What can politicians who care about value for money in government hope to achieve? Where should they focus their efforts?
Those are tough questions. They were put to the New Zealand Initiative last week by a politician.
Our challenger agreed that far too much of what government does is wasteful, as argued last year in the New Zealand Initiative’s report Fit for purpose: Are we getting the government we paid for? Our report stopped short of advising what an individual politician could best do to put that right.
This article responds to that challenge.
It is a challenge because it is hard for a politician who cares about the overall prosperity of New Zealanders to make much of a difference. This is because electoral politics drive most political parties into wealth distribution rather than wealth creation.
Redistribution can dominate overall wellbeing when enough people vote on a ‘what’s-in-it-for-me-at-your-expense’ basis. National’s national superannuation promises for the 1976 general election and Labour’s promises to students in the 2005 and 2017 general election campaigns illustrate this trend.
The politician who wants policies more likely to raise all future boats probably faces colleagues and a political party focused on the prosaic goal of retaining and gaining seats in the next general election.
Political time horizons are short. On average, the next election is only 18 months away. That makes many political decisions short-sighted – leading to adverse unintended consequences such as the much-increased proportion of the working-age population on welfare since the 1960s.
MMP is a further complication. Even if one’s own party can be persuaded, getting a parliamentary majority for a wise but unpopular measure is unlikely.
Rodney Hide has cited the example of mandatory chip implants for dogs. Probably few if any of the parliamentarians who voted for this measure thought it would stop a future rogue dog from biting a little girl’s face. Yet the public was demanding that something be done, and the chip was something.
Nevertheless, staunch individuals can make a difference. Here is a checklist that illustrates how. It is not in priority order.
First, never accept that good intentions or grandiose distant goals are good enough. Ask exactly how a policy is to be implemented and why government intervention is necessary. “If it is a good thing, why are people not already doing it?” If KiwiBuild houses are a good thing, why are developers not already building them?
If the 2019 government budget is really about future wellbeing, its focus will be on measures to lift the rate of productivity growth. If not, ask why not. Good intentions are not good enough.
Second, never be satisfied with a laudable supporting reason for a policy, particularly one that merely assumes it will achieve the hoped-for outcome. Always seek to identify the opposing considerations. Only then can the pros and cons be assessed.
Sure, a year’s free tertiary education for all might increase student numbers a bit. But by how many, at what cost and for what benefit? Ask if that is really a good use of money.
Third, resist the impulse to set up or preserve state entities that lack a single overriding objective. Decisions are arbitrary when entities are tasked with achieving multiple competing objectives. When any decision is as good as any other decision, accountability to Parliament and voters is minimal. The current thrust to impose diversity objectives on chief executives could easily distract them from what should be their primary purpose.
Costs and benefits
Fourth, always seek to avoid structures that fail to internalise costs and benefits. They are a major source of economic and environmental problems. Paradoxically, this is a critical weakness of the Resource Management Act. It fails to confront those who object to a development with the cost to the community of going without it.
Look instead for arrangements that symmetrically confront both developers and objectors with the costs each would impose on the community if they get their way. Look for property rights and user or objector charges options for internalising these costs between the affected parties.
Fifth, pay serious attention to the quality of top public sector appointments. The pressures to appoint on the basis of extraneous matters such as diversity or political acceptability are always present.
Currently, we have the astounding situation of chief executives being appointed with minimal expertise or experience in the core skills their organisation needs to excel at. A top manager can motivate highly skilled staff and move mountains; a poor one can make them want to leave.
The same goes for appointments to working groups and committees. Appoint ‘right-thinking’ hacks and you can be sure the public will not get an expert and balanced assessment of the pros and cons.
There are more generic options. Seek ways of making executive government more accountable to Parliament and the public for the quality of spending and regulatory decisions. Current Cabinet rules have some sound requirements but it is too easy for the cabinet to finesse them. Seek arrangements that make that harder.
All significant spending and regulatory proposals should be accompanied by a competent professional assessment of their likely net benefits for those affected. That includes measures marketed under the wellbeing label.
The bottom line is that waste in government spending and regulation is a systemic problem. The most powerful remedies will be systemic. That is where a far-sighted politician could usefully focus.