentailers’ excess profits.

In the UK, meanwhile, the Labour government has established Great British Energy, a state-owned company that is spending billions of pounds on offshore wind and other renewable schemes. Polling shows it has clear public support.

In Australia, Victoria’s Labor party has just revived the State Electricity Commission, privatised in the 1990s but now rejuvenated with A$1b in funding. Again, it’s pursuing renewable energy; again, it’s an electorally successful proposition.

Back home, the CTU this week made an intriguing proposal, urging politicians to use the dividends from the state’s remaining 51% of the gentailers to gradually repurchase the privatised 49%. Wholly state-owned gentailers could then be more easily directed to bring on new supply.

Given the failures of part-privatisation, it’s an idea worth contemplating. But even when fully state-owned, the gentailers were hardly model enterprises.

Some would harken back still further, to the pre-1990s Electricity Corporation of New Zealand, which valorised engineers over corporate-style managers. But even conventional state control can have its downsides. Engineers may over-build, and ministers may manipulate state-owned enterprises for political ends.

One possible solution is to run such enterprises in more deeply democratic ways. A model here is Paris’s water supply, privatised – weirdly for the French – in the 1980s but renationalised in 2010, after independent audits found water charges were wildly excessive and investment levels disappointing.

The new public operator, Eau de Paris, saved €35 million through increased efficiency in its first year alone, allowing it to cut charges by 8%. Nine in 10 Parisians are satisfied with its service.

Central to this success is citizen oversight. A City Water Observatory– with members drawn from NGOs, unions, universities and elsewhere – vigorously scrutinises Eau de Paris from outside. The Eau de Paris governing body, meanwhile, comprises not just city councillors but also staff delegates, water and sanitation experts, and representatives of both residents and environmental groups.

This broadly democratic make-up helps balance the equally broad range of goals a public body must serve, while the accountability mechanisms ensure transparency and efficiency. Let us hope that our own election campaign next year will canvass similar ideas.

The Spinoff: The Treasury’s dire warning – New Zealand may have to look a bit more like Europe

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Amid a slew of apparently terrifying graphs and stern warnings about the public finances, a startling truth has emerged from the Treasury’s latest long-term forecast: New Zealanders may have to resign themselves to paying taxes at a rate most Europeans would take for granted.

The revelation arises from something called the Long-term Fiscal Statement (LTFS), a 40-year forecast of government spending and revenue that the Treasury regularly produces. Normally these statements get ignored: at Wednesday’s launch of the latest iteration, Dominick Stephens, the Treasury’s chief economic adviser, noted it had been “beating this drum for 20 years”.

The ambient fear about New Zealand’s public finances, however, means that this latest statement may have more impact than most. It will certainly embolden conservatives who believe drastic spending cuts are needed lest the country go bankrupt.

Sensational headlines can, of course, be generated by those who like such things. As an ageing population pushes up superannuation and healthcare costs, the fiscal statement projects that, on current trends, state spending would reach 45% of GDP by 2065, while revenue remained at 30%. This would imply annual deficits of tens of billions of dollars; the borrowing needed to close the gap would balloon out to twice the country’s annual income.

In truth, though, the picture is not so bleak. These projections all assume no changes would be made, when in reality they will. New Zealand’s public institutions are sufficiently strong, and the citizenry sufficiently engaged, that corrective action would be taken well before disaster struck. 

We also start from a relatively strong position, at least compared to some other nations. The government’s debts, accounting for assets like the Super Fund, are currently just one-fifth of national income. The government does have what the Treasury calls a “structural” deficit – an enduring tendency for outgoings to exceed incomings – but, for better or worse, Nicola Willis’s cost-cutting is forecast to eliminate that in a few years’ time. There is currently no reason whatsoever to panic about the state of the public finances.

And although the Treasury is required by law to look out 40 years, it is debatable how much such projections mean. By that stage, we may all have been enslaved by robots.

Looking ahead a couple of decades – roughly one generation – may be more useful. By 2045, even if nothing changes, the Treasury’s projection is that government spending will be around 35% of GDP. To balance the books, revenue would have to rise to match. But as the fiscal statement makes clear, this would only put New Zealand in the middle of the rich-nation pack.

To recap: even if the New Zealand government does nothing to change its spending patterns for the next 20 years, even if it takes no steps to deliver healthcare more efficiently or constrain the cost of New Zealand Super, it would only need to raise tax revenue to the levels currently enjoyed by Slovakia, Hungary and the UK. Even if one insists on looking out further, to 2065, the cost of unchanged Super and healthcare could be funded by raising tax to 37% of GDP – roughly on par with the Netherlands and Germany, and significantly below Denmark.

These are all countries with far stronger economies than ours. So there is, once again, no cause for panic. That said, planning should start now: as the Treasury pointed out on Wednesday, making changes early and gradually is far better than waiting till the last minute.

It need not be all about revenue-raising, of course. If we are to pay extra tax – the well-off in particular – it would be good to get more from it than just preserving the lifespans and retirement incomes of the older generation. Efficiencies there could free up funds for climate mitigation and the like.

So we should be seeking ways to deliver healthcare better, potentially through stronger prevention and community care services. That said, a recent report from the Association of Salaried Medical Specialists warns that although many countries have promised healthcare efficiencies, actually delivering them turns out to be quite hard. Meanwhile, as the Treasury sagely notes, technological advances like AI “may help ease some [spending] pressures” but “cannot be relied upon to close the gap between revenue and expenditure”.

Reducing Super costs is also an option. We could raise the retirement age to 67 but keep it at 65 for people medically unable to work longer (if there is a feasible way to do that), or implement means-testing – though the latter brings immense practical and political challenges.

In the end, though, any spending gap could be closed with tax reforms that would be totally unobjectionable in comparable European countries: a capital gains tax (CGT), for instance. “Taxing all types of income more evenly,” the Treasury notes, “would reduce the incentive for people to reclassify their income to minimise taxes … [and] make it easier to use income taxes to raise additional revenue.” 

The income made from selling assets probably accrues disproportionately to older generations, making a CGT an especially appropriate way to fund higher healthcare and Super costs. The same could be said for inheritance and wealth taxes.

So the case for panicking about the public finances remains unconvincing. The case for tax reform, by contrast, just got a whole heap stronger.

The Post: Wellington’s new waste plan is a step toward a greener city

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In the late 1970s, my grandmother Kae Miller was briefly famous for persuading the Porirua City Council to let her live on its landfill, as a protest against excess consumption and waste. A one-woman tip shop, operating out of a shed made from old packing crates, the “Porirua tip lady” – as she was known – helped visitors re-use rather than discard their goods, until the council changed its tune and evicted her a couple of years later.

Half a century on, Kae would have been dismayed to see waste piling ever-higher – but heartened by the signs that, at long last, those piles might soon start shrinking.

Of particular note: without much fanfare, many local councils have started weekly kerbside collections of food scraps. Auckland, Hamilton, Christchurch, New Plymouth, Timaru and Tauranga all do it. The latter estimates it has halved the volume of waste going to landfill, turning 10 million kg of food scraps into compost for farms and orchards instead.

Next up is my hometown, Wellington. Amidst the city council’s infighting and dysfunction, few have noticed one of the bright spots in its recently approved long-term plan: a major upgrade to the way the capital handles its waste.

This re-think has been a long time coming. For years, the council was – bizarrely – barred from shrinking the Southern Landfill, because sewage had to be piped there and, under a set formula, mixed one part sludge to four parts rubbish.

So the new Moa Point plant – well over-budget, admittedly – doesn’t just transform sludge treatment: it’s the foundation stone for wider reductions in waste. Whereas the council had planned a new 100-year landfill, it can now make do with a 35-year extension of the current one.

Progress, like something mechanical, clicks together slowly, incrementally. Local councils are constantly under attack but, on this issue at least, Wellington is heading in the right direction. Next up: kerbside organics collection, starting in 2027.

Food scraps and garden waste make up a startling 57% of Wellingtonians’ weekly kerbside rubbish. Even when one includes waste from demolition and other commercial sources, organic material comprises one-quarter of the Southern Landfill. Starting to divert that – as well as the roughly one-quarter of landfill made up of sludge – could be transformative.

It matters for the climate, too. When food scraps are properly composted with plenty of oxygen around, they don’t release vast amounts of methane; but when flattened under the landfill’s oxygen-less piles of rubbish, they do. Nearly one-tenth of our planet-heating methane emissions come from organic waste.

Ideally, we wouldn’t need organics collection because everyone would do their own composting. But, as an ardent composter myself, I can tell you that’s totally unrealistic: most people lack the required space, knowledge and commitment. A council trial in 2022 showed kerbside collection works twice as well as trying to get people home composting.

And once the green matter is collected from its sealed containers kerbside, private operators can turn it into compost and clean energy. What was once waste becomes profit. It’s a sizeable step towards a circular economy that finds new life for materials rather than simply discarding them.

Some councillors complain that this isn’t “core” business, but tackling waste is surely one of the basics. Surveys and submissions show residents back the organics plan. And what, in any case, is a more “core” activity than protecting the planet?

The organics collection will also prompt further change. So much green matter having been redirected, rubbish collection will drop from weekly to fortnightly, collected mostly via bins not bags. Recycling, though largely unchanged, will be slightly enhanced.

Collection will become more efficient, too. Today, 60% of Wellingtonians pay for costly and inefficient private rubbish collection, requiring multiple unco-ordinated trucks to circulate around the suburbs.

Under the new system, most residents will be covered by a co-ordinated council scheme, albeit one that’s still contracted out. This should save money: the scheme’s estimated cost is no more than $7.21 a week per household, less than most pay for private collection. (Within that, the organics component will be up to $2.90 a week.)

The waste plan is, inevitably, imperfect. At least initially, the new collection system won’t touch the city centre, owing to concerns about bins cluttering up packed CBD streets and inadequate waste storage areas in apartment blocks.

Meanwhile, households who already compost, and otherwise minimise their waste, will subsidise those who don’t. But as a member of the former club, I’m able – and happy – to take that hit for the greater good.

Organics collection is, like recycling, low down the hierarchy of waste-minimisation activities. We must do more to prevent food waste occurring in the first place: reform supermarket practices, buy only what we need, and not let food go off.

But council-run composting is still a great innovation – and one which would, I think, meet with my grandmother’s approval.

The Spinoff: The one Australian democratic innovation New Zealand should adopt

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There is an anecdote that, for Iain Walker, perfectly illustrates the potential for getting ordinary Australians more deeply involved in politics. In 2016, in his capacity as the executive director of the New Democracy Foundation, he was helping run a “citizens’ jury” in which 50 regular people were brought together to consider whether South Australia should host a nuclear waste disposal facility.

On the opening day, a member of the Nuclear Fuel Cycle Royal Commission – an elite panel that had already backed the nuclear waste plan – was standing next to one of the jury members, a tradesman in concrete-splattered work gear. In the latter’s hands was the 320-page Royal Commission report, curled into a tube.

When the Royal Commissioner asked what he’d made of the report, the tradesman responded: “Well, I’ve had it in my ute and I’ve been reading kind of a chapter every couple of days. I’ve got to tell you, I didn’t understand Appendix H at all. Chapters three through seven make total sense. [But] I think you missed a few things around costings, etc., and I’ve got a lot of questions around that.”

For Walker, the anecdote underscores just how much political and media elites underestimate members of the public and their ability to take part in decision-making. Following a report from the above jury, a subsequent larger one – this time featuring 350 people – was convened. It came out strongly against the nuclear waste plan and, partly as a result, the idea was shelved.

Such stories are repeated across the 40-plus citizens’ juries that Australian government agencies have run. The idea behind these forums – the larger version of which is sometimes called a citizens’ assembly – is that in the right conditions, ordinary people may be better problem-solvers than politicians are.

A citizens’ jury brings together a group of people designed to be representative of a region or country, their mix of age, income, gender and ethnicity making them a “mini-public” or “the nation in one room”. They are given time to engage with the evidence, listen to experts and make consensus-based recommendations which the relevant government agency will respond to or – ideally – implement. The jury’s discussions are invariably better than those taking place in parliament, because its members aren’t bound by party lines or pushed into knee-jerk positions by a poorly informed public.

In New Zealand, only a handful of citizens’ juries have been held, and only one has had real impact: an assembly run by Watercare in 2022 that decided Auckland’s next major water source should be recycled “greywater”. However, a recent Porirua citizens’ assembly, in which tangata whenua and tangata tiriti sub-assemblies merged their ideas for how to tackle the climate crisis, shows there is life in the form yet.

Speaking on the phone from Australia, Walker acknowledges that this democratic innovation still faces major obstacles. Prime minister Anthony Albanese, for one, has been publicly unenthusiastic about citizens’ juries.

But the Liberals’ outgoing leader in the senate, Simon Birmingham, said after the last election that his party should embrace them, and the climate-focused “teal” independents are big fans. Even some Labour heavyweights, among them treasurer Jim Chalmers, have acknowledged voters will start to “drift away” from the party unless it can break long-standing deadlocks on issues like tax.

“That’s where you start to see the entry [for citizens’ juries],” Walker says. “The hardest step in politics, the hardest step in a reform conversation, is the first one. The first person to say, ‘I think we need to reform our tax system or industrial relations’ – all the arrows come their way. And that’s the problem a citizens’ assembly can solve.”

New Zealanders probably associate Australia less with democratic innovation and more with vicious attack ads and the debacle that was the Voice referendum. But Walker says the drive to reinvent Australian democracy has come a long way. “When we were standing up in 2011, saying, ‘Our democracy is about to get a lot worse’, people laughed at us. People thought we were out of our minds. You can probably guess we don’t hear that any more.”

The case for reform was only strengthened by the chaos of “what you could say was our Marie Kondo period of prime ministers – we had five in five years where they no longer sparked joy [and] we threw them away.” Citizens’ juries still seemed “too weird” to the average punter. But then Ireland stunned the world by using citizens’ assemblies to forge a public consensus that both abortion and gay marriage – long the subjects of bitter and entrenched division in the profoundly Catholic country – should be legalised.

Even in Walker’s backyard, citizens’ juries have achieved major feats, including, in 2014, setting out a multi-billion-dollar, 10-year budget for the City of Melbourne. How did Walker and colleagues equip those ordinary people for such a Herculean task?

First, he says, they got the city council to put the budget in concrete terms – “how many pavements, how much road, how many childcare centres, how many parks, how many after-hours services”. Second, the jury members were willing to get engaged because the problem was a pressing and relevant one: Melbourne’s politicians were caught between the unenviable options of a 43% rates rise or cancelling a swathe of projects. “To a reasonable person, it’s like, ‘Yeah, that [dilemma] is worth my time. I’ll get involved.’”

Finally, the jury members had tonnes of time: six all-day Saturdays, spaced three weeks apart. The end result: a set of recommendations, containing a mix of tax rises and asset sales, that “heavily influenced” the council’s final budget.

Democracy, Walker argues, must continually evolve. Despite his reservations about conventional politics, he describes election day as “one of the most innovative electoral processes out there”. Its key elements – including voting on a weekend, the secret ballot, Australia being the first country to allow women to stand for parliament, and compulsory voting – were all revolutionary in their time. But, he adds, “What have all these innovations got in common? They’re all over 100 years old … What’s missing, what no one thought was needed 100 years ago, was a format for regular people to mix. We need to build that institution.”

First, though, politicians must believe that ordinary people will make a constructive contribution. They must also accept they can’t predict what a citizens’ jury will decide – and, above all, acknowledge that the current system is badly flawed. That realisation, Walker thinks, is slowly dawning. This year’s Australian election was “the first time I’ve woken up … and heard a major party’s very senior representative say we need to look at [reforming democracy]. It’s the first time I’ve woken up after a federal election where a large number of independent candidates have asked us for advice on how to implement it.”

In New Zealand, democratic activists argue there are plenty of issues where politics is deadlocked, the trade-offs are complex, or the issues are otherwise ripe for a citizens’ jury. Reform of GMO laws, proposals for a four-year parliamentary term, cannabis law reform … the list goes on. In Australia, Walker says, awareness of the need for democratic innovation “has never been higher”. Whether that’s true on our side of the ditch is another matter.

The Post: How this Government is adding fuel to the inflationary fire

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Every time we buy a $10 block of butter or a $20 slab of cheese, we’re reminded of the cost-of-living crisis. Less obvious is the extent to which our bills are being inflated by this Government.

Just paid an extra $25 to get your car registration? That’s this Government. When a further $25 is piled on next year? That’s this Government. When you have to pay an extra $30 to renew your passport, or another $50 to file an appeal in court? This Government again.

The sharp increase in the state’s fees and charges, known technically as administered inflation, has so far caused little fuss. But it’s an embarrassment for National because it so directly undermines the party’s already-dubious claim to have conquered inflation.

Labour’s spending was never the main driver of rising costs, that being global supply-chain shocks and increased corporate margins. Inflation’s decline had little to do with National’s cost-cutting and everything to do with the Reserve Bank’s hiking of borrowing costs.

Indeed, far from taming inflation, the Government is making it worse. Although overall inflation is 2.7%, roughly where policy-makers want it to be, it is rising once more.

That is in part because administered inflation last month hit a startling 10.8%. This, the Reserve Bank believes, is the highest increase in public service fees and charges for at least 35 years. The Government is administering a significant price shock.

The extra vehicle registration fees will increase Kiwis’ costs by $530m. Cutting free and discounted public transport for young people raises household costs by $327m. Restoring the $5 prescription fee is a $620m hit to family budgets, while importers are being stung by $70m annually in extra Customs fees.

Council rates are also rising sharply, at an average of 12.2% this year, partly because National promised to “co-invest” in water infrastructure pre-election and then promptly broke that promise.

The Government has conspicuously abandoned its claim that its policy will be cheaper than Three Waters, an implicit admission that it is hiking water bills higher than they need to be. Its cuts to transport infrastructure and the like also force councils to raise rates.

More administered inflation is on the way. Having promised no fuel tax hikes this term, National has merely saved them up for later: a 22c rise, slated for 2027-29, will cost households over $1.4b.

A huge hole in the roading budget could well be filled with billions of dollars’ worth of road tolls. And some speculate that next year’s Budget, if it needs to find space for election-year tax-cut giveaways, could contain even more fee hikes.

Why does any of this matter? First of all, it reveals yet another incoherence at the heart of this Government’s economic policies.

Journalist Bernard Hickey, whose The Kākā newsletter has most tellingly highlighted this issue, says any reduction in inflation from state spending cuts has been “swamped” by the fee hikes.

Those hikes also feed through into other forms of inflation. In January, the Civil Aviation Authority more than doubled domestic passenger landing fees and increased other charges. Air New Zealand, accordingly, claims its airport charges have risen 6% this year, a cost it will pass onto consumers.

This upwards pressure on inflation forces the Reserve Bank to keep interest rates higher than it would like; meanwhile, ministers are breaking the decades-old convention around the bank’s independence and putting pressure on it to cut those rates more quickly. All this is quite contradictory.

The Government can of course claim that, if it hadn’t hiked fees and charges so sharply, it would have had to find those funds somewhere else. But that’s exactly what it should have done.

For the capital investment component, borrowing the money would have ensured future generations paid their fair share. And the day-to-day spending could have been managed without extra user-pays if the Government had not, for instance, restored $2.9b in tax breaks for landlords.

Hence the significance of the administered inflation shock. It is yet another choice by this government to give the well-off an easy ride while burdening hard-up households with cost after cost.

User-pays, which typically involves flat-rate fees, takes the biggest chunk out of the smallest budgets. Often, it also mis-characterises common-good services – such as access to justice – as private benefits.

One might have expected Labour to have made more of this debacle – although given the state of the public finances, the party may fear it will be unable to reverse the fee hikes, and thus cannot oppose them too loudly.

But it’s benefiting regardless: the latest polls show National has comprehensively lost its status as the party most trusted on the cost of living. Voters may not understand the finer points of inflation policy, but they know a mess when they see one.

The Post: Why all of us drinking less might help reduce hazardous consumption

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If you raise a glass of wine or beer to your lips this weekend, consider this question: even if you’re only a moderate drinker, should that beverage have been harder to come by in order to combat alcoholism?

This issue was brought to mind by RNZ’s revelation this week that booze lobbyists were consulted by the Ministry of Health on the design of its strategy to combat the harm that drinking can cause. This, inevitably, allowed the industry to make some dubious claims.

Spirits New Zealand’s chief executive, Robert Brewer, appeared to downplay the severity of the issue by arguing that hazardous drinkers constituted “just” 16% of adults. One out of every six would seem like a lot to most people.

The more subtle problem, though, lies in the Brewers Association’s claim that the ministry had erred by proposing “broad-based initiatives”, such as excise taxes and limits on the availability of alcohol, rather than those targeting only “harmful” consumption.

Aiming initiatives only at the worst offenders can, of course, seem sensible. It is also wrong.

To understand why, consider something called the prevention paradox, first identified by epidemiologists several decades ago. The paradox is that, for a given disease, people at high risk of contracting that disease constitute the minority of cases. Most cases – the bulk of the problem, in other words – are contributed by those deemed low-risk.

Take crime as an example. Around 2% of the population is deemed high-risk, and according to a 2018 government analysis, they will commit 15% of all crimes over the next 15 years.

That is massively disproportionate to the size of the group. But it also leaves the vast majority of crimes being committed by people who are not deemed high-risk. The “medium-risk” group are responsible for 28% of crimes, and “low-risk” people the remaining 57% of the total.

The 2018 analysis offers a compelling plain-language explanation: “High-risk people offend more on average, but low and medium risk-people offend more in total because these groups are much larger.” The implication for policy? “Both universal and targeted approaches are needed to prevent crime.”

The same arguments apply in areas like transport. A handful of genuinely dangerous drivers will cause a disproportionately large number of accidents. Overall, though, most accidents will be caused by people who consider themselves relatively good and normal drivers, simply because – once again – those people make up the bulk of the population.

As a result, public health experts argue that among the most effective anti-harm measures would be an overall reduction in car travel, generated by providing better public transport and intensifying cities so that fewer people have to drive to work. And, where people do still need to drive in urban centres, we should shift to lower speed limits for everyone.

This can seem irritating, or jarring: why should you, a “perfectly” safe driver, have to dawdle through town at 30km an hour? Unfortunately, as the prevention paradox tells us, millions of relatively safe drivers will otherwise generate the majority of damaging or even fatal accidents.

As with crime and accidents, so too with the big commercial creators of health-related harm – industries like tobacco, alcohol and gambling. Professor Boyd Swinburn of Auckland University told me this week there’s a “very tight” connection between the average level of consumption of such activities and the proportion of people with high and problematic levels.

Research indicates that if the average alcohol intake was reduced by 10%, the number of heavy drinkers would fall by a quarter. This highlights a second argument for broad-brush solutions.

In a world saturated by alcohol advertising and consumption, it is unsurprising that so many people develop an unhealthy relationship with the substance. If there is simply less of it in their surrounding environment, their exposure – and their likelihood of problem drinking – will probably decline.

One can see the same logic with driving. To some extent, we take our speed cues from those around us, so if relatively safe drivers drop their speeds, at least some of the people tempted to drive recklessly will change their behaviour.

Not all of them, though – hence the crime analysis’ argument that we need targeted as well as universal measures. Nor should we take too hard a line on everyday activities.

Drinking, for instance, and its associated substances like beer and wine, have a long and glorious association with fellowship, entertainment and relaxation. Consuming them in moderation can be one of the great joys of life.

But people should not complain too much about the mild inconvenience of there being fewer liquor outlets, narrower alcohol-purchasing hours, and higher taxes on booze. The bulk of the population might even benefit from consuming slightly less while enjoying it more – and, in the process, creating a social environment that helps those who are most at risk.

The Spinoff: How to design a wellbeing ‘meta-law’ that could actually make a difference

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Some politicians play the game better than others, but the smartest ones change the rules of the game itself. Most laws create something: a new penalty for shoplifting, a different type of school, an enhanced entitlement to paid parental leave. Some laws, though, change the basis on which all other decisions are made.

You could call them embedding laws or meta-laws. Some are uncontroversial. The 1993 Electoral Act, for instance, is the bedrock of the democratic system, determining how elections are run, MPs elected, and political parties registered.

Other such laws, though, embed a specific view of the world. For a long time, left-wingers have complained that the 1980s neoliberals entrenched a market-fundamentalist mindset through three interlocking pieces of legislation. The 1986 State-Owned Enterprises Act put profit ahead of the public interest. The 1987 State Services Act, while it was on the statute book, made government departments operate more like private companies. And the 1989 Public Finance Act nudged governments to borrow and spend less. Rather than do a specific “thing”, these acts changed the terms on which all government agencies did their “things”.

The last Labour government had a penchant for passing meta-laws – albeit with mixed success. The Zero Carbon Act reorients policy towards climate action, and creates an independent commission and reporting processes that seek to embarrass governments into cutting emissions. David Parker’s 2023 Taxation Principles Reporting Act, which forced governments to justify their policies’ impact on equality, was designed to nudge all future tax laws in an egalitarian direction. Jacinda Ardern’s 2018 Child Poverty Reduction Act contained no policies to reduce child poverty, but created official measures and targets against which future governments could be held to account. But while the Zero Carbon Act has had enduring influence, the others have not: Parker’s law was repealed the moment National took power, and Ardern’s is largely ignored.

Embedding acts, in short, are no sure thing. Another recent attempt, this time from the right, is David Seymour’s controversial Regulatory Standards Bill. Although a pure reporting mechanism, with no hard power of its own, it nonetheless creates processes that seek to elevate private property rights and nudge ministers away from legislating in the public interest. How far it will succeed is an open question.

Welsh lessons

The latest idea for a meta-law, however, holds far more promise. The Wellbeing Alliance Aotearoa, a recently formed NGO, is running a campaign called Tomorrow Together, the centrepiece of which is a proposed Future Generations Act. The act is modelled on the Welsh equivalent, which requires public bodies to follow “sustainable development” principles and promote the country’s long-term cultural, social, environmental and economic wellbeing. Public agencies have to set wellbeing objectives and take “all reasonable steps” to achieve them. The act also established a future generations commissioner, who makes recommendations that public bodies must – once again – take all reasonable steps to follow.

Finally, the act requires Welsh ministers to set national indicators that show whether wellbeing is really on the rise. They include carbon emissions, community safety, poverty rates, productivity growth, the number of Welsh speakers, and participation in democratic decision-making.

There is much to like here, but also a few things to give one pause. Of the 50 indicators, fewer than half are headed in the right direction, suggesting they may not have much influence over state action. It is hard to maintain government, media or public focus on so many measures. And, being set by ministers, the indicators are neither determined nor owned by the public.

Picking five to 10

How, then, might a wellbeing act gain more teeth? The answer to this question begins with understanding why, year after year, economic debate is dominated by the demand for governments to run a budget surplus. Surpluses have assumed this status not just because they are often desirable but also because they generate a simple and widely understood measure of “success”.

While our governments run budget surpluses, however, they are often racking up environmental and social deficits, polluting the countryside and allowing poverty to rise. The budget gets balanced on the backs of the poor, and at the expense of the planet.

Governments sometimes pay a price for this, if media stories of social misery and environmental pollution become too powerful to ignore. But the quest for a surplus continues to dominate debate because, by contrast, other measures are vague and amorphous. What does a social or environmental “deficit” look like? Even if we knew, which ones would matter most? How would we measure them? And how would we stop governments from inventing their own, easily satisfied targets?

Social and environmental measures, in short, need to be made more concrete, for both policymakers and the general public. The first step is probably to pick just five to 10 measures to target. (This would avoid the fate of the last Labour government’s “wellbeing” approach, which got bogged down in 141 different measures.) Why so few? Because many people, among them the Nobel prizewinner Joseph Stiglitz – one of the godfathers of wellbeing economics – believe a small suite of measures is needed to focus attention. “One can grasp five to 10,” Sitglitz told the Treasury in 2023.

How should we select those measures? A government could of course pick them itself, but that would have neither true democratic legitimacy nor real staying power. Imagine, instead, that we had a genuine national conversation – an overused phrase, admittedly – about the social and environmental measures most important to us. Who knows what people might choose – safety in their community, swimmable rivers, connections to whenua and reo, higher living standards, something else?

Discussions could be held up and down the country, allowing individuals to come together, articulate different versions of the good life, and aggregate their views into a national vision. A citizens’ assembly – a representative sample of, say, 100 New Zealanders, “New Zealand in one room” – could be convened to make the final call, in full view of the wider public and with complete access to experts and evidence. (Countless other process choices, of course, would have to be made.) The resulting suite of five to 10 measures, embedded in legislation, would have immense democratic legitimacy, embodying the considered will of the public. And it could be renewed every decade or so.

Countering the power of the ‘surplus’

To sharpen matters still further, though, imagine if the national conversation generated targets for each wellbeing goal: the best cancer survival rates in the world, for instance, or a halving of child poverty within a decade. That would hone government accountability to a well-defined point.

And we might go further still. If we could estimate, however roughly, the spending needed to reach each target, and we added them all up, we would effectively have a measure of the social and environmental deficit – the amount by which spending on those outcomes was “under” the line even while the government’s budget surplus was “over” it.

This might constitute, finally, a number to compete with the hallowed surplus, creating a sharp-edged way to hold governments to account for their social and environmental failures. Imagine the effect of Jack Tame saying to a future prime minister, “Sure, you’ve run a $1bn surplus, but what about the social and environmental deficit, currently at $23bn and worsening?”

Embedding our shared goals

The ideas above are naturally speculative. But even if all this were practicable and came to pass, how much difference would it make? Meta-laws can be undone, and even those that survive may have less power than their framers imagined. But the lesson from laws like the Public Finance Act is that they can have enduring power if they encapsulate elite opinion, the public’s “common sense”, or – ideally – both. And this would plausibly be the case here: wellbeing economics is now mainstream policy thinking, and most people care about far more than just GDP growth.

The results of such a priority-setting process, and the measures and targets selected, would not necessarily be the ones I would choose, nor those that you, the individual reader, would prefer. But that’s democracy. The point is not to advance our own narrow interests but to orient politics, in an enduring manner, towards the social and environmental goals endorsed by New Zealanders as a whole. That is the kind of accountability worth embedding.

The Post: National is shedding compassion and showing its mean streak

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“The basis of private prosperity is government activity.” These words were uttered not by some socialist agitator but by Jack Watts, a 1950s National minister of finance. William Massey, a conservative prime minister from 1912 to 1925, similarly believed that people should pay tax “in proportion to their ability and in proportion to the requirements of the country itself”.

Contrast this with Christopher Luxon’s approach to governing, in which “excessive” state spending is constantly attacked and restoring $2.9 billion in tax breaks for well-off landlords takes precedence over properly funding the health system. It is striking just how far the National Party has drifted from traditions that were once its anchor.

Formed in 1936 by the merger of Reform and United, the National Party – and indeed its predecessors – have always had a mean streak. The infamous “Massey’s Cossacks” brutalised waterfront workers in 1913; four decades later Watts’ government did essentially the same thing.

But as might be expected from a conservative party, National has often, well, conserved things.

When the great Labour prime minister Michael Joseph Savage described his creation of the welfare state as “applied Christianity”, National leader Sid Holland may have retorted that it was “applied lunacy”. But when he won power, Holland preserved virtually all Savage’s achievements.

Again, the contrast with the current administration – which tore up Labour’s legislation with frenzied disregard for democratic process – could hardly be sharper.

National has also sometimes pursued “One Nation” conservatism, the idea that we have obligations to others and should support the poor, even if communities shoulder more of that burden than the state. Under Keith Holyoake’s 1960s National government, economic growth was broadly shared, and disparities fell.

Contrast that with the current doubling of homelessness in some cities. In a devastating recent interview with journalist Bernard Hickey, Auckland City Missioner Helen Robinson said she knew of people forced to sleep rough despite having pneumonia.

Others had been denied emergency accommodation because they were deemed to have “contributed to their own homelessness”. But, under the Government’s new rules, that “contribution” can be something as innocent as giving up stable housing in order to move cities.

At this point one has to ask: what have we become? Do we want to be a country in which desperately ill people are denied housing on the flimsiest of pretexts or for minor imperfections? How is this even vaguely consistent with any notion of “compassionate” conservatism?

Although obviously not a cheerleader for this Government, I have tried to give ministers their due, praising reforms in schooling, infrastructure and elsewhere. But when people with pneumonia are being left on our wintry streets, what am I supposed to say? What is anyone supposed to say?

I know of seasoned government-relations professionals, too worldly-wise to be a partisan for either side, who now absolutely despair of this administration. I have heard public servants speak wistfully of the “tight but fair” era of Bill English, comparing it favourably to Labour’s undisciplined largesse but also to the open contempt some current ministers have for public servants, experts, and indeed basic facts.

Some commentators compare the current climate to the dark days of the early 1990s, when poverty and unemployment soared. And although this government is not – thankfully – slashing benefits by one-quarter like Ruth Richardson did, still there are parallels.

In the early 1990s, two Porirua pre-schoolers burned to death when their state house was set alight by a candle. Their family had resorted to this primitive lighting method after National hiked their rents and they could no longer afford the power bill.

Such house-fire deaths are now soaring again, reaching their highest level in a decade. Many involve “non-traditional” forms of heat and light, including candles and even barbecues brought inside, as families seek “to reduce the cost of living”, Fire and Emergency’s Pete Gallagher told RNZ.

What links the early 1990s and today? Ideology. ACT’s Silicon Valleyesque, “move fast and break things” worldview is partly to blame. But the bigger party has been infected, too.

National has often been suspicious of rigid ideology, preferring a more pragmatic approach. In the early 1990s, though, its attacks on the state took on a quasi-religious quality.

Today, rough sleeping has doubled because National holds a rigid ideological view that emergency housing numbers must plummet. A numerical target has taken precedence over pragmatism, and indeed compassion.

Some people have of course made the positive move from emergency accommodation into state homes. But those are dwellings Labour built. And National has scrapped plans for another 3000 state houses, amplifying a homelessness crisis for which they are substantially responsible.

This is a long way from the party’s better traditions. Nor can ministers claim ignorance of the beliefs of predecessors like Watts and Massey, whose statements above are drawn from a history of tax entitled We Won, You Lost, Eat That! The author? Justice Minister Paul Goldsmith.

The Spinoff: Ten things we could do to better support people into work

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During the nine months I recently spent researching our welfare-to-work system, one contrast jumped out at me. 

I’d heard an interviewee describing how her 40-year-old brother, a “typical” Samoan Kiwi, was working as a builder in Norway; despite needing a major operation, he’d wanted to carry on his hard, physical labour. The Norwegian equivalent of Work and Income, however, felt he should be contemplating another career. Having taken the time to deeply understand his background, skills and leadership qualities, they concluded he’d make an excellent teacher – and they’d pay him to retrain.

When, by contrast, I sat down with a group of beneficiaries in Nelson, I listened to a 60-year-old woman, previously a cleaner, talk about her dodgy knees and how she was no longer able to clean at the pace demanded by commercial firms. So what kind of employment did Work and Income keep pushing her way? Cleaning jobs, of course. There could be no starker contrast between, on the one hand, a system willing to spend money upfront to build a more highly skilled workforce, and, on the other, a system that takes someone’s CV as their destiny and pushes them into the first available job, regardless of suitability.

I heard these stories as part of the first research project carried out by the Institute for Democratic and Economic Analysis (Idea), a thinktank I helped launch last year. Improved living standards are a central focus for us, and we’d identified the welfare-to-work transition as a crucial – and neglected – area of policy.

One thing we quickly learned is that the Work and Income system doesn’t serve businesses’ needs any more than it serves those of jobseekers. When Work and Income doesn’t screen beneficiaries for their suitability for a position, businesses just spend precious hours interviewing individuals without the required aptitude or desire. Meanwhile jobseekers’ potential is left untapped. Even when they find work, it is often wildly out of line with their skills: between one-third and half of the workforce experience serious skills mismatches, with all the attendant problems that creates for productivity.

Such issues are especially relevant right now, as unemployment rises and people flock to Australia. When jobs are scarce, we should be investing massively in vocational education and mid-career retraining, both to give people reasons to remain here and to fit them for the positions that will appear when the economy recovers.

We should also provide all the other support – wraparound physical and mental health services, wage subsidies, even temporary public-sector job creation – that can help people move from welfare into paid employment, where that’s the right thing for them at that point in their lives. Idea’s report on this issue, launched last week, is called The Pipeline of Potential because that’s what the welfare system should provide: a steady stream of highly qualified staff, generated by investing in people at a crucial moment in their lives. Below are 10 key ways to make that happen.

1. Raise our game on spending. New Zealand currently spends half the developed-country average on supportive welfare-to-work schemes, known technically as active labour-market policies. Other countries spend more, and reap the rewards: people who get high-quality training, wraparound health services and other such support are significantly more likely to find employment and earn more. They also pay more tax and require less benefit spending.

2. Get to know jobseekers properly. Case managers need to deeply understand jobseekers’ history, skills, aspirations and needs, as a prelude to building them a tailored job plan. Although it gets crowded out by the focus on sanctions, the government is taking steps in this direction – even if Work and Income caseloads (and attitudes) remain a stumbling block.

3. Reduce case managers’ workloads. The typical Work and Income case manager, tasked with helping people move into paid employment, has a caseload of 110 jobseekers, implying they can give each one an average of 20 minutes’ attention each week. Providing tailored welfare-to-work support is, at those ratios, extremely difficult.

4. Set new targets. In the absence of other mandated goals, the government’s target to get 50,000 people off Jobseeker Support can reinforce the “any job is a good job” mentality described above. It needs to be balanced with meaningful targets to provide high-quality training and match the right person to the right job.

5. Connect companies and people. The employer-jobseeker relationship should be at the heart of the welfare-to-work system. Work and Income offices need to better understand what local employers are looking for, and equip jobseekers with those skills and attributes.

6. Provide more holistic support. In 12 of 19 health districts, people can access something called Individual Placement Support (IPS), a highly successful scheme that embeds employment specialists in community mental health teams, so individuals can get both kinds of help at once. IPS participants earn over $4,000 a year more than comparable non-participants. The scheme could be rolled out to the rest of the country for as little as $10 million a year.

7. Help jobseekers support each other. Several European nations have had great success with “launching pad” schemes that bring groups of jobseekers together, under the supervision of a trained job coach, to share life lessons, build self-esteem and develop plans for training, employment and entrepreneurship. By breaking down the isolation many jobseekers experience, and creating a supportive environment for skills-building, such schemes generate dramatic increases in employment.

8. Prevent workforce churn. Of the people who leave benefits, just 40% are still in employment 18 months later. We need a greater focus on matching people to the right job, more post-placement support for those new to the workforce, and a push to eliminate the worst forms of low-paid and precarious work.

9. Support people through redundancy. In mass redundancy situations, which may become more common owing to climate change and AI, trusted locals should be employed to help the affected people find new work. Employers and unions should also be funded to upskill staff ahead of such disruption.

10. Introduce a circuit-breaker job guarantee. Building on successful overseas models, New Zealand should offer a year-long job placement to any young person at risk of long-term unemployment. This would involve the government creating temporary jobs or paying for placements in firms, NGOs and local councils. By boosting people’s CVs, work habits and skills, and making a powerful statement that the government has their back, such schemes overseas have significantly lifted permanent private-sector employment for the under-25s.

The Post: The power of ideas – why I helped launch a think tank

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Just over a year ago, I was one of the group of hardy souls who embarked on what might seem, in this country, a risky endeavour: the launch of a new think-tank.

We chose the name Idea – short for the Institute for Democratic and Economic Analysis – partly because we were in the ideas business and partly because we were deeply troubled by the intersection of economic and political disparities. When a country allows poverty and political exclusion to combine, it creates the conditions in which marginalisation, disaffection and polarisation can breed.

This line of thought came directly from the Nobel prize-winning economists Daron Acemoglu and James Robinson, whose bestselling book Why Nations Fail set out the recipe for social success (or disaster). In high-functioning societies, political and economic systems are inclusive: because everyone has a say in how that society is run, the economic system delivers widespread benefits.

In failed states, by contrast, those systems are extractive: elites use their political power to skew the distribution of wealth in their favour. While New Zealand succeeds in many ways, it is far from fully inclusive: one child in eight lives in serious hardship, and a million people feel so disenfranchised they don’t even vote.

That dynamic, left unchecked, could haul the country downwards; we want to ensure that it stays on an upward path. We decided to make that contribution via a think-tank, an organisation that unearths solutions to pressing problems and then shares those solutions with politicians and the general public. We also decided to act in a spirit of open dialogue, taking up good ideas regardless of where they originate and trying to foster respectful debate.

I describe this as a risky endeavour because, in a country of our size, there’s seldom enough funding for public-good research. Hence only a handful of think-tanks exist here – the McGuinness Institute, Maxim, the Helen Clark Foundation, the New Zealand Initiative, perhaps a few others.

Still, we thought it was worth having a go. And this week marked a big milestone: the launch of our first-ever report.

Entitled The Pipeline of Potential, it looks at how Work and Income could better invest in jobseekers so as to provide companies with a steady stream of work-ready employees.

Currently, New Zealand spends around half the developed-country average on the schemes – vocational training, wraparound health support, wage subsidies and so on – that help people make a sustainable welfare-to-work transition. Instead we push people into the first job available.

This system doesn’t work for firms any more than it does for job seekers. One employer I met, a courier company owner in New Plymouth, spoke of Work and Income sending her job applicants who weren’t fitted for the role and who’d frankly say, “I don’t know what I’m doing here”. That wasted precious business time.

On the job seeker side, I spoke to a 60-year-old woman in Nelson who’d previously been a cleaner but, following serious health struggles, could no longer clean at a commercial pace. What kinds of jobs did Work and Income push her towards? Cleaning jobs, of course.

The solution is to put the employer-job seeker relationship back at the heart of the system. Work and Income should better understand what local firms are looking for in potential employees. Then its case managers should be given the time – and mandate – to get to know job seekers deeply, understanding their histories, needs and aspirations. And they should build a tailored plan that addresses the job seekers’ barriers and matches them with the right employer.

We applaud the steps the Government has already taken in this direction, but more must be done. Of those who leave benefits, just 40% are still in employment 18 months later. If you push people into the first job going, they don’t stick at it. Matching them to the right employer is crucial.

Our report also recommends bigger interventions, like a circuit-breaker job guarantee that provides a work placement for every young person at risk of long-term unemployment. It would give those young people confidence, work habits and skills learnt on the job. Participants in such schemes overseas are 27% more likely to end up in permanent private-sector employment than their peers.

Well-designed welfare-to-work schemes more generally are proven to boost employment rates, lower benefit costs, raise incomes, and cut overall unemployment. And they have an impressive payback in financial terms, let alone wider social benefits. Better investment in these schemes is, for us, a key building block of a new and more dynamic economy – one that’s built on maximising everyone’s potential.

We can’t say for sure that our ideas will be adopted. But so far they’re getting a good hearing across the political spectrum. And if ideas start life there, breathing the oxygen of open debate, they have a fighting chance of effecting the kind of change that endures.