The background to In Open Seas: How the New Zealand Labour Government Went Wrong:2017-2023
Not in Narrow Seas: The Economic History of Aotearoa New Zealand, published in 2020, proved more successful than either I or the publisher (VUP, now Te Herenga Waka University Press) expected. I had expected that it would be a sleeper, a steady seller which would eventually reshape the way we thought about our history and our country.
However, it sold well. The obvious next step was to update it. It was to be a more future-oriented book. I titled it In Open Seas to indicate that there were options as to where we might progress. Early on, I made the decision that its voice would be more personal, more reflective because it would include my judgements about those future options. I also decided to link it to Not in Narrow Seas by describing some of the challenges I had when I was writing the earlier book.
The initial theme was transformation, following Labour Prime Minister Jacinda Ardern’s statement that hers would be a ‘transformative’ government. I thought I could add a bit of intellectual weight to the underlying transformation using the background of the nation’s economic history. But it became evident that whatever its aspirations, the Ardern-Hipkins Government was not going to deliver on them. As it became increasingly obvious to the informed that many of Adern-Hipkins Government’s policies were suicidal, the book increasingly transformed into a critique. (This is not a book about its politics; others will write about that.) I added the subtitle: How the New Zealand Labour Government Went Wrong: 2017-2023. The critique is not always sympathetic: the Government’s behaviour sometimes forced me away from the more temperate tone of Not in Narrow Seas.
I completed the first draft of the book in July 2022, and then commenced the revision and updating. More material was added as the Ardern-Hipkins Government did not change its course. But I did not expect the Government, with its huge majority, would lose the October 2023 election. By the time I sent it to the publisher, their publishing program was already full for the rest of 2024. By 2025 events and policies will have moved on under the Luxon-led Coalition Government.
That meant the book, as conceived, was no longer contemporary enough. I looked at the possibility of revising the manuscript. It contains much useful material including setting out new direction and reporting on some policy failures. Some of it is so prospective that it will be beyond the comprehension of the conventional wisdom for some time. No matter. It took 40 years to recognise the significance of child poverty, damaging two generations of New Zealanders in the interim. Hopefully, the country will respond a little faster to some of the issues raised in In Open Seas.
However, the Coalition Government has embarked upon such a different direction that a total reconstruction was required. Better to start a new book.
What to do with the manuscript of In Open Seas? I could have stuffed it in a bottom drawer. But because there is so much valuable material I decided to publish it, as is, as an e-book. This is where it is available.
In doing so I have resisted the temptation to do yet another revision and updating. I hope that readers will forgive the book’s limitations. To have done more would have meant that In Open Seas would never have been published.
The book may provoke a less than mild reaction from some Labour loyalists. In a few years’ time they will realise that their government lost its direction. Rather than plodding on, they should take the standard advice for those lost in the bush.
Stop. Sit down and think.
Think carefully about how the situation arose.
Can you retrace your steps?
Gain some height to get a better perspective.
The aim of publishing this book is to help them do so. Even if its map is not perfect, I am confident it has some clues for a better path.
Those who are not Labour loyalists will also find the book useful, as they reflect that the Coalition Government’s ‘back on track’ is not taking them anywhere near where they want to go. We really do need a fundamental rethink about the future path of Aotearoa New Zealand. I hope this book – and my future writings – contribute to the rethink.
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The final section of In Open Seas, called ‘sailing in a new direction’, provides a chapter-by-chapter synopsis.
1. About the Author: Hello! The study argues for a Rawlsian framework for public policy, which evaluates it on the basis of the benefit to those at the bottom of society.
2. Wellbeing: We need to refocus from our obsession with measures of material output, such as GDP, towards wellbeing, despite this being a more complex notion.
3. To Market, To Market: Markets are a very powerful means of coordination in a complex affluent economy. But they need to be regulated in order to work most effectively for enhancing wellbeing.
4. Economic and Social Development: Economic growth, say as measured by GDP, is not the same as economic and social development, the way that a society evolves. A major contribution to either is technological change, which is neither inherently good nor bad, but usually has to be regulated to promote wellbeing. The origin of most technological change is overseas and it has to be adapted for New Zealand. We overrate our ability to accelerate economic growth. We have more influence over the patterns of development.
5. The Environment: The environment is an integral part of economic growth and wellbeing. We should be aiming for it to be as sustainable as possible.
6. Overpowering Markets: Are markets overpowering our lives? Will we end up valuing everything in dollar terms rather than human ones?
7. Is the Rich World Going Into Secular Stagnation? Whether or not the world (and New Zealand economy) is entering a period of long-term stagnation or slower growth, the following need to be addressed:
avoiding stressful unemployment;
lifting the relative incomes of those at the bottom;
improving the quality of life;
improving safety;
increasing opportunity enabling the achievement of capabilities;
promoting sustainability.
8. The International Order: While throughout New Zealand's past history the international order has been dominated by one of two hegemons – Britain and the US – or the transition between them, the future is likely to be a multipolar world. Even if it is a bipolar international order, New Zealand will have to tread a narrow path on economic, security and cultural issues between the great powers rather than relying on just one of them.
9. The Open Economy: Because it is small, the New Zealand economy will be a specialist one, concentrating on resource-based exports despite trying to diversify. It will have to maintain an open economic stance to the world, challenged by the reluctance of significant potential trading partners to open up their markets to pastoral imports or to even notice our existence.
10. Migration and Diversity: While there may not be more social diversity these days than in the past, it is certainly more publicly evident. That places a challenge on how to evolve a coherent nation. Tolerance is critical. An important source of diversity is immigration. It needs to be better organised and more strategic. Immigration will not solve the aging of the population. The age of entitlement for New Zealand Superannuation needs to rise in a planned, slow, transparent manner. The fiscal savings could be used to improve the healthcare of the frailist elderly.
11. Māori: The notion of being Māori has evolved. Today being Māori is primarily an ethnic or cultural matter rather than a descent (or racial) one (although whakapapa remains important). We should focus on the achievement story rather than the grievance story. Even so, most socioeconomic indicators of those who identify as Māori are lower than the national average. The gap is slowly closing. Because being Māori is evolving, it is difficult to forecast where they are going. It is critical though, that our thinking about Māori is not limited to keeping them in the past ignoring the changes, ignoring the achievements, ignoring their diversity.
12. Te Tiriti o Waitangi: There are many misunderstandings as how the treaty signed at Waitangi in 1840 came about and what the text contains. ‘Originalist' interpretations can be rejected for any close historical/textual analysis. There was no common view of its intentions at the time of signing. Its meaning today arises from the dialogue which has subsequently occurred; it will evolve further.
13. Governing New Zealand: A modern social democracy depends upon an elected dictatorship. One way of understanding the paradox is to see it as founded on a social contract. Te Tiriti is such a social contract; that was the intention of at least one person involved in the drafting (it was not everyone's intention). New Zealand should continue to progress towards a republic, which is not so much about having a (distant) monarch or president as head of state, nor about the diminishing ties with Britain. It is about everyone having equal social status and value; a civil society in which supreme power is held by the people and which recognises the rights of minorities.
14. Centralised New Zealand: Those who signed Te Tiriti o Waitangi were thinking in terms of a minimalist state. Over the years New Zealand has become increasingly centralised. The pressures for increasing the powers of the centre continued. New Zealand should be less centralised, not only because the centralised state suffers from rigidity and is slow to innovate-, but because decentralisation and tolerance may be the only way for a liberal democracy to maintain coherence in the face of increasing expressions of diversity. Decentralisation is not only about giving individuals greater discretion in their decision making. It is also about encouraging the organic growth of social institutions to fill the hollow society. An important institution for decentralisation is local government.
15. Co-governance: Co-governance must be distinguished from partnership, self-government and co-management. Its origin and meaning is unclear. It does not come out of Te Tiriti o Waitangi.
16. Accountability: The government – the executive of Cabinet and the public service – of a liberal democracy is held accountable to the public by a number of mechanisms, only one of which is regular ‘free' (i.e. independently run) elections. Many of the mechanisms exist in principle, but do not function well. Parliament holds the government to account very poorly. Among the changes to strengthen this function are:
a greater recognition of importance of Parliament's accountability responsibilities;
reducing political parties’ power over MPs chosen by the party list;
reducing the influence of political funding;
making Officers of Parliament those commissioners whose function is to hold the government account and who are currently within the executive they are meant to be monitoring
strengthening the Official Information Act (especially by better funding the parliamentary officer monitoring the OIA – the ombudsman).
Until there is a considerable strengthening of the accountability mechanisms, the parliamentary term of three years should not be extended.
17. The Public Record: The maintenance of the public record is a key element of holding the government to account. The recent stewardship of the Department of Internal Affairs which is responsible for Archives New Zealand has ignored that central role in democracy. The Department's record in regard to the National Library, for which it is also responsible, has also been disappointing. Both agencies need to be housed elsewhere. The Chief Archivist should be an Officer of Parliament.
18. Generic Management: New Zealand management is dominated by the cult of generic management, of managers who profess to be able to manage, but know little about the institutions they manage. In fact they do not manage very well, often reducing the professional capacity of their institutions. There is a need to shift to a new style of management which respects professional skills and the integrity of each organisation.
19. The Healthcare System: Often healthcare is poorly delivered by the market. That is why we need a publicly provided large and complex healthcare system with unified funding. The issue is not that its structure is wrong and we need another redisorganisation. Rather, it is managed badly with insufficient attention to patients and the people who treat them. It is typical that the last centralisation (redisorganisation) paid little attention to quality control and local accountability. Changing the balance between generic and professional management of the system is both the priority and, given the entrenchment of the incumbent managership, a great challenge.
20. Education and Science: The research and tertiary education sectors became dominated by a commercialisation philosophy when they meekly accepted the neoliberal restructuring of three decades ago. Consequently they have become top-heavy with generic managerialism and the resulting transaction costs. They have lost their purpose of contributing to New Zealand by maintaining the country near the international intellectual frontier.
21. Inequality: Distributional inequality is tricky; commentators often confuse different notions. Moreover, their focus tends to be on the existence of inequality, rather than why it occurs and how it has changed. The chapter explains some of these issues in preparation for the following chapter.
22. Poverty: The definition of poverty involves a social judgement. Mine follows from the 1972 Royal Commission on Social Security, which wanted a society in which people are able to feel a sense of participation in and belonging to the community – a very Rawlsian approach. In 1990 the approach was abandoned for the less generous standard of sufficiency to sustain life and health which has dominated social policy since. The vast majority of the poor are children and those who live with them. Poverty is not confined to any ethnicity. The effect of the 1990 ‘redesign of the welfare state' was to double the number of children in relative poverty. The evidence is that in this new regime many people are below an adequate standard of living and are struggling, compromising their health and their future prospects. The implication of the 2018 Child Poverty Reduction Act with its objective to halve child poverty, thereby reversing the redistributional cuts of three decades earlier, was surely the most revolutionary ambition since the Rogernomics revolution. However, the Ardern-Hipkins Government failed to really pursue child poverty reduction, probably because it did not understand what it was doing.
23. Redistribution: Paying taxes is a part of citizenship. The wherewithal to pay the taxes arises from individuals being part of a community. They would have little income without the economy which the community creates. Rawlsians are left with the challenge of attaining adequate wellbeing for those at the bottom without compromising the economy and overall wellbeing. Fortunately wellbeing for most of the population is not particularly related to their material income. The current New Zealand system is neither efficient nor especially equitable.
24. Modernisation: Societies continually face shocks and change. Modernisation is the task of adapting and evolving its institutions to these new circumstances. The chapter illustrates this by reference to the changes which have happened since 1972 which require rethinking how the principles set out by the Royal Commission on Social Security need to be applied. These include the rise of married women in the paid workforce and the higher level of evident unemployment together with the inconsistency recognised by the Royal Commission between the Social Security System and the Accident Compensation System. New Zealand suffers from intellectual and policy inertia supported by sclerotic pressure groups with the consequence that it modernises slowly and badly.
25. Making Policy: Policy design is a discipline which should start off with a detailed specification of the problem followed by a careful analysis. However, it is common in New Zealand to decide on a policy solution and construct the justification for it based on selective anecdotes. That is why so much policy is badly designed and why the repeatedly amended botch jobs look so Heath-Robinson.
26. The Covid Crisis: This chapter describes the Covid crisis and the evolving policy response. It contributes to the lessons reported in the next chapter.
27. Climate Change Policy: The chapter uses the experiences of climate change policy (and the Covid crisis) to illustrate the critical conclusion that it is extremely hard to replace bad policies with good policies. We frequently imitate foreign practices failing to adapt to New Zealand-specific conditions. New Zealand's contribution to global warming is insignificant and has been even further limited by imitating rather than adapting overseas thinking on climate change. New Zealand's economic and social sustainability may have been compromised. The way we have measured emissions – on a production rather on a consumption basis – has shaped the way we think about the problem (Gilling’s Law), often to the detriment of New Zealand's interests. We should be focussing more on the cloud than the emissions joining it. That suggests we should treat long-life and short-life emissions differently and reinforces the conclusion that we cannot rely upon forestry sequestration of carbon.
28. The Public Discourse: The public discourse depends upon truthiness rather than expertise, celebrities rather than experts, personal abuse rather than rationality, self-interest rather than independence. The low standards exist from the bottom of society right to the top.
29. Mañana New Zealand: Public policy is very much mañana, putting off making decisions until it is too late, without any anticipation of the future. Dornbusch's law is that ‘a crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought'.
Epilogue: There is a sad tendency by the mediocre to try to isolate New Zealand from the world, instead of engaging with it.