Kerry McDonald details why he believes New Zealand must hold a Royal Commission into the policy failures of successive governments since the Millennium

By Kerry McDonald*

The time has come for a Royal Commission into the policy failures of successive governments since the Millennium.

Political leaders have failed to deliver good policies or outcomes. Only a top-level independent inquiry can determine the causes and recommend solutions.

When the economic engine of a democracy fails, social and environmental imperatives become unaffordable. But rather than fix the economy, politicians have obfuscated and spent more of the nation’s precious capital on political band aids – reinforcing the downward spiral.

Some 50 or more important policies have failed, including:

• World-lagging productivity growth;

• Low incomes, declining living standards, poverty and deprivation;

• Excessive low economic value immigration, exacerbated by no planning or supporting policies;

• Reduced housing availability, affordability and quality;

• Decline in building and construction standards (leaks, steel, earthquake and fire standards, certification);

.• Delivery of government services;

• Environmental management and capacity, particularly waterways;

• Water quality and waste management;

• Border protection and management that has raised bio security risks (kiwifruit, dairy, kauri dieback); and

• Public service lacking in leadership and performance.

The context

Productivity growth is essential for increasing incomes and living standards. But a number of experts have pointed out this hasn’t happened:

“New Zealand’s productivity performance has been relatively weak … the main reason why per capita incomes are below the OECD average,” Productivity Commission director of economics and research Paul Conway said in 2016

Between 1970 and 2007, New Zealand was the worst performing of the world’s developed economies in terms of total factor productivity, former Reserve Bank economist Michael Reddell reported, quoting the Conference Board’s Total Economy Database.

After 2007, New Zealand continued to be one of the worst performers and fell further behind the median of advanced countries.

“New Zealand has been in productivity recession since 2012,” JB Were’s Bernard Doyle found in his 2017 study

This poor performance is inevitably reflected in low incomes, living standards, poverty and social deprivation.

Low productivity also underlies the failure of many government services to perform to an acceptable standard, leaving a legacy of many seriously inadequate and underperforming policies.

Sustainable productivity growth requires a well-designed package of consistent and effective policies. These have many important micro and macro benefits that require expertise, consistency, leadership and determination.

The critical issues are:

• The lack of governments’ political will and leadership to prioritise the national interest and deal effectively with important economic, social and environmental issues;

• The failure to build economic capacity, which is having a damaging impact on many policies and outcomes;

• The cost of addressing numerous social problems is reducing the capacity for productive investment to improve the economy and future living standards; and

• High immigration rates continue to dig a deeper hole.

To understand this, it is necessary to examine the performance of three governments this century.

1. Labour 1999-2008

Helen Clark is probably rated as the most thoughtful, politically learned and astute leader in recent times. But she and her deputy Sir Michael Cullen developed a political model that has had a disastrous impact on policy quality.

Important elements of the model were:

• Policy initiatives that pro-actively (top of the cliff) addressed important economic issues (productivity, incomes, economic capacity) were too politically risky and avoided.

• But they gained excellent political benefit in dealing with social burning wrecks (bottom of the cliff) – low incomes and Working for Families, particularly with increased government spending.

• The critical issue of economic/fiscal capacity and the affordability of a rapidly growing number of burning wrecks was ignored.

• Income redistribution was a political positive.

• A competent and effective public service giving “free and frank” advice was a serious risk so it was neutered by “No Surprises” and eroding capability.

• Whistleblowing was kept high risk and unattractive.

• Cutting off access to the Privy Council was important.

“No Surprises” was a signature initiative. It crippled the professional arm of governments via diminishing performance capability and mandate, leaving the amateurs (ministers and others) to blunder on with decision making dominated by political considerations.

Unfortunately, the leadership of the public service was weak and acquiesced to this damaging development.

The Clark/Cullen epitaph is Working for Families. They made no effective effort via economic policy to solve the problem by lifting incomes and living standards. Trade agreements are not enough and their handling of the global financial crisis was woeful, costing billions.

Three electoral terms were wasted but at least they didn’t trash the place.

Rating: 3/10 – definitely a fail!

2. National 2008-2017

 Sir John Key and successor Sir Bill English embraced the Clark-Cullen model, avoiding potentially unpopular policy changes and new initiatives needed to improve living standards. Then they, disastrously put immigration on full turbo boost, without any supporting analysis or the essential supporting policies.

Their failure to reject the Clark-Cullen model, including “No Surprises” and Working for Families, were clear signals of their preference for the rewards of politics ahead of providing effective government in the national interest.

Behind the charade of being experienced and capable managers, the mirage of budget outcomes ignored that the roof leaked, the power had been cut off and the livestock and kids were starving.

Growth (aggregate GDP) was highlighted while ignoring the real impact on incomes and living standards.

Accelerated immigration of low skills and economic value were the perfect tool to boost GDP. Ethnic cohorts and wealthy individuals were often grateful but the serious negative consequences all came later.

This was aided by “No Surprises” -–no analysis, planning or strategy and no public debate. The Treasury’s assessment of the benefits of immigration was pitiful – limited, weak and inconclusive.

This government’s toxic legacy will damage the living standards of New Zealanders for decades.

Rating: 0/10 – probably should be negative!

3. Labour-New Zealand First Coalition 2017-

A commendable first 100 days brought a real sense of engagement with serious policy issues, considering it received a toxic inheritance.

However, Jacinda Ardern and Winston Peters have a largely socialist-social welfare agenda based on increased spending (housing, minimum incomes, quantity not quality employment growth, collective bargaining, gender targets, oil and gas restrictions, etc) while ignoring the need to develop sustainable economic capacity - and there is a limit to the leverage of 7%!

Their first crucial achievement was to remove the poorly performing National Party, giving it the opportunity to rebuild and rejuvenate with better leadership before the next election.

The Coalition government has talent but not enough given the many complex issues it faces. It is not bothering to slow the damaging flood of low economic value immigrants and “No Surprises” remains.

Instead of squandering the nation’s seed capital with unsustainable short-term fixes, it should be investing in future living standards.

Rating: 4/10 – but likely to be 2/10 unless there is a real game changer.

Priorities for the future

• Establish a Royal Commission to examine past serious policy failures and provide guidelines for the future.

• Replace “No Surprises” with “Free and Frank” as the public service performance obligation. Implement selection, task-setting performance management and improvement processes to improve leadership.

• Introduce a “fit for purpose” whistleblower regime.

• Adopt a clear, high-level strategic framework, using credible analysis to guide the use of scarce resources and the development of economic capacity. This should be a dynamic document, fuelling national debate, produced within three months and no more than 10 pages in the first version.

Here's a copy of a letter Kerry McDonald has sent to Prime Minister Jacinda Ardern).


*Kerry McDonald is a company director, advisor and economist.

Previously: Director NZ Institute of Economic Research; Senior Exec/an MD Comalco/CRA/Rio Tinto; chairman of BNZ, OceanaGold, OPUS, Powerhouse, etc & Savings Working Group, State Sector Standards Board, Aus-NZ Leadership Forum, Kakapo Recovery Project, etc; director National Australia Bank, Leighton Contractors, Carter Holt Harvey, Ports of Auckland, Comalco NZ, etc.

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79 Comments

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Bang on. To a degree I'd suggest much of the Policy work needed has already been done by TOP.

The no surprises policy has been a disaster.....stifles the flow of dissenting info from Public Service to Ministers big time..

However TOP almost now does not exist and got 2.5% of the vote. Its a good article but clearly shows but doesnt seem to state the power of the (swing) voter to neuter any Govn in the ballot box. Then throw in the wonky economics models of the neo-liberal era that persist and well huge failure.

TOp (or a different party but with most of TOPs polcies) will be making a comeback, should be an announcement within the next month or so.

Come on, does anyone really believe our economy is worse now than it was in the 90's? Didn't we almost go under back then?

..arguably it is...we have sold off a truckload of assets and exchanged them for debt on houses. Can kicked while the boomers party'd.

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Yeah...this looks about right, indeed.

Being PM shouldn't be a hobby for folk who have grown up dreaming of being PM. It should be a job for people prepared to lead, even when it requires making difficult calls.

Well this is going to put a rat amongst the chickens so far as those of the contributors here who are unflaggingly partisan for one side or the other. Have to say this is an incisive column. Assume this is the same Mr MacDonald who propped the Wellington scrum, a powerful one then too, for many years some time ago and was also a strongly performing surf lifesaver. Knows what solid means I would think.

" It should be a job for people prepared to lead, even when it requires making difficult calls."

Yes, agree, and even if they don't last 5 minutes.......

High turnover keeps politicians on their feet.

TTP

How much effect has MMP had on poor policy I wonder? Compromise and trading of favours that weaken the real intent and ability to deliver results of what some policies might have achieved otherwise.

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I wonder if our particular implementation of MMP has got it exactly wrong.. Taken away the absolute power aspect of FPP, but due to the 5% threshold has also reduced the number of parties obtaining seats, leaving two dominant parties and a tail-wagging the dog situation as opposed to proper coalitions and minority governments where they can seek supply and confidence from multiple smaller parties.

I mean, because its a 2 horse race it's effectively FPP; National had enough votes to pass anything it wanted and nuke anything the opposition wanted (in most cases, anyway) - I think the issue is that we have elections every three years and by the time a party is in power they're looking to try to stay in the next 3 years. Shift it to 5 or 6 and i think we'll see more action taken.

Geoffrey Palmer suggests a four year term.

http://constitutionaotearoa.org.nz/

And I'd add to Kerry's points - we need a constitution - as what he's really talking about are failures in governance. Get those governance settings right and enshrined in a constitution and we should make far better progress in holding Governments to account.

The shocking performance of three year terms suggests we have little to lose having longer periods. I also suggest that more voters need to think longer term than the next election. I trust I do not need to spell out why.

Definitely the 5% threshold is a major part of the problem. It stifles the proportionality that it was supposed to deliver, as stated in the name MMP. If there was more opportunity for smaller parties, they would also have less power as bigger parties would have more options available to form a coalition with, and thus the power balances would actually be proportional to the votes. Instead we have coat-tailing, promising parties getting close but smaller parties getting seats. And of course governments rejecting referenda like less MP's in parliament, until someone like ACT now who is only making noise about it now when they're almost non-existent, because let's face it what could they lose now? Maybe we should get the pitchforks out, clear parliament and see what a bunch of people who have done business in the private sector can do on a national level.

I seem to remember that STV was the recommended type of proportional representation by the group vested with responsibility to come up with the best system for NZ, before we ended up with MMP and MMP was a cynical move by the poly's of the day to shaft truly representative government.

What, identify and address real issues? Crikey. Whatever will they think of next? I'd be harder on Clark and Cullen and easier on Key and English, as they had the GFC and Chch to deal with, but generally it seems to reflect the needs of the times.

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Kerry is pitching to a partisan (coalition+supporters) audience, flattering the current coalition with their long list of screw-ups and the Clark govt too, while being overly critical of Key et al because (obviously) he is hoping to get them to listen to him, and you don't do that by being mean (or in this case even honest). What he is proposing is a reasonable idea, though coalition is ideologically hidebound and hamstrung by whims of a cranky and self centred septuagenarian and fringing nuttiness of Greens so I don't think it has any chance.

Clark and Cullen failed pretty badly at improving long term outlook for NZ, they left us in a big spending hole and recession with a lot of splashing out on increased welfare growth choices and massively expanded civil service. Key et al pulled NZ through GFC and earthquakes recovery and bought us back to surplus and deserve a lot of credit for that, but didn't make any long term positive changes - particularly with regard to stifling housing regulation. But they still rate a lot higher than either Labour govt.

I do have a mistrust of his approach. Is it actually "Let the experts decide" in disguise? Meritocracy is all well and good, it gives first rate staff officers. The trouble is the first rate staff officer often makes a second rate commander, as too concerned with process over identifying opportunity and seizing it. Hayek pointed out that installing them in power leads to stagnation and the call for a strongman who will Get Things Done, ie act decisively to deal with the priority issues of the day in a timely manner. The world seems to be having exactly this revolt at the moment. I do think MMP may be to blame, as it acts to frustrate change, which can be good but equally could be part of our problem.

Roger,

Hayek,like Von Mises and Schumpeter,saw the world through the prism of his upbringing in Central Europe.he mistrusted democracy,as this quote illustrates;"we must face the fact that the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice".he had considerable influence on the 'Chicago School' whose subsequent influence on US political thinking has been malign in my view.

Yes, the fact that others use someone's ideas for their own malevolent purposes doesn't necessarily indicate the fallacy of the original work. I don't think Marx forsaw that his ideas would be used to inflict untold suffering on hundreds of millions of people, or that Wagner forsaw the misuses his work would be put to. Ideas are a sort of technology, they can be used for good or ill, depending on the hand and head and heart that uses them. As an aside, it seems to me the people who have most used Keynes' ideas to their benefit have been the militarists.

This seems partisan in the other direction, to me. Key et al did nothing about that welfare spending (that they called "communism by stealth"), only increasing in - while abandoning their campaign platform of addressing the housing crisis.

GFC did not have a great effect on Australasia and Asia primarily because (at least in NZ's case) our banks were not mixed up in the dodgy instruments, while crediting National for spending following the earthquakes is basically crediting them for economic broken windows.

We seriously need to be looking at what services we expect our governments to manage, so as not to be veering between "structural deficit" and "infrastructural deficit".

Key's problem was he wanted to be PM and he enjoyed it. He didn't spend his political capital on making the hard calls. I voted for him to address some of these issues that he campaigned on (including our WFF "communism by stealth", as he called it).

I agree with regard to failure of Key to role back the middle class welfare. But we still took a huge kicking from the GFC - just look at GDP growth over that period, there was a recession in NZ for 2-3 years

Excellent summary. Good Govt can only deal with the cards that are dealt to them. Would have been interesting if National Had not had to contend with the Christchurch Earthquakes.
COL believe their own speak if they say it often enough they are hoping people will eventually believe it

Presumably because more people like Kerry and the wise denizens of interest.co.nz don't try, or don't succeed, to get elected to Parliament and appointed to Ministerial office. Why is that?

Meritocrats usually fail to win public opinion during elections because they care more about the work than the appeasements.
Unfortunately, people decide who they vote for based on interviews and rallies instead of the candidates' qualifications and experience. Avid readers of websites such as interest.co.nz make up but a fraction of NZ's voting base, the majority get their "news" from Facebook posts and videos.

The best examples for this are Key and Ardern: both won their respective party leaderships and then the prime ministerial office shortly after based largely on their brand appeal.

Paradise Lost. Perhaps. It's always easy looking back - mistakes to be avoided and opportunities not taken. But there is no chance of political change, regardless of our hopes. ALL parties are just factional wings of the one. And after all, where else is there?

*Kerry McDonald is a company director, advisor and economist.

Previously: Director NZ Institute of Economic Research; Senior Exec/an MD Comalco/CRA/Rio Tinto; chairman of BNZ, OceanaGold, OPUS, Powerhouse, etc & Savings Working Group, State Sector Standards Board, Aus-NZ Leadership Forum, Kakapo Recovery Project, etc; director National Australia Bank, Leighton Contractors, Carter Holt Harvey, Ports of Auckland, Comalco NZ, etc.

Looks like the author had been there every step of the way too, helping to perpetuate the status quo since the dawn of the new millennium.

Download his letter and read the full list. As the Aussies would say 'figjam'

Hi Jock Silver,

Your comment is complete BS.

Kerry McDonald is a highly reputable economist and businessman.

He's a person who's held true to his principles throughout his career - which extends back to the 1960s, when he was a talented young economist at NZIER.

You should have taken the time to find out about Kerry's credentials before shooting from the hip - with your eyes shut and brain out of gear.

TTP

I may shoot from the hip, but I always hit my target.

I do not care about this guy, or your incessant whinging. As far as I'm concerned he's history.

Good luck with that.

Agree.

Happy realisation :)

this recent goverment has stopped oil exploration ...???? thats right up there with taking farms away from white people in south africa . if you dont like oil you need to close the gas stations not the oil explorers now well just buy it all from other countrys while we have more unemployed and they were very well paid jobs getting us one of the most important products on earth .i dont get it . its not going to help the earth or make nz green its going to have a direct impact on nz gdp. and w hoever let housing become the joke it is now . and i say joke as in the rich laughing at the poor .building consents costing 30,000? in 1999 i paid like $300 for a building consent also about pests coming into the country . this isnt rocket sience . ive done a fair bit of importing and its an eye opener. the inspections are geared to make as much money for as little work as possible i have personally destroyed hornets, ants nests and spider eggs after maf has finished there inspectionsit used to make me angry that theyd send a student to do the inspection after charging 900bucks to inspct 3 cars it would be over in 30 min .. but then i haveto kill stuff they missed . i love nz and dont want be bringing in bugs im surprised we dont have everything here.

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Refreshing to read a non partisan comment on past admins. From an evolutionary view the inability to do what is necessary is disastrous. May that this admin is emboldened as they address previous policy holes, ie housing, infrastructure, Immigration, health care etc etc. I've often wondered if the incumbent admin are incapable of addressing "unpopular" issues maybe a referendum issue would give the social permissions required of a nervous admin,,

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Kerry is right. We have all sinned. Leadership is missing in all areas - at school, in business, in politics, in the community and the worst of all, in the family. The dismembering of the nuclear family and supporting that agenda in law has effectively created most of the rest. There is no respect for leadership anymore, in fact there is very little respect for anything and anyone at all. The freedoms we take for granted are not understood nor appreciated by many (most?) of us, so we have this collapse into the entitled age that we now find ourselves.
We cannot fix anything until the family is restored to the top of the food chain and we can only do this if we give up trying to create a nirvana society full of dysfunctional ideologies in our 'inclusive' ways.
There are rights and there are wrongs. Trying to right the wrongs with more wrongs is silly and if you take a good look around you where you are, you will see the results of a spoilt society that has almost everything, but are too busy moaning about what they don't have to be grateful about anything. There is no quick fix folks. A good dose of humility might be a good start???

The writer is a dinosaur. Sorry Kerry, but the meteor has landed already. Next it'll be Ruth Richardson....

The new - and they're reality-based, so they're superior - measures are global footprint (in which we have to retreat by a goodly measure):

https://www.overshootday.org/
https://www.overshootday.org/newsroom/country-overshoot-days/

And: https://www.theguardian.com/big.../happiness-gdp-wellbeing-statistics-po...

Not even Canute can turn back this tide of events. Luckily, I suspect the PM will treat the letter with the reverence it deserves. What we can do is have a mature discussion about population, degradation and long-term-maintainability. It's a different discussion.

Fortunately Christianity has mostly lost its power to increase its membership via prolific childbirth except in certain NZ cults. However, it is time that national policies strictly encourage all religions or ideologies NOT to engage in propagation 'arms' races in a vastly overpopulated planet.

When I was in the National party we had very strong electorates, the MP's were expected to represent the electorate. Today the people head office chooses for us as our electorate Mp, often have their own agenda's, the electorate is just along for the ride. No one ever talked immigration, the electorate was too stupid to understand the benefits.

If National wants a future it needs to rebuild it's membership base. Which means you have to listen, and also notice how old everyone is at meetings.

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they stopped bothering and imported a whole new base.

If 10,000 members tell you they are not happy you should listen, if membership collapses you should listen, it matters, it's your feedback loop. Don't tell them that it's life and to, 'suck it up'.

In the UK conservative membership is lower than the SNP at 128,000. When Thatcher was in power they had 2.4 million members, they were a broad based party with solid support, look at them now.

funny how they are still consistently the most popular party ..

I wouldn't bet on it for much longer. They don't have enough members to run an effective election campaign, they rely more on their contacts in the media, like Murdock and the Barclay bros.

That has been repeated for sometime now. Wishful thinking ?

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This is a very interesting piece.
I am basically a centrist who has voted for Labour (3 times), National (2 times) and Act (once). I enjoyed this article because it is was so non-partisan.
He is right on the money. Successive governments of both colours have screwed NZ.
The Clark government did a lot of damage. They revved up the immigration Ponzi, and did jack shit about housing. To their credit, Kiwisaver was excellent policy. I'm a bit agnostic on WFF - yes it's (lower) middle class welfare and expensive, but bugger me if I know how many would survive without it given NZ's low wages and high cost of living.
The Key government came in to much fanfare. Key promised to sort housing out. He totally failed.
They revved up the immigration Ponzi further, in the process helping keep wages down, making housing worse, and putting our infrastructure under awful pressure. GDP growth looked good-ish, but it was based on really flimsy grounds.
Bill English was a good Minister of Finance, and managed the economy well. But overall, the Key government failed in addressing NZ's current and future issues.
Judgement reserved on the current mob. There are some great policies, but question marks over how well they will be executed. For now, I'm giving them the benefit of the doubt - like I did Key (for two terms...) .

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You forgot how the Clark government paid down tons of debt while other governments around the world went on a spending spree. When the GFC hit NZ was in great shape to weather it. I give them 8/10 just for that. As for WFF, I think we need to get used to middle class welfare, trickle down isn’t working.

Yeah good point.
I'd give them a 5
And Key's government a 3.5

I think if Clark and Key's governments had done much more on housing then there would be less need for WFF

They transferred debt to the private sector and started the bubble in housing.

WFF is so ambulance at the bottom of the cliff and a lazy policy. How much of the gap in living costs could have been fixed if any government got stuck into our supermarket duopoly, electricity market, telecoms, costs that push up housing (materials, consents which seem time and time again to be worth nothing when the build fails) etc etc...

Agreed re WFF. Putting the middle class on welfare was always a stupid idea and even the Key government didn't have the gumption to remove it.

WFF was a tacit admission that NZ's productivity is too low and that wages alone weren't enough to sustain good living standards. Lower taxation is a red herring because it simply bankrupts the public purse (see Federal Government in US) and accelerates massive inequality....which we have as well.

WFF was a bribe pure and simple, corporate welfare and contributed to housing inflation. Many took that lump sum and purchased an investment property. Other than being overtaxed there was no evidence that the middle class were on struggle street at the time.

Totally agree re WFF and the supermarkets, but electricity and telecoms are now competitive and market driven.. A lot better than the bad old days of telecoms and the old electricity monopolies.

Ahhh Telecom. 128/128 kbit adsl connection with a 10 gig cap. ****New Plans coming out**** 2mbit down / 192k up, 10 gig cap.

Agree that living costs could be pushed down. The fact that no government has even tried to tackle the supermarket duopoly is bordering on corruption IMO. Even high taxes on cigarettes and alcohol are essentially being subsidised by welfare - although that isn't so bad because the tax just goes around in circles.
Of course the big one is rent. It needs to come down a lot.

What we need is a "Common Sense Political Party"

Maybe we need to find more people, with a modicum of "Common Sense"...

By definition you need to have average intelligence to have common sense. I think we need better than that.

Aristotle called a somewhat related intellectual virtue, phronesis, or practical wisdom. And of the three intellectual virtues (the other two being, episteme, or scientific knowledge and techne, craftmanship and art), he emphasized that it was phronesis that informed the moral virtues (i.e., the ability to make decisions about what is good and bad for society).

Unfortunately, we've lost our focus on practical wisdom.

3.►Phronesis It means Practical wisdom. It is related to the following main ideas: Ethics. Deliberation about values with reference to praxis. Pragmatic, variable, context dependent. Oriented toward action. Based on practical value-rationality.

Instead we practice/reward instrumental-rationality - not values-rationality. That's why we have technocrats in charge (i.e., techne, those with craftsmanship in the art of politics).

In my opinion, the last Parliamentarian in NZ with phronesis in spades was Geoffrey Palmer.

We should be heeding what he is telling us is wrong with our democracy, and how to get it onto a better governance footing;

http://constitutionaotearoa.org.nz/

Sure, constitutions seem dull and dry - but they are practical and they are value-rational.

I think it's the step up in nationhood (and democratic sophistication) that NZ needs at this historical juncture.

Very interesting. You forgot that Clark/cullen spawned the I.T. knowledge wave, its a massive part of the economy now, gave rise to Xero among others...probably bigger than primary sector soon. Key and English very good at building some big roads just not very good at having a strategy to fill them with anything more than immigrant families in people movers....we have the wrong version of MMP the other version would be better. Restore privy council and upper house of parliment as well.

Clare Cullen said ""“This Government intends to close the digital divides by 2020, and to make ICT the second largest contributor to GDP by 2025."" So the minister agrees with you. However SNZ has "Telecommunications, computer, and information services" as representing 1.1% of total NZ exports which way behind Milk->18.2% and Meat->8.2% and even Aluminium->1.5%. In fact your IT Knowledge wave was 1.2% a year ago so we are going backwards.

I'm not a Kiwi so I went off and looked up the OECD data, it appears we are about on trend growth: https://data.oecd.org/chart/5g3M

The issues is New Zealand has always trailed other OECD counties, we are not catching up - just treading water comparatively: https://data.oecd.org/chart/5g3O

Excellent Article

Doing an autopsy on past governments is wasted unless the role of business is considered in tandem. We are one of the freeist economies in the world which should mean that business is free to sniff out opportunities, re-allocate resources and push new ideas to market.
So what have they done in the new millennium?
Business has wanted high immigration of both educated and cheap workers. Business has wanted light touch government and a stable working environment with less change due to the grand ideas of gov.
Also, examining reserve bank policy is integral as their low-interest rate policies have arguably done the most in allocating resourcing to high-cost housing.
One thing for sure, is that it's only going to get harder for NZ inc as cloud computing and global distribution networks impact local businesses. The death of downtown retail, for one, here in New Plymouth is quite dramatic to watch..

This is a very important article as it puts Government performance under specific scrutiny, which should only enhance our democracy further. i note though that there are a few critics here who cannot wait to shoot the messenger, rather than discuss the message.

I wouldn't rate the Clark/Cullen Government as high as he has done, because he doesn't mention a lot of the damage they did such as destroy the Mental Health infrastructure with the consequential horrendous impacts. Or the impacts of the Free Market policies, that successive Governments have upheld and entrenched.

What he doesn't mention is that all MPs pay and conditions are significantly better than any other Kiwi, and they have given this to themselves. But clearly this is not earned by the demonstrated very poor performance. And they go on to pat themselves on the back afterwards by giving each other awards. This article should be picked up and published widely for everyone to see, as i fear that too few will see it on this site. Such articles can only be produced after the damage is done, but can serve to get many people to think a little more about who they elect and why.

Absolutely agree, but you need to start your review 20 years earlier.

Successive governments since Muldoon was tossed out have dabbled in the *same* policies without any real differentiation between them. Whether one taxes a little more or favours Federated Farmers a little more is unimportant. Bring it on.

Agreed, I also wondered why he did not go further back in time.

Perhaps it is a generational thing. I was discussing some politics/mental health issues with a 30 something studying psychology the other day and noted some interesting generational blinkers that made her a little myopic on causal factors and drivers for conditions today. When researching some of these topics, the researchers need to be able to step outside what they "know" and go beyond their immediate references. They may find some interesting factors that might challenge their paradigms.

I 'shot the messenger' as I see him unfairly blaming politicians with no evidence that he's walked a minute in their shoes. While there are business politics they bear no relationship to real world politics where power is on the line every three years based on what the average voter wants. It's akin to bemoaning restaurants that serve what the customer will order rather than something innately healthy. The Royal Commission should be on US the voters.

Disagree, the majority of voters only know what the Government wants to tell them through the media. The media is complicit in this disinformation programme, and this is why this article is so important. It tries to put the spot light on what Governments ACTUALLY achieve.

Those voters do not have the motivation, the knowledge, the education, the self confidence and belief, the time and a lot more to be able to do the research to find the truth for themselves. They rely on others to inform them. When that news becomes biased, unbalanced and pushing an agenda it can be difficult to determine that for many.

The media, as well as politicians have consistently failed the public to provide informative, balanced commentary on political affairs. They are trying too hard to suck up to the powerful and influential, being sycophants instead of exercising their own power, that of ensuring the truth does not get buried under piles of political BS.

And you think it is unfair for politicians to be held to account for what they do? Why? And no evidence? really - the evidence is all around us! Lost jobs, declining living standards, people living on the streets, a destroyed mental health system, increasing equity gap, climate change and so on. You don't think politicians had any part to play in any of this? In NZ at least they only need to be in Government for nine years to get retirement benefits that NO other kiwi could ever hope to get, after a lifetime in a job. the starting wage is well over $100 k, without allowances, as a back bencher, and what do they do for it? Get told to shut up, vote when and how they are told, speak only when told and what to say. Successive generations of politicians have corrupted our political system, and Government and ripped off, hard working Kiwis, and you think holding them to account for the damage they have done is UNFAIR?! You are exactly the problem in this country, someone who cannot see past their own ego, ignores the evidence before their eyes, and is blinded by ideology. Time to wake up!

Waste of time.
Policies dont create new resources - and the world is in resources per capita decline mode... (the exact opposite of growth)
When this eventually knocks the debt ponzi falls over we should be worried about what happens when theres no food turning up in the supermarkets
But whos actually interested in that discussion.

To call something a failure, you have to have a yardstick.

Not an ideology.

And GDP - taken by all as the measure - is an invalid yardstick. It lead us to revere and reward those who perhaps weren't doing things our grandchildren will be so pleased to inherit. Until we establish a valid, long-term yardstick (I'd suggest long-term sustainability) then we are arguing about deckchairs on an increasingly sloping deck.

Mind you, if the terms of reference were wide enough, it might be a rare chance to articulate the fatal shortcomings of growth-based finance and neo-liberal mantra-chanting.

The article is traversing ground which I heard summed up a quarter of a century ago by a then-still-young Phillip Burdon, during the course of my MBA years. He said that MMP was a recipe for (his, possibly imperfectly recalled) words:

"Perfect Policy Stasis"

The sad conclusion is that we ain't gonna get "leadership" of the sort KMcD so earnestly desires, from the current configuration.

Which means that we have to look forward to a continuation of the same old, same ol':

  • Muddling along a mostly centrist line
  • Veering slightly off centre from time to time, but with the New Mob generally swiftly undoing the perceived worst bits of the Last Mob's legacy
  • An unswerving dedication to buying votes: whether by letting asset bubbles rise and rise like an over-yeasted dough and surfing the wave of Apparent Wealth, or by shovelling billions of OPM down the ever-wide-open gullets of the Poor and Feckless (however defined du jour) thus guaranteeing their fealty
  • With the only apparent philosophies in play being either Laissez-Faire (let 'er run) or Government Cheese - 'They'll turn us all into Beggars 'cos they're Easier to Please' (ht: The RainMakers)

Oh, and don't ferget to Vote. It could Change Everything!!!

Nice thought but we're not likely to get a sensible person without some political bias appointed.

My PhD is in policy effectiveness, and I tracked some of this in my research too. A few decades ago, NZ was a world leader in policy effectiveness/outcomes in Govt, with academics and officials engaged in leading OECD research. Then successive Govts moved to a focus on 'outputs' (albeit often mislabeled outcomes), and intended societal/economic policy objectives were missed, time and again.

Early indications with this Govt are mixed. There are brief flashes of genius, but decades of 'practice' appear to be hobbling this Govt down the same path. They seem to want to achieve better outcomes, but using the exact same templates and tools to replace policies they (often rightly) recognize having failed, without re-introducing policy-effective leadership to the machine that created the very things they want to fix, is more likely to perpetuate the same poor social/economic outcomes, just with different labels.

Some already starting to emerge (eg a companies regime revamp demonstrably unable to achieve its policy objectives, for exactly the same reasons the Nats' much vaunted 'solution' couldn't, with both following the same policy development template).

At a practical level, speaking with a senior official yesterday, he reminisced for the days when, as he put it, Ministers actually could receive free and frank advice. It sounds a bit harsh because those 'in' the privileged tent also give free and frank advice, but his point I think was more nuanced. Not that the 'in' group don't give free and frank advice. But the 'no surprises' system now guarantees surprises. With Depts/Ministries tightly managing Ministerial access, the 'no surprises' policy has often had the opposite effect, with many examples of Ministers surprised because officials & preferred advisers 'in the bubble' truly didn't see anything to warn of, but Ministers cut off from those many other officials & advisers who see big icebergs ahead of flagship policies now being developed and implemented. They still have binoculars but no access to the bridge, radio, megaphone or semaphore to warn the captain.

So .. we keep on doing things the way we always have, and we are surprised when we get the same results? Or more effectively; the rules were changed, but they mucked up the game and now no one will allow them to revert to something that worked?

Actually those in power surrounding themselves with sycophants who then control and constrain access to the Grand Poobah while filtering what they get to hear is a common malaise throughout Government organisations. I recently challenged a senior manager on his choice for a promotion, having as a QA, observed the individual in action and found them less than satisfactory. The manager had been in a position to know what the person was actually like but chose to ignore this and only take notice of the application and interview process. i told him he got what he deserved. Unfortunately I have been proven very correct, and there is no effective process for returning a person to a prior rank due to non-performance.

'When the economic engine of a democracy fails, social and environmental imperatives become unaffordable' .

That'll be why this:

https://www.tvnz.co.nz/.../headaches-over-wholl-pay-clean-up-toxic-waste......

What we actually need is businesses which pay their way. Totally. No mess left behind.

But the statement is incorrect, Kerry. It's sort of a horsey-cartey-thing. You probably wouldn't understand....

Yes, take for example, Costa Rica. Using KMcD measure of GDP - Costa Rica GDP per capita $12,144 vs New Zealand at $40,118.

Yet, look what they've done;

2011
https://ourworld.unu.edu/en/ethics-and-environmentalism-costa-ricas-lesson

2012
https://www.theguardian.com/global-development/poverty-matters/2012/jun/...

2016
https://grist.org/food/costa-rica-modernized-without-wrecking-the-enviro...

Great links Kate...
Had to laugh in reading the last one....
The Vega brothers, for instance, are part of a cooperative of some 400 farmers, called CoopeTarrazú, which processes and markets its own beans. Farmers acting on their own only get a tiny share of the final market price for their crops, but the members of CoopeTarrazú are able to get more money for their work because they collectively own most of the value chain for their coffee. They grow it, collect it, clean and dry it, and sell the beans to companies like Caribou Coffee.

yes ..the whole point of producer cooperatives is to maximise profits... rather than being at the bottom of the supply chain....

Is Fonterra a co-operative or not...?? ( In its' current form ..it is a paradox )
ALL... fonterra farmers should read this article and ponder their slow loss of power and control .... back down the slope..

My call on the NZ Economy over the next 3 years is "Stagflation": defined as a situation in which the inflation rate is high, the economic growth rate slows.

It is very difficult to stop and hurts the Govt Balance Sheet, personal Balance Sheets and the NZ Economy. Very hard to stop it once it rears its head. Maybe, this government can forget the government past(s) and pure party political dogma and come round to developing a plan; as it does not look like there is one for the Economy at present in Wellington.

Cheer up old sport, the wheel is turning and a bright new dawn will follow. Honest. First the cold, dark hour, however. Chaos and fumbling in Wellington, caused by younger people Who Know Best using geriatric failed ideas from the Soviet past, complete with Soviet style housing schemes, it seems. Collapsing exchange rate and the RBNZ has a courageous plan to reduce the OCR by 1% if GDP slows below 3%. I kid you not, sort of Erdogan light. All this after a collossal debt binge. What could possibly go wrong?

As you say, falling exchange rate causes inflation, plus collapse in private construction, and increase in regulatory burden, suggests stagflation 1970s style is coming back, complete with strikes. The end result might be a saner NZ, with profitable export businesses expanding despite the governments every effort to stop them, but first the chaos, the blame, the anger and denial.