Published in the New Zealand Herald, 7 March 2023
Aside from the dominance of media and political attention, what the issues of Three Waters and Cyclone Gabrielle underline is that we have a problem in New Zealand in dealing with long-standing issues that grow over time, that have been clearly signalled, and that require timely intervention and the earmarking of resources.
Let’s take Three Waters. The fundamental problem is that, with few exceptions, local authorities just have not set aside the funding required to maintain, upgrade and future-proof their water infrastructure.
And it is not as if this has not been clearly signalled. In legislation enacted in 1996 local authorities were required to set aside depreciation for assets. Legislation in 2002 made this requirement more explicit, and further legislative activity in the 2010s underlined this requirement. And yet the Auditor General recently found that local authorities were not setting aside sufficient depreciation funds for their assets.
And then there’s Cyclone Gabrielle. Everyone agrees this is a sign of the coming impact of climate change. The basic problem here is that, despite legislative and other commitments on the issue, concrete action has been constantly deferred, particularly in the primary sector.
Again, it is not as if we have not known about this. While New Zealand signed up to the United Nations Framework Convention on Climate Change in the 1990s and promulgated some environmental goals, it did not commit to any specific actions to meet those goals. Since then, there was an attempt to introduce a carbon tax in the early 2000s, but that was abandoned in the face of fierce farmer opposition, and the Emissions Trading Scheme (ETS) was introduced. More recently, the Climate Change Commission has been established to support work towards carbon zero. Meanwhile, New Zealand’s greenhouse gas emissions have risen by about a quarter since 1990 while other developed countries have reduced theirs.
So, here we have two major policy issues of substantive significance, for which the required actions have been clear – setting aside depreciation in the one case, reducing emissions and starting on adaptation in the other – and which have been with us, and clearly signalled, for at least 30 years.
Yet, in neither case has New Zealand been able to make much, if any, meaningful progress. Even with the impact of catastrophic events – the rupture of pipes and collapse of essential infrastructure in the one case, the destruction of housing, infrastructure and businesses in the other – it is not entirely clear that there is a political consensus on whether or how to move ahead.
And these are not the only such examples we have of the problem we have addressing fundamental challenges. There are others.
New Zealand’s Quota Management System (QMS), first canvassed in 1986, sought to establish fishing quotas for the commercial industry. Ten years later, we passed legislation governing fishing, including a clause outlining an ecosystem approach to fisheries management. Yet, in the recent review of the sector by the Prime Minister’s Chief Science Advisor, it was established that nine fish stocks have collapsed and another dozen or so are either overfished or at risk of overfishing. Compounding this, after 30-40 years, the sector is in many cases still not collecting the information necessary to determine the state of fish stocks, failing to record bycatch, and conducting destructive bottom trawling.
Here’s another. Treasury, in its regular report on forward projections, has estimated that our current commitments and taxpayer funding trajectories for superannuation and health will produce a revenue shortfall of 15% of GDP by 2061. There is at present no provision for meeting this shortfall. If these other major issues are anything to go by, in 30-40 years’ time we will still be contemplating this issue without any clear way forward.
The policy problem is easily stated. It is possible to identify these four issues as being a form of intergenerational “moral hazard”. In every case “the can is being kicked down the road” because of current short-term, political constraints. Yet it is future generations that will to have to bear the consequences – whether that be fronting up on the impacts of failing water infrastructure, dealing with global warming, repairing depleted fishing stocks and damaged ecosystems, or paying for unfunded liabilities on pension and health care.
The solutions are harder to identify. One is to encourage our political and media cultures to take a longer-term view. As Chair of The Helen Clark Foundation, I have suggested the potential role of think tanks, extending the parliamentary term, and the greater use of commissions to develop policy. I have also argued for more funding for non-commercial and public interest media.
Whatever the potential solutions, it is clear that New Zealand has a problem in grappling with fundamental, long-term issues in a successful manner. We need more honesty about the challenges and what is required to resolve them.
Peter Davis, Chair, The Helen Clark Foundation, an independent public policy think tank.
nicely put, thanks for your continuing efforts
I don’t know whether this is within your current frame of interest but it certainly is for us:
All the best
Well done. Can you get it put into the current legislation – namely, that companies have to disclose payments to practitioners and organisations?
It seems like we have to rapidly reduce our expectations for a whole realm of services and privileges that we have been enjoying. There isn’t enough money to provide what we would like to have, and there is likely to be less money available rather than more. To minimise the forward cost, we need to rapidly reduce what we expect and demand as a society. The conversations need to be about where we can rationalise and reduce, rather than anything more that we would like to have. Preferably we will have conversations, otherwise we will just get less of a whole lot of things without any prioritisation going on.
We are amongst the most lightly-taxed developed countries in the world, and we don’t make it easier for ourselves. For example, we pay for national super out of tax, when many countries have contributory schemes. All the examples I gave are of long-standing issues. So, for example, the issue of water infrastructure. The reason why it is a problem now is that authorities have failed to set aside a little each year, and so all of a sudden it is a burden now. One of our problems is that we have allowed our housing infrastructure to become grossly inflated as we sell stuff to each other without adding much value – except capital gain! So, there is very little public debt, but a large amount of private debt, much of it due to inflated housing values!