27 September 2026, The Post

We need an honest debate about how to reach a new equilibrium on fiscal responsibility. This would involve reducing poor policy decisions that are expensive and deliver very little of value, and in return identifying the essential – i.e. non- discretionary – goods and services we rely on collectively and ensure that they have sensible sources of revenue that are not subject to arbitrary and often ill-judged political intervention.

Let me give three examples of poor decisions that I would immediately review.

The case for a third medical school does not stack up. I would rescind it.

The number of doctors practising in New Zealand per capita is higher than Canada and the UK, both hosting effective health systems. The number of domestic medical graduates we produce per capita is very close to Australia’s. An extra 50 graduates would bring us level pegging with them, well within the current educational capabilities of the existing medical schools. Where we fail is in keeping our graduates, and distributing them well. Nearly half of all practising doctors are overseas-trained. Another medical school would quite likely be an export industry. We should increase our current numbers, and bond them for a time, concentrating on rural and underserved areas.

So, how did a proposal for an entire new medical school make it through our decision-making process despite failing to hold up on any plausible criterion?

The case for a four-lane highway from Warkworth to Wellsford does not add up.

The case for a major 26km expressway in a low-population and low-traffic area that would involve twin one-2km tunnels, 15 bridges, two underpasses and 12 wetland basins, and that would commit a major portion of the transport budget for decades to come, has not been persuasively made (it has a low cost-benefit ratio given its cost). It is also envisaged as stage one for a 100-kilometre Northland highway that could cost between 15 and 18 billion dollars. The Mayor of Auckland, Wayne Brown, believes it is too expensive and over- specified. Less ambitious measures could do the job, given the likely traffic.

How was the proposal allowed through with little effective debate, committing a major resource into the future? The PPP contract was signed and an OIA on its details refused.

There is no case for an increase of nearly a third in Corrections funding.

Like all other developed countries, New Zealand has experienced something like a halving of traditional crime rates over the last 20 years. Yet, our prison population is amongst the highest in the developed world. And the corrections budget is increasing substantially (from 2 to 3 billion), with 40% of the greater prison muster (now 12,000, up from 10,000) accounted for by prisoners on remand – that is, they are accused, but not convicted and not allowed out on bail. Being held in prison means that these people will acculturate to the institution, lose contact with family and employment, and end up more likely to re-offend if imprisoned.

This will create a considerable fiscal burden disproportionate to the problem it is addressing.

So, that’s one side of the budget ledger. But what about the other? If we can reduce poor spending, what can we do to ensure that we do not fall short on funding non-discretionary collective goods and services?

First, I would request that the Public Service Commission establish a public service performance tracker (an idea pioneered by the UK’s Institute of Government). The public understandably worry about public sector bloat. Let’s see the figures.

Second, I would ask the public service commissioner to consider regarding PHARMAC, our world-leading drug-buying agency, as the model for an effective and efficient public sector procurement sector.

Third I would empower our free-standing, independent agencies, such as the Infrastructure, Commerce and Climate Change Commissions to take up some of the heavy lifting and politically challenging decisions which politicians are unwilling to take, especially in an election year.

The Infrastructure Commission could ensure that a combination of a fuel tax and a road-user charge could be sufficient to fund a reasonable and agreed transport maintenance and enhancement plan that NZTA could promote and execute.

The Commerce Commission could be empowered to tackle wicked problems like the dysfunctional energy “market” and the supermarket duopoly. The Climate Change Commission could ensure that the Natural Hazards Commission is able to set insurance levies that clearly cover us for the growing range of climate-related catastrophes to which New Zealand is increasingly exposed.

In each of these instances I would also “Go Dutch” (as the New Zealand Initiative has suggested) in ensuring that there was an independently chaired Parliamentary Select Committee of long standing and fully resourced with all parties represented that would establish some continuity, durability and necessary political oversight.

I would “Go Swedish” on pension funding. The Swedes had a similar set up to us – taxpayer-funded pension plus KiwiSaver-style private pensions. They merged the two and grew them in such a way that people could retire with certainty.

And finally I would “Go Australian” on ACC, separating the income support aspect to something like their National Disability Insurance Scheme from the medical support to something like their Medicare levy (which has been in existence for half a century).

Then I would sit back and watch with satisfaction as the budget gently balanced.

Peter Davis, Emeritus Professor in Population Health and Social Science, University of Auckland.

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