We are dealing with the Covid crisis. But what about the long term?

Published in The New Zealand Herald, 3rd. January 2022

New Zealand seems to be doing well in responding to the twists and turns of the pandemic. But this necessary focus on the urgent and immediate should not be at the expense of dealing with the long-term issues we face.

In a commentary on their newly-published book, Policy-making under Pressure, Adjunct Professors at the University of Canterbury, Sonia Mazey and Jeremy Richardson, argue that the policy style in New Zealand is short-term, reactive, and lacking in continuity. They advocate longer Parliamentary terms, standing policy commissions, and using non-Parliamentarians as Ministers.

They give the example of the government’s so-called Three Waters proposals which intend to commit billions of dollars to investment in drinking and waste water management in local government. This has been a problem long in the making, but it has required a series of near-catastrophes with the breakdown of water management in several places to give government the leverage to step in. And the proposals are contentious.

A similar conclusion was reached with respect to Australia by John Daley, the former CEO of the Grattan Institute, a large, bipartisan Melbourne-based think-tank. In Gridlock, he reviews over 70 reports published by the think tank. Two-thirds of these reports were never adopted. Where suggested reforms were publicly unpopular, none were adopted. Reports that crossed party ideological red lines were also never adopted. Other reforms were opposed by vested interests, but this was one area where, if the evidence was strong and the broader public interest demonstrable, such opposition could be overcome.

A recent example in New Zealand is perhaps the failure of a Capital Gains Tax (CGT) to gain traction. Despite New Zealand being almost the only country in the OECD without such a tax, despite clear evidence that investment signals favoured asset accumulation over productive investment, despite the impact of CGT being restricted to a minority of better-off tax-payers, a swathe of vested interests and ambivalent public opinion put paid to this recommendation from the Tax Working Group.

What have we done to try and institutionalise independent and future-focused thinking?

We have established commissioners. These have been in administrative procedures (the ombudsman), health and disability, environment, privacy, children, race relations, human rights, and retirement, among others. However, these tend to be operational in focus.

Royal Commissions are a more clear-cut mechanism for achieving long-term policy change. The most striking example of this was the 1967 Woodhouse report which successfully advocated the establishment of ACC. By contrast, The Royal Commission on Social Policy that reported in 1988 achieved very little of lasting impact. More recently The Royal Commission on Auckland Governance (2009) has had real long-term impact, but this long-term policy development role seems to be the exception rather than the rule.

We have established commissions. The Productivity Commission, for example, put up the idea of unemployment insurance, which the current government is developing further. It has also been given the issue of migration, an area that has lacked coherent, long-term planning. There is the Commerce Commission which has acquired more independence and power. The Law Commission has been very productive. But these commissions tend to be functional and operational in focus.

Ministries have a role. For example, The Treasury recently identified health and superannuation as major future contributors to debt unless addressed by some kind of pre-funding mechanism.

In the same vein, Simon Upton, the Parliamentary Commissioner for the Environment, has argued that the current budgetary emphasis on immediate costs can risk long-term investment, particularly in environment and well-being.    

The current government has also established the Infrastructure and Climate Change Commissions, both pitched as non-party political, independent, future-focused, and long-term in orientation. However, whether they can fulfil their mandates will be highly dependent on the political environment.

Finally, there are examples of initiatives in the political arena that have been future-focused and successful. Thus the late Sir Michael Cullen established the Super Fund and KiwiSaver to tackle New Zealand’s failure to raise its savings rate and pre-fund pensions.

Another example has been the almost unprecedented spectacle of government and opposition joining forces on a key socioeconomic policy in the agreement to support legislation advancing greater housing density and intensification in our major urban centres. Could this be a model for other intractable areas?

While many may judge the performance of the current government on its response to the Covid pandemic and after, in the long haul its true legacy will be whether it can bed in an institutional and policy structure that can better address long-term social, economic, and environmental policies in areas that have so far proved to be resistant to statecraft, such as climate change, environmental despoilation, poverty reduction, low productivity, dependence on low-skilled, often imported labour and on the export of unmodified commodities, and our deficit in research and innovation. This will be the real test.

Peter Davis, Chair, The Helen Clark Foundation, an independent public policy think-tank.

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