Puffing Policy

This entry was posted in Health, Pundit on by .

Public policy towards tobacco consumption remains politically sensitive.

In 1983, a young researcher was told by a medium-level Treasury official that Treasury policy was to abandon excise duties on tobacco. The senior Treasury economist that I consulted, famed for his commonsense, snorted ‘we need the money’. He explained that no-excise-duty was the ambition of a couple of very ideological Treasury officials – later we would call them ‘Rogernomes’ or ‘neoliberals’ – who objected to state intervention.

I recount this incident to remind you that tobacco policy has an ideological dimension as well as being affected by lobbying from the commercial tobacco interests, which are not particularly ideological but pursue their self-interest. A ‘Socialists for Ciggies’ lobby would be generously funded too. (One may suspect the funding of favourable lobby groups tobacco interests is because they do not want New Zealand successes to set an international example.)

Understanding the ideological dimension explains why some not very impressive arguments are trotted out to justify reducing tobacco excise. It is common for an ideological justification to be clothed in practical garb. Understanding the commercial lobbying explains why alcohol excise is not also under review. The liquor interests cannot be spending enough on the right-wing lobby groups.

Tobacco excise duties are still Treasury policy; it still needs the money. But there is a sound economic justification for excise duties on tobacco. Smoking damages smokers’ health, compromising heart and lungs and triggering cancers. The tobacco excise contributes to the cost of health service treatments. (The revenue actually exceeds annual costs. However, if everyone stopped smoking tomorrow, they would experience some health gains immediately, but would still have higher treatment costs for some decades. So the duty is covering future costs, just as taxing carbon emissions is intended to offset global warming which lasts centuries.)

The priority of revenue collecting is demonstrated by the fact that currently the level of excise duty is indexed to general consumer prices. As prices rise, so does the tax (although there are some in the current government who would like to end this practice). The indexation arose because it was such a hassle for Treasury to get the Minister of Finance to raise the excise rate; now it is automatic. The small incremental changes probably don’t have a lot of effect on smoking, whereas holding off the increases and then having a big increase encourages more smokers to give up.

Another economic dimension has been the smoke-free legislation. Once smokers had the right to pollute others’ airspace, which many non-smokers found offensive. The realisation that passive smokers could also suffer health damage led to a law change which removed the right for a smoker to infringe the airspace of others. The health damage from passive smoking is quite small compared to that from active smoking, but it provided the political lever to introduce the smoke-free legislation.

Over the years the amount of smoking has decreased. In 2011 the government set a target of only 5 percent of smokers in the population by 2025. That seemed ambitious at the time but it looks as though the target will be attained.

The big difference may be the introduction of vaping which enables the tobacco addict to switch access to a nicotine source which appears to be less harmful, because there is less poison in the inhaling. We cannot be sure how less harmful it is. It took decades to track how much tobacco damaged health and we have insufficient data to be sure of vaping’s long-run effects. (The medical advice is that addicted smokers should switch to vaping, but non-smokers should not take it up.)

The neoliberal’s ideological case is that they object to the state interfering in individual lives, especially when it tries to change behaviour. If people want to smoke, they are entitled to make that decision without state interference. I am not unsympathetic to that general principle, especially if the smokers are paying for their health (and other social) costs and they are not infringing others’ airspace.

The economics discipline is framed by the importance of individual choice. But how addiction fits into the economists’ approach is unclear. Most smokers are addicted to nicotine; many wish they could give up smoking, but they can’t. It is easy to say ‘don’t get addicted’ but it happens with other things we consume. (Kate Shepherd famously remarked that ladies of her time were addicted to cups of tea.)

The economics approach to personal decision making began before psychology as a science was founded. Behavioural economics draws upon modern psychology, but I have yet to see how it incorporates addiction. (Some of the neoliberal arguments are just plain silly. A famous one was that being unable to give up an addiction was akin to saying you wanted to get married but could not find anyone to marry.)

I am uneasy that the (handful of) tobacco companies profit from getting people addicted to their product despite it being harmful. That position is not based on deep economic theory but on the commonsense of a senior Treasury official. In particular it suggests we should target behaviour which results in addiction.

We are not going to stop teenagers trying out a fag, especially if their elders say ‘don’t’. Daily smoking is already low among teenagers, Hopefully they will completely stop by their early twenties. That should be an aim of public policy.

This approach suggests we should not get too agitated about the (diminishing proportion of) older adult smokers. They are paying for the costs of their health care (although sometimes, say for heart conditions, they will not be treated unless they give up smoking because the treatment is not very effective). They are not polluting our airspace. We may be sorry for them; we should give them as much assistance to give up smoking as we can. But they know the risks.

I expect the previous paragraph will cause outrage among some of my colleagues in the health profession. Theirs is a different ideology committed to saving every life they can. Their view is smokers are killing themselves; they should not. It is an approach I respect – it involves a commitment to preserving life well beyond what the advocates are paid. But we all do risky things, like skydiving and jay walking, aware there are dangers.

Indeed, we may be facing a dispute within the anti-tobacco lobby about what to do once the target of five percent smokers is attained. One side will want to reduce the target further; the other will be more relaxed about adult smokers, focusing the effort on limiting adolescent smoking. Meanwhile the neoliberal lobby, backed by the commercial tobacco interests, seems to be in office and perhaps in power. We may be facing a major political wrangle, but a three-sided one.

Our Understandings of Te Tiriti Have Evolved Organically: Why try to stop that evolution?

This entry was posted in History of Ideas, Methodology, Philosophy on by .

This is a background to my column ‘Te Tiriti as a Social Contract’. (February 2024)

In 1956, historian Ruth Ross presented her investigations of the treaty signed at Waitangi on 6 February 1840 to a seminar concluding, ‘The [Māori and Pakeha] signatories of 1840 were uncertain and divided in their understanding of [Te Tiriti’s] meaning; who can say now what its intentions were? … However good the intentions may have been, a close study of events shows that [Te Tiriti] was hastily and inexpertly drawn up, ambiguous and contradictory in content, chaotic in its execution.’ The reaction to her paper was scornful. Those at the seminar ‘regarded her approach to the treaty as idiosyncratic and dismissed it.’ Ross said that another historian, a close friend, ‘told me my approach was a waste of time’ and ‘dismiss[ed] my preoccupation with the text as “historically worthless”’.

In 1972 Ross published virtually the same paper in the New Zealand Journal of History. It has since become the foundation paper for historical studies of the signing at Waitangi, fundamentally changing the way that historians (and informed persons) thought about Te Tiriti. One age’s eccentric becomes the sage of a later one.

That story is written in detail in Bain Attwood’s ‘A Bloody Difficult Subject’: Ruth Ross, Te Tiriti o Waitangi, and the Making of History, the most important scholarly book on the subject in over a decade. The book observes that in the early 1980s, much influenced by Ross’s work, the common sentiment that ‘the Treaty is a fraud’ was replaced by ‘Honour Te Tiriti’.

This was the biggest but not the only major development of thinking that has occurred in the last half century. In 1975 Te Tiriti was embedded in New Zealand law in the Treaty of Waitangi Act, whose appendices also included what we call the ‘English version of the Treaty’. It was one of the drafts when the treaty was being developed in preparation for negotiation. Ross does not think it was the last draft – neither do I – but that the last draft in English has been lost in private papers and probably destroyed. We know that after the last English version was translated into Māori there were some changes made to get to the final Māori version (Te Tiriti), but we do not know what they were.

We do know that there was no English text on the Treaty grounds on the day of the signing. We know that shortly after the signing, the US consul, James Clendon, hunted around for an official English text but could find one. In fact, William Hobson, who signed Te Tiriti, forwarded five different English language versions to his superiors in Sydney and London, which surely suggests he did not have an authoritative text. Those translations of Te Tiriti, made for land dealing purposes in Auckland in the following decade, would have been quite unnecessary if there had been an official English language version of Te Tiriti. The claim that ‘the treaty is a fraud’ could be applied to the ‘English version’.

A later major development was the 1987 Court of Appeal decision on the meaning of Te Tiriti. (New Zealand Maori Council v Attorney-General 1987). ACT is both wrong and right when it says Te Tiriti is not a partnership. The Court – all five judges – said that the signatories had to act in good faith akin to a partnership. Earlier courts had talked about the ‘honour of the Crown’, which is an analogous sentiment. But the judges did not say that Crown and Māori were partners like a couple of lawyers in a business. Perhaps the people who jumped to this conclusion have not read the decision.

There are other critical events such as decisions made by the Waitangi Tribunal and the courts, and the Treaty Settlements. But I have said enough to illustrate how our understanding of Te Tiriti has evolved over the last half century, as it did earlier.

To many, the evolution has been a bit frightening; I sympathise with them. We are no longer talking about the treaty we were taught about at school; we can now be more informed. There are two main efforts to stop the evolution of our understanding.

One is ‘originalism’ – that we should go back to the original intention of Te Tiriti. The difficulty is that, as Ruth Ross showed and subsequent scholarship has confirmed, there was no agreed meaning on the day. Hobson had an understanding, but I doubt that either James Busby or Henry Williams, who helped develop the agreement with him, fully shared his view. Māori certainly had a different understanding. It would be totally anachronistic to think that they had an understanding of sovereignty similar to Hobson’s. Moreover, it is most unlikely that the different Māori signatories had a common view about what the agreement meant.

In any case, any original notion about governance was based on the minimalist state. (Look at Colonial Secretary Normanby’s instructions to Hobson.) The modern state, with facets like a large taxation base, considerable government spending, the development state and the welfare state, which we take for granted really got underway later. (Te Tiritihas had to adapt from the conception of the minimalist state when it was written to the current highly centralised one; I’d have said ‘with difficulty’.)

Originalism is undermined by social change. The third article says that Māori would be entitled to English rights. In 1840 neither all women nor most men were entitled to vote in England. Is Te Tiriti irrelevant to our universal suffrage? (In 1840 colonial subject’s access to England was unrestricted. I doubt a New Zealander would get very far if they tried to use Te Tiriti as grounds for a British entry permit today.)

There is a quasi-originalism which goes back to an earlier treaty interpretation. An example is drawing attention to a pamphlet by Āpirana Ngata published 100 years ago. (It is historically inaccurate.) In fairness to Ngata, he was a man of his times but he kept up with developments. There can be no doubt that had he read the Ross article and followed the subsequent informed discussion, he would have rewritten his pamphlet.

If originalism does not work then, there is what may be called the ‘new originalism’, which is to set down an interpretation of Te Tiriti which will be a foundation for the future. ACT’s proposed Treaty Bill is an example. If it were passed by a huge majority in a referendum with little public dissent – I do not expect that it would be – it would be a basis for the future, setting in concrete the meaning of Te Tiriti. (Of course there would have to be a version in te reo, and we would have to agree that the two versions meant the same thing.)

ACT is slipping into the bill its own political theories when it reinterprets the second article as being confined only to property rights in a minimalist state, a very New Right approach. I doubt that is how the Māori signatories interpreted the notions of ‘rangatiratanga’ or of ‘taonga’.

Neither do the modern courts.  A really important evolution was when the courts confirmed te reo was a taonga. I would have been a very odd discussion if anybody in 1840 had raised the issue. ACT’s second proposed article overturns the possibility that te reo is taonga.

ACT are not the only new originalists. Many of those who set down what they think Te Tiriti means do so in as equally ahistoric certainty that what they are saying now is (or should be) eternal.

It aint. Given the change in the last fifty years, it is inconceivable that our understanding will be the same in 2074. Whatever the originalists and new originalists try, it will be different. Hopefully, it will come about through the organic evolution like the last 183 years. And true, we may end up with something that I am, or you are, not entirely happy with. But we should try to prepare ourselves. Understanding Te Tiriti’s actual historical evolution rather making up pseudo-history to suit our prejudices would be a good start.

I assume that Williams was not just a translator of the treaty, but being in the room with Hobson, Busby and Freeman contributed to the discussion. I do not know what he contributed because I do not know enough about his thinking or about Christian thinking on these and related issues. I observe that while he was no doubt active in his church as a youth and that Methodists were notorious for vigorous discussion in the ‘after-meeting’, he does not seem to have had a lot of theological training. He, like Hobson, may not have had a lot of philosophical depth on these matters. The nuances that trouble us today may have been passed over lightly — such pass overs are common into today’s discussions unless there is a lawyer involved in the drafting.

I take it that Williams and son faithfully translated the last English draft of the treaty (which is why I think, like RR, that there was a subsequent version to what we call ‘the English version’ because Te Tiriti could not possibly be faithfully translated from what we have.) It seems to me likely that the word sovereignty was translated into ‘Kīngitanga’ (although I don’t totally rule out ‘mana’).

We know little about the debate on the treaty grounds of 5 February except it was vigorous. I am inclined to the view that there was great Māori objection to the notion of Kīngitanga (or mana). We know there was a change between the document in Māori of Feb 5 and the signed document on Feb 6. It was said to be ‘minor’ (in which case why was it necessary?). In my view the change from Kīngitanga to Kawanatanga (king to governor)would have been deemed minor by the English contingent but was a huge change for Māori enabling them to sign Te Tiriti on Feb 6. (I do not rule out that there was a bit of massaging of Māori by missionaries overnight, but I there is no mention of this, and such discussions may not have fitted well in with Māori evening/night habits.) Something reasonably significant must have happened overnight to get Māori to so quickly change their mind.

That still leaves for us the troubling conflict between ‘Kawanatanga’ and ‘Rangatiratanga’. One possibility is that the English contingent was not greatly troubled — they have got a deal and no one was pushing them to resolve the conceptual conflict.

My convoluted solution, which I do not trust but which makes sense today, is there are two notions of sovereignty here: ‘national’ sovereignty which is a matter of the authority to make and police laws and be given international recognition and ‘individual’ sovereignty which is the matter of living one’s own life. The distinction is problematic at the boundaries; I’ll try to resolve it below.

The distinction is an important one in protestant thinking. You could argue that it was much of what the seventeenth century turmoil was about. (I’ll come to Hobbes.) The King or Church were no to impose their views on one. The individual was entitled to come to their own conclusions based on their understanding and conscience. I expect Williams would have broadly agreed.

Māori thinking was a little different. Rangatiratanga was more about the rights of chieftainship which included chiefs consulting their hapu (not Iwi as we use it today — the entities were too large) and while those with greater mana — they were very hierarchical societies — had greater weight in the final decisions they had not the total authority of King or Pope (although both are today increasingly constrained). Williams may have had some understanding of this, but it may have been tenuous — like mine.

From either interpretation the two articles can be reconciled I think  (especially if the priority is getting a deal). I’d have thought Williams would not have been uncomfortable.

Even so there are boundary problems about this resolution. [Here I am extracting something I have in the next book; hence the change in voice.] 

            ‘According to a famous social choice theorem by (Nobel economic laureate) Kenneth Arrow, the only sure way of getting consistent decisions is for them to be made by a dictator – much as Thomas Hobbes had already concluded without Arrow’s mathematics. So a state decision making is not robust unless it has an absolute sovereign.

            ‘To reconcile the dictator’s duty to protect their subjects, the argument, very evident in the US constitution but also in the unwritten British constitution, is that the substantial powers of the Hobbes-Arrow dictator have to be limited by checks and balances, including the ability of the governed to dismiss a dictator.

            ‘Today that ruling dictator is no longer the monarch but president or prime minister in cabinet. Technically the New Zealand people elect a parliament which choses a prime minister who advises the sovereign on what actions need to be taken, the sovereign (or their representative) being bound to take this advice.

            ‘This system of ‘elected dictatorship’ faces a paradox: a country needs a dictator but the dictator must protect the interests of the subjects. One answer goes back to the notion that the dictator rules with the consent of the governed. However, it is difficult to know what the national consent is when a nation is deeply divided. Parliaments evolved to control the ruling dictator. The extent to which a particular parliament really represents the will of the people – Arrow shows it is a nebulous concept – can be debated.’ [End of extract.]

A resolution is to base one’s theory of the state on a social contract. Unexpectedly Te Tiriti is in a form of a social contract. I have argued this in the column I expect to post Friday-week (you saw a version of this Friday’s but it has been altered to deal with the issues you raised.) It takes the above argument on, so I have attached the draft. [Again a change of voice; comments welcome.]

In summary then, I can offer a reconciliation of William’s two use of the terms ‘sovereignty’ in Te Tiriti but I am not sure that he would accept it.

Te Tiriti as a Social Contract

This entry was posted in History of Ideas, Methodology, Philosophy, Maori, Pundit on by .

Interpreting the agreement made at Waitangi as a social contract is a way to move forward on treaty issues.

(This column follows ‘Our Understandings Of Te Tiriti Has Evolved Organically’.)

Te Tiriti is in the form of a social contract of the sort that political theorists have discussed since the seventeenth century to explain how countries should be governed. Philosopher David Hume pointed out that no country had a tangible one on which it was founded. Sixty-four years after his death, New Zealand upended his objection.

Te Tiriti looks like a social contract. It has a prologue, three articles and an epilogue. The articles are at its core. In an early draft, the third article was actually in the prologue, with a ring around it and arrow pointing to a position as the third article.

The third article is the ‘rights’ clause. A good translation of the Māori text is ‘In return for the cession of the sovereignty to the Queen of England the people of New Zealand will be protected by the Queen of England and the rights and privileges of British subjects will be granted to them.’

In standard political theory such an (inalienable) rights clause precedes the next two clauses, exactly where it was originally placed.

The first two clauses are constructed in the form of a contractual exchange. The first says that the signatories accept that the governance (kāwanatanga) of New Zealand will be the responsibility of the English sovereign and her successors, while the second says that, in return, the government will respect and protect the signatories’ rangatiratanga, including their properties and other treasures. This is exactly the way a social contract is constructed.

There is an argument as to whether the Tiriti is a covenant or whether it is about property rights. If it is a social contract, it encompasses both – and more.

‘Rangatiratanga’ may have had a more Iwi/tribal* meaning to some of the original signatories. But that notion seems to have subsequently evolved into everyone having the status of a rangatira – of having the sovereignty of the individual over her- or himself – which is the way a modern social contract would interpret it.

While Te Tiriti was between the English Crown and Rangatira Māori, today it must be taken to involve all of us, whether we have some Māori descent or none. That is the logic of the third article.

Some confused thinking equates the English Crown with the English people. They are quite distinct. Technically the English people were not involved with Te Tiriti (except some were advisers). Describing some New Zealanders as ‘tangata tiriti’ seems to be a misunderstanding of what historically went on.

The text refers to the recent arrivals as ‘Pakeha’. which is how I describe my ethnicity – honouring Te Tiriti. (I do not describe myself as ‘European’ because of its race overtones.)

Te Tiriti does not set up a partnership between the Crown and Māori (Iwi). That was not the interpretation of the Court of Appeal. (The Court said both parties must act in good faith akin to that of a partnership.) If Te Tiriti was a social contract, the Crown would be more like a trustee than a partner.

Hobson’s London instructions give no hint that he was to negotiate a social contract. He discussed the Colonial Office directions with Governor Gipps when he was in Sydney before sailing to Waitangi. Gipps tried to get some Māori visiting Sydney to sign a deal. (They turned it down.) The Gipps’ (unsigned) treaty is not in the form of a social contract suggesting it was not a consideration in the Gipps-Hobson discussions.

The likelihood is that the conceptual notion of a social contract came from James Busby (who mentioned social contract theory in one of his letters) and possibly Henry Williams (who would have certainly known about the theological equivalents – covenants). So there was at Waitangi local input from Busby and Williams which was more sensitive to Māori interests. Te Tiriti is not simply what the Colonial Office envisaged. 

The origins of social contract theories go back to the covenants in the Bible. Here we start with seventeenth-century England, a time of great civil unrest and turmoil. Thomas Hobbes argued then that absent of any political order there would be ‘[n]o arts; no letters; no society; and which is worst of all, in continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.’ He posited the need for a central authority (a ‘Leviathan’).

But, he said, that ‘[t]he obligation of subjects to the sovereign is understood to last as long, and no longer, than the power lasteth by which he is able to protect them’. A few decades later John Locke made the point even more strongly that if the Leviathan failed to look after the interests of its subjects it could be replaced, as had just happened to James II

If a social contract is breached, the signatories have the right to withdraw the authority of the sovereign. This is not to say that they need chop off the king’s head but it does raise the question of how to keep the sovereign authority on track. (The MMP referendum replaced the existing frontrunner ‘monarchy’.)

Evolving here is the notion of a social contract for which the population, concerned by civil turbulence, appoint a sovereign but on the condition that their interests are protected. Which is exactly what Te Tiriti did.

It would be anachronistic to argue that the Māori signatories knew the European political debate but, shortly after, Māori described the agreement as a ‘covenant’, which is a part of the theological origins of social contract theory. So it is not implausible that such notions may have underpinned at least some of the Māori signatories’ thinking; and certainly they have done so in the thinking of many of their descendants.

Te Tiriti being a social contract does not undermine most of the things we do today in its name.

    – The treaty settlements are still remedies to the Crown’s breaches of the second article;

    – The Māori language remains a taonga of the second article (as ruled by the courts) and the Crown is obliged to foster it;

    – Under a liberal social contract, the Crown should practise subsidiarity and devolve as much autonomy as possible to individuals, and to the voluntary groupings which include Māori ones;

    – The Crown should be concerned with social inequality including inequality of opportunity,  not least to promote social cohesion (reduce turbulence), and should be concerned to reduce social deprivation, especially where it applies to identifiable social groups such as Māori.

While Te Tiriti as a social contract is a coherent interpretation of the facts, and seems likely to have been the interpretation of at least one person involved in the events of the day, that does not mean it is a social contract today. That is for us to decide. How can we?

I do not think there is any point in the government declaring Te Tiriti is a social contract – especially the bit about if it does badly, you may ‘behead’ it (although that is the import of the Electoral Act 1993). Rather it is about how each of us thinks about Te Tiriti, like the paradigm shift from ‘Te Treaty is a Fraud’ to ‘Honour Te Tiriti’.

Hopefully an increasing number of people will treat Te Tiriti as a social contract and describe it that way in their public dialogue. Not everyone will agree and there will be differences of interpretation – as there are among philosophers. (Many subsequent philosophers – including David Hume, Jean-Jacques Rousseau and John Rawls – have contributed to the theory.) But we could evolve our thinking towards a consensus which does not just say Te Tiriti is the foundation document of the nation, but treats it as such; which does not just honour Te Tiriti, but does so in a contemporary, historically consistent, practical and intelligible way.

* I capitalise iwi to indicate when I am referring to tribes rather than people.

Our Understandings of Te Tiriti Has Evolved Organically.

This entry was posted in Maori, Political Economy & History, Pundit on by .

Why try to stop that evolution?

In 1956, historian Ruth Ross presented her investigations of the treaty signed at Waitangi on 6 February 1840 to a seminar concluding, ‘The [Māori and Pakeha] signatories of 1840 were uncertain and divided in their understanding of [Te Tiriti’s] meaning; who can say now what its intentions were? … However good the intentions may have been, a close study of events shows that [Te Tiriti] was hastily and inexpertly drawn up, ambiguous and contradictory in content, chaotic in its execution.’ The reaction to her paper was scornful. Those at the seminar ‘regarded her approach to the treaty as idiosyncratic and dismissed it.’ Ross said that another historian, a close friend, ‘told me my approach was a waste of time’ and ‘dismiss[ed] my preoccupation with the text as “historically worthless”’.

In 1972 Ross published virtually the same paper in the New Zealand Journal of History. It has since become the foundation paper for historical studies of the signing at Waitangi, fundamentally changing the way that historians (and informed persons) thought about Te Tiriti. One age’s eccentric becomes the sage of a later one.

That story is written in detail in Bain Attwood’s ‘A Bloody Difficult Subject’: Ruth Ross, Te Tiriti o Waitangi, and the Making of History, the most important scholarly book on the subject in over a decade. The book observes that in the early 1980s, much influenced by Ross’s work, the common sentiment that ‘the Treaty is a fraud’ was replaced by ‘Honour Te Tiriti’.

This was the biggest but not the only major development of thinking that has occurred in the last half century. In 1975 Te Tiriti was embedded in New Zealand law in the Treaty of Waitangi Act, whose appendices also included what we call the ‘English version of the Treaty’. It was one of the drafts when the treaty was being developed in preparation for negotiation. Ross does not think it was the last draft – neither do I – but that the last draft in English has been lost in private papers and probably destroyed. We know that after the last English version was translated into Māori there were some changes made to get to the final Māori version (Te Tiriti), but we do not know what they were.

We do know that there was no English text on the Treaty grounds on the day of the signing. We know that shortly after the signing, the US consul, James Clendon, hunted around for an official English text but could not find one. In fact, William Hobson, who signed Te Tiriti, forwarded five different English language versions to his superiors in Sydney and London, which surely suggests he did not have an authoritative text. Those translations of Te Tiriti, made for land dealing purposes in Auckland in the following decade, would have been quite unnecessary if there had been an official English language version of Te Tiriti. The claim that ‘the treaty is a fraud’ could be applied to the ‘English version’.

A later major development was the 1987 Court of Appeal decision on the meaning of Te Tiriti. (New Zealand Maori Council v Attorney-General 1987). ACT is both wrong and right when it says Te Tiriti is not a partnership. The Court – all five judges – said that the signatories had to act in good faith akin to a partnership. Earlier courts had talked about the ‘honour of the Crown’, which is an analogous sentiment. But the judges did not say that Crown and Māori were partners like a couple of lawyers in a business. Perhaps the people who jumped to this conclusion have not read the decision.

There are other critical events such as decisions made by the Waitangi Tribunal and the courts, and the Treaty Settlements. But I have said enough to illustrate how our understanding of Te Tiriti has evolved over the last half century, as it did earlier.

To many, the evolution has been a bit frightening; I sympathise with them. We are no longer talking about the treaty we were taught about at school; we can now be more informed. There are two main efforts to stop the evolution of our understanding.

One is ‘originalism’ – that we should go back to the original intention of Te Tiriti. The difficulty is that, as Ruth Ross showed and subsequent scholarship has confirmed, there was no agreed meaning on the day. Hobson had an understanding, but I doubt that either James Busby or Henry Williams, who helped develop the agreement with him, fully shared his view. Māori certainly had a different understanding. It would be totally anachronistic to think that they had an understanding of sovereignty similar to Hobson’s. Moreover, it is most unlikely that the different Māori signatories had a common view about what the agreement meant.

In any case, any original notion about governance was based on the minimalist state. (Look at Colonial Secretary Normanby’s instructions to Hobson.) The modern state, with facets like a large taxation base, considerable government spending, the development state and the welfare state, which we take for granted really got underway later. (Te Tiritihas had to adapt from the conception of  of the minimalist state when it was written to the current highly centralised one; I’d have said ‘with difficulty’.)

Originalism is undermined by social change. The third article says that Māori would be entitled to English rights. In 1840 neither all women nor most men were entitled to vote in England. Is Te Tiriti irrelevant to our universal suffrage? (In 1840 colonial subject’s access to England was unrestricted. I doubt a New Zealander would get very far if they tried to use Te Tiriti as grounds for a British entry permit today.)

There is a quasi-originalism which goes back to an earlier treaty interpretation. An example is drawing attention to a pamphlet by Āpirana Ngata published 100 years ago. (It is historically inaccurate.) In fairness to Ngata, he was a man of his times but he kept up with developments. There can be no doubt that had he read the Ross article and followed the subsequent informed discussion, he would have rewritten his pamphlet.

If originalism does not work then, there is what may be called the ‘new originalism’, which is to set down an interpretation of Te Tiriti which will be a foundation for the future. ACT’s proposed Treaty Bill is an example. If it were passed by a huge majority in a referendum with little public dissent – I do not expect that it would be – it would be a basis for the future, setting in concrete the meaning of Te Tiriti. (Of course there would have to be a version in te reo, and we would have to agree that the two versions meant the same thing.)

ACT is slipping into the bill its own political theories when it reinterprets the second article as being confined only to property rights in a minimalist state, a very New Right approach. I doubt that is how the Māori signatories interpreted the notions of ‘rangatiratanga’ or of ‘taonga’.

Neither do the modern courts.  A really important evolution was when the courts confirmed te reo was a taonga. I would have been a very odd discussion if anybody in 1840 had raised the issue. ACT’s second proposed article overturns the possibility that te reo is taonga.

ACT are not the only new originalists. Many of those who set down what they think Te Tiriti means do so in as equally ahistoric certainty that what they are saying now is (or should be) eternal.

It aint. Given the change in the last fifty years, it is inconceivable that our understanding will be the same in 2074. Whatever the originalists and new originalists try, it will be different. Hopefully, it will come about through the organic evolution like the last 183 years. And true, we may end up with something that I am, or you are, not entirely happy with. But we should try to prepare ourselves. Understanding Te Tiriti’s actual historical evolution rather making up pseudo-history to suit our prejudices would be a good start.

Footnote: ‘Te Tiriti as a Social Contract’ describes an organic evolution.

There is A Lot to Be Learned from the Award Winning Film Oppenheimer

This entry was posted in Literature and Culture, Pundit on by .

And even more from the book it is based upon: “American Prometheus: The Triumph and Tragedy of J. Robert Oppenheimer” by Kai Bird and Martin J. Sherwin.

Christopher Nolan’s award winning film Oppenheimer is based on the 2005 biography American Prometheus. I really liked the title. Prometheus was the Greek god who gave mankind fire, and was punished for doing so. J. Robert Oppenheimer gave us atomic weapons and energy. The ugly and enthralling core of the book and the film is about the story of his success and the resulting punishment.

The film is not quite accurate, but in a related context Oppenheimer justified some changes to other theatrical accounts of his life as legitimate dramatic licence. The 700-page book has to be more scrupulous. There are 85 pages of notes and the bibliography is another 15.

An enquiry was set up in 1954 to consider Oppenheimer’s security status. The book calls it a ‘kangaroo court’. Lewis Strauss, his main antagonist, chose the enquiry panel and kept in constant touch with them and the ‘prosecuting team’. Between meetings Oppenheimer’s rooms were bugged, including discussions with his counsel. It was not a court, so illegally acquired evidence from FBI wire-taps was used against him. Not that Oppenheimer or his counsel always knew because much of the evidence was not disclosed to them. The enquiry was in secret with no independent journalists reporting it.

I was continually reminded of the detestable show trials under Stalin where the conviction was predetermined and the defendant never had a chance. I was appalled, because I have had so much respect for the American judicial system. Of course, it has failed on numerous occasions – there are the terrible stories of McCarthyism at about the same time while those involving blacks go back centuries – but this was the authoritarian state out to get someone. Prometheus was being punished.

The difference from the Soviet Union and similar trials was that there was widespread public uproar from the science community when the verdict was announced; the panel revoked Oppenheimer’s security clearance by a 2–1 vote (while unanimously clearing him of disloyalty). That sort of outrage cannot occur in an authoritarian state, so one was still left with some respect for the robustness of American public life.

Eventually the decision was revoked and Oppenheimer’s official status was reinstated. But he was a broken man when the presidency acknowledged him and dead when his security status was restored.

It is difficult for a film to capture the gruelling detail of the ‘trial’. When I saw Nolan’s film, I did not come away with the knowledge or extreme outrage I had following reading the book. The best that the film could do is juxtapose Oppenheimer’s ordeal with a 1957 senate hearing into Strauss’ suitability to be commerce secretary in an Eisenhower cabinet. You may not have a lot of respect for such hearings, recalling the disgraceful McCarthy ones of the 1950s. But it was in public and there was due process. The Senate rejected Strauss in what was described as ‘one of the biggest, bitterest, and in many ways most unseemly confirmation fights in Senate history’. (The nays included  John Kennedy and Lyndon Johnson.) The film makes it seem that Strauss was being punished for his treatment of Oppenheimer, but the charge sheet of his misdeeds was longer, including the Democratic majority’s main argument that Strauss’s statements before the committee included semi-truths and outright falsehoods and that under tough questioning he tended towards ambiguous responses and petty arguments; given the way he treated Oppenheimer one is not surprised.) I doubt the outcome gave much comfort to Oppenheimer.

There are a couple of other themes in the book worth pondering, even if there is not room here to explore them. First is the clash at Los Alamos, where the atom bomb was developed, between Oppenheimer, who headed the scientists, and Lesley Groves, who headed the military. The military wanted great compartmentalisation between scientists for security reasons. Oppenheimer argued that a free flow of information was necessary for scientific endeavour. He won, the scientific community shared, and produced a bomb in a remarkably short time. After the war, Oppenheimer argued that scientific communities sharing their understanding across nations was the best way to prevent the misuse of atomic weapons. He lost that one.

Second, I was also struck by the contrast between Oppenheimer’s success at Los Alamos and his lesser achievements at the smaller Institute of Advanced Studies near Princeton which he headed between 1947 and 1966. (However, his insistence that Fellows at the Institute should include the arts and humanities was farseeing; he was well read, with a wide variety of tastes and interests.)

Oppenheimer came to Los Alamos with little management experience (generic managers would be appalled). His success there was because its scientific community had a single common goal (to produce an atomic bomb). There was no such commitment at the IAS, which was staffed by able eccentrics with personal agendas, just like universities. Vice-chancellors might like to reflect on the parallel; it is not just trying to herd cats but sometimes, to be zoologically inaccurate, the cats hunt in packs.

The film Oppenheimer is doing very well in the rankings. It has many strengths, although its sound is not one – the advice is to go to a session with subtitles (if you can find one). But I can’t help thinking that part of its recognition among Americans arises from its representation of one of the nastier shadows in US history – the repeated failure of its justice system to be judicial. The shadow has not gone away. Perhaps many of the film’s enthusiasts are deeply worried about how Donald Trump is using the courts and how he might use them even more malignantly if he became president again.

Footnote: Many images of Oppenheimer (including the cover of the book) show him with a cigarette or pipe. He died of throat cancer in 1966 at the age of 62; I found the book’s description of the treatment gruelling. It is thought that tobacco killed – caused the premature death of – about a hundred million people in the last century with over 25m this one. The number contrasts with perhaps less than a million killed by atomic weapons. Both are unnecessary scourges of mankind.

The Prime Minister’s Biggest Challenge

This entry was posted in Political Economy & History, Pundit on by .

Luxon has to address the need to maintain and enhance New Zealand’s social cohesion.

Dear Christopher Luxon,

The greatest challenge you face is that of the nation’s social cohesion (rather than the economy). The problem has been with us ever since Hobson arrived.

New Zealand is a diverse society. For over a century we suppressed this truism by relegating women to the kitchen, Māori to the pa, gays to the closet, and ignoring the role of religion in secular life. We practised majoritarianism by a group – who among other things were straight, Pakeha, Anglican, middle-class, male, rugby followers – which pretended theirs was the only acceptable lifestyle and the country should be run in their interests. Those who did not conform to this majority were ignored, treated as quaint eccentrics, or repressed.

Today that diversity is more apparent. Affluence has enabled individuals to exhibit their differences, while social media enables like-minded minorities to join together. We are also importing the fashions of antagonistic public dialogue from overseas, most notably the rhetoric of conflict from the US – a society which seems to be falling apart because it lacks social cohesiveness.

All societies are under these pressures for roughly the same reasons. Some rigidly suppress differences, perhaps emphasising a dominant ethnicity or religion at the expense of everyone else and ignoring that there can be great diversity within the dominant group. Others face, in despair, the terrifying prospect of social unrest and breakdown.

Each country is different and has to find its own resolution (or not). New Zealand has three major differences. We have no significant external threat (except global warming); we are small; we have MMP, which recognises the diversity in a way that Frontrunner/FPP did not (Its electoral system is exacerbating the disruption in US politics).

You, Mr Luxon, will be reminded of MMP every time you enter Parliament’s chamber. You are not there because a majority of the electorate voted to support you. You look at your benches and see three disparate parties, none of which is entirely unified; the other side of the House looks no better.

You know, even if the commentariat does not, that the voting outcome of the 2023 election was not very different from that of the 2017 election except that the parties at either extreme garnered a little more support. But if the electorate did not change much, the government has shifted dramatically (because New Zealand First changed its mind).

So you have not really been given the radical mandate some of your colleagues aspire to. You are tentatively charged by the electorate to govern New Zealand in everyone’s interests; you will be judged by an unforgiving electorate.

The easy approach might seem to be a majoritarianism which attacks any dissenters. As tempting as it may seem, it is unlikely to work. Recall Rob Muldoon. He could argue his abrasiveness got him re-elected. But that was under Frontrunner. Had it been under MMP he would have lost both 1978 and 1981 as well as 1984.

There are numerous counterexamples. Prime Minister Bill Massey (1912-1925), a founder of a key precursor of the National Party, was a member of the Orange Order, notorious for his harsh response to the miners’ and waterfront workers’ strikes in 1912 and 1913. He matured.

He was against the charging of Cardinal James Liston for sedition in 1922; he saw little advantage in sharpening the religious antagonism of the times. A cabinet full of hard-line Protestants overruled him. (Liston was found not guilty.) You may be on Massey’s side, Mr Luxon, but you will not be given a decade to mature.

So how are you going to deal with the tensions and divisions, especially as you have people on your side of the House who revelled in intensifying them when in opposition?

The first obvious action is to talk to your cabinet and caucus about the issue, explaining the importance of not exacerbating social tensions and of healing social divisions. Keith Holyoake gave excellent advice when he told MPs to breathe through their nose – not opening their mouths at inconvenient moments. You need to discuss the same message with the leaders of your coalition parties and ask them to pass it on to their caucuses.

One of the nastiest rising tensions is between media and politicians. What is going on is surely mutually agreed destruction invigorating public extremists; apparently journalists are receiving death threats too. Your press office needs to talk to the press gallery and agree to take a more courteous approach. It must recognise that both sides are doing necessary tasks but they need to avoid abrasive, stupid and useless questions and answers.

Does that deal with around Parliament? You also need to change Parliament’s approach to the wider community. In particular it, needs to resist the temptation to interfere. Apparently over half of the population are opposed to trans-women being involved in women’s sports. (That’s something outside of my expertise.) It is easy for Parliament to pass a law but I suggest that it instead leaves the decision to individual sports bodies. Many will get into a pickle but explain it is their responsibility, not Parliament’s.

Another area to restrain is the nation’s habit of simplifying what is going on into two opposing and antagonistic camps. The obvious current example is Māori and non- Māori. You do not have to be very socially perceptive to know that there is enormous diversity within each group and much overlap. When someone claims to speak on behalf of Māori or whatever, the one thing that is certain is that the speaker is at best, representing just one of the group’s segments.

Take a leadership role; say your government respects all Māori or whatever, will listen to all of them and not just some self-appointed spokespeople, and will govern on all their behalfs. Get your speechwriters to always include a reference to the diversity within any group whenever a speech mentions them.

The issues of delegating down and recognising diversity applies in many other areas. It might be summarised by ‘subsidiarity’, the notion that decisions should be taken at the lowest possible level. It has not been prominent in the thinking of the New Zealand government. For instance, it loves to bully local government, directing what they should or should not do. It is time for the centre to withdraw and leave them to make as many local decisions as possible, even if they make ones with which you personally disagree.

Subsidiarity is about respect for local and individual decisions and tolerance of diversity. As far as I can see, respect and tolerance is the way to maintain social cohesion in a liberal democracy. The alternative is centralisation, majoritarianism and authoritarian repression followed by ugly civil strife.

There is an economic dimension. The market is a very powerful means of decentralisation – of practising subsidiarity. In that sense, I was a supporter of the market liberalisation we associate with Rogernomics (and I wrote about it before 1984). Unfortunately, the neoliberals decentralised very badly. Very often their economics was embarrassingly shonky and they never really understood the issue of market design – getting the right balance of regulation. Paradoxically, they were bullies using their centralised powers to impose their theories – look at the way they treated local government. And a properly working market requires a fair income distribution – instead, the policies increased its unfairness. Ironically, the neoliberals’ arrogance brought on MMP which is designed to reduce the power of the centre.

Mr Luxon, you govern with the consequences of that heritage, and the real danger that, because of the way its institutions operate, you will govern a deeply divided society if you pursue a majoritarian strategy. There has to be a better way. Decentralisation and subsidiarity, respect and tolerance are keys to it.

Yours sincerely, Brian Easton.

The State of the Economy: January 2024

This entry was posted in Macroeconomics & Money, Pundit on by .

The New Zealand economy is struggling; the new government will struggle to implement its economic promises.

There is not a great deal of difference in Treasury’s projected GDP growth patterns between the May 2023 Budget Economic and Fiscal Update (BEFU) and the December 2023 Half Yearly Economic and Fiscal Update (HYEFU). But there are some other important underlying changes which suggest the incoming government has a tougher task than it expected. (I am skipping the September 2023 pre-election update because there is a lot of noise in the series, and the longer perspective gives a clearer account of any changes.)

Surprisingly, for me at least, the more recent HYEFU forecast suggests a slight improvement in the external account compared to the forecast six months earlier. But any difference is well within the forecasting fans, which indicate the inevitable uncertainties. (A footnote below describes how the Treasury may want to change its forecasts in the light of new developments since HYEFU was locked up in November 2023.)

The big difference between the two forecasts is population growth arising from higher immigration than was expected in BEFU. Since the GDP projection has not changed much, that means GDP (output) per capita is lower in HYEFU than BEFU.

This column treats population growth from migration in the standard way where the distributional impact of the new arrivals is neutral. The assumption is probably wrong and I plan to investigate whether the effect is significant. I’ll let you know (if anyone does the job before me, I am happy to report their work first).

As a result of the population growth, private consumption spending per person is falling over the next few years. HYEFU thinks spending will be rising again from 2025/6 but even in 2027/8 the per capita level will be below this year’s level.

You may think the changes are small, but averages can be misleading. Some will get an income  boost, so many of those suffering will experience a greater fall than average. Losers include those facing higher interest rates; on the other hand depositors will be benefiting from the higher rates. Probably well over half the population will experience a fall in their spending power over the next two years.

The HYEFU forecasts are based on government policy decisions made up to November 24,before the new coalition government was sworn in. It reflects the outgoing Labour Government’s policies and did not incorporated the new government’s December Mini Budget decisions. HYEFU comments that they ‘will improve the fiscal outlook’, although the announced changes were small. The Mini Budget included neither the coalition government’s proposed income tax changes nor the offsetting cuts to public consumption. HYEFU says – perhaps piously – that the ‘other signalled commitments … expected to be agreed in the future … would be broadly neutral over the forecast period’.

The centre of those commitments is to give income tax relief, in order to allow some increase in private consumption after June 2024. (We shall have to wait to see how well the relief is are targeted on those most suffering.)

As HYEFU implies, the relief is to be offset by cuts to public expenditure. The Minister of Finance, Nicola Willis, has announced that the cuts will be in the order of 6.5 percent and more, but I am not sure of what. (‘Backrooms’ are a nebulous concept.)

My reaction was to recall the 3 percent cutting exercise on 1982 under Muldoon. (Willis had just been born; I doubt many in the cabinet will remember them.) I checked my memory with some on the frontline at the time. One described the outcome as a ‘sham’, with few real cuts.

Admittedly, Ruth Richardson slashed government spending in 1991’s ‘mother of all budgets’ but that was as much about ‘redesigning of the welfare state’ from a European to a minimalist American approach. As well as impoverishing many New Zealanders, the cuts to the health system killed people while they waited for treatment.

Perhaps a more relevant instance was the measures the Key-English National Government imposed after the 2008 Global Financial Crisis. They were more a squeezing in which each year government departments were given a little less than they needed. Consequently, government borrowing remained high, coming down only slowly. The public agencies struggled with the under-funding. Part of the increase in government spending under the Ardern-Hipkins-Robertson Government was restoring what had been squeezed. (On the other hand, some of their additional spending seemed to me to be wasteful or ineffective.)

To my surprise – remember it was about Labour’s spending plans – HYEFU forecast a fall in per capita public spending of around 6 percent over the next three years to June 2026. Where Labour expected to get the reductions is unclear. Labour’s already assumed planned squeeze suggests that the Coalition Government is going to be struggling to get the cuts they need unless they have a dramatic (and, thus far, secret) agenda in the way that Richardson had.

We won’t fully know until the May 2024 budget brings the coalition government’s decisions together, although there will be various indications – cries of pain – before then. I have no doubt that Treasury officials will be struggling to meet their political masters’ demands. The real decisions are yet to be taken which is why the December Mini-budget was vague.

Being a member of the Opposition or commentariat is a bit like being a couch fan watching a football match, shouting advice like ‘you should run faster’. Now Luxon, Willis and a gaggle of associate Treasury ministers are on the field. Welcome to the real game.

Footnote: HYEFU observes the following new information since the November forecasts were made: the September 2023 quarterly GDP figure turned out lower than expected (it may be revised), indications are that the December 2023 CPI increase (to be released on 24 January) may be lower than forecast and that house prices rises are also more subdued, while the net migration inflow is higher. My impression is that international thinking about the world economy is becoming gloomier. We await more data and the 2024 BEFU to find out how that will affect the Treasury forecasts.

Centralisation and the New Zealand Health System

This entry was posted in Governance, Health on by .

Note written for circulation January 2024

In 2023 the New Zealand Health System was further centralised. As usual, the reasons given for the redisorganisation were unclear, thin and unconvincing. There have been no immediate benefits evident from the new structure; experience suggests that if there are any, they will take time to manifest themselves. Downsides of the transition are already apparent.

Centralisation was a common theme of the Ardern-Hipkins Government. It centralised the polytechnic system is a similar manner while, until it backed down, the proposals to merge public broadcasting and the management of water had strong centralisation elements. It largely left together the vast clumsy Ministry of Business, Innovation and Employment created by the National Government.

The Evolution of a Centralised System

Some centralisation may have been necessary. Historically, there has been an ongoing process of consolidation of secondary care. Whereas in the nineteenth century there were cottage hospitals scattered throughout the country, the hospital system has slowly turned into a nationwide one as New Zealand has become more geographically integrated. Even so, there is a hierarchy of what the hospitals can supply. Today a person with a serious heart condition in Nelson – which has as good a provincial hospital as there is – is likely to be flown to Wellington.

That means that Aucklanders are going to be offered better secondary care than those in Kurow, where the notion of the modern health system was formulated by Dr Gervois McMillan in the 1930s (according to standard histories).

Underpinning the hospital system there is the primary healthcare system, which covers general practice, services provided by other medical professions and residential care. Here Kurow residents might reasonably expect much the same quality and range of care as those in Auckland City.

Medicine has become more specialised and is evolving rapidly. That suggests that hospital care needs to be built around advanced medical centres (with medical schools) attached to a base hospital. There is sufficient scale in New Zealand for only five such centres at best – Dunedin, Christchurch, Wellington, Hamilton and Auckland. The five centres would be ‘tertiary’ medical centres offering specialised levels of care which provincial hospitals are unable to provide; ideally these hospitals will be linked to tertiary ones, while also being better integrated with primary and preventive care.

Perhaps the Auckland Hospital is in a separate (quaternary) class. Apparently, an effective neurosurgery service requires at least a dozen surgeons. There are only twenty-odd neurosurgeons in New Zealand with twelve in Auckland. Such figures suggest that New Zealand has room for only one neurosurgery unit, with its staff in tertiary hospitals, coordinated and integrated with the team in Auckland. Some collegial networks already exist. We need a health system which strengthens such co-operative arrangements.

Another issue is the fragmentation of medical records, with different configurations in each DHB. There has been progress towards IT compatibility in the South Island DHBs but it has been slow.

Health New Zealand

However, medical cases for a degree of centralisation were not prominent in the case for the 2023 redisorganisation, which was a consolidation of the health system’s bureaucracy into Health New Zealand (HNZ, Te Whatu Ora) with a promise of some offsetting reductions in the local bureaucracies. Any reductions are usually exaggerated.

So it is a mystery why this particular redisorganisation occurred. It was not proposed by the 2021 Health and Disability System Review (the Simpson report). The choice was neither that of the Ministry of Health nor of the consultants. The reasons given (below) were not compelling.

A possibility is that the Ministry of Health was judged to be failing and it was thought better to set up a new agency rather than redisorganise the Ministry. That might explain the strange decision to locate the new bureaucracy in Hamilton, which is a smaller urban centre than Auckland, Christchurch or Wellington with poor transport connections to its south, avoiding capture by the Wellington-based ministry and out of the immediate reach of the bigger ex-DHB areas.

One might wonder whether the shift to national pay and condition scales was a consideration in favour of centralisation. The redisorganisation of the early 1990s left industrial relations in the hands of individual CHEs/DHBs. Over time that decentralisation has been undermined in a uniform national award system.

Surely one factor was that the population-based funding model was failing. It was first introduced in the early 1980s and was, at the time, a progressive attempt to move away from a funding system based on rigid historic proportions to one which reflected the changing regional population. There were later refinements, such as adjusting for health need according to different age and socioeconomic balances (including ethnic ones). The formula appears never to have been properly adjusted for the cross-border flows which occur in a hierarchical system, nor for differences in population density and concentration or for economies of scale.

Crucially, to be equitable, the funding formula required that each DHB had a capital structure which generated a similar level of productivity and, also, that the shocks that each DHB experiences are small. This wrongness of this assumption was vividly illustrated at the Canterbury DHB in 2021, which had an unusually large deficit. The locals claim that it arose because of inadequacies in the funding formulae coupled with the Canterbury earthquakes of a decade earlier which destroyed a lot of its buildings, while the Mosque Massacres of 2019 imposed heavily on the CDHB. (Additionally, the CDHB’s new acute services block opened two years late and its construction costs were over-budget, with added costs of healthcare in the interim. The Wellington centre was responsible for the building phase and therefore – in principle – for the substantial cost overruns. However, the additional costs are not charged to the centre but to the Canterbury DHB.)

The widely admired Canterbury DHB senior leadership team (its members had professional medical backgrounds) said they had a plan to pull back the deficit. However, central government had appointed powerful advocates to the DHB board above them to implement its agenda. Ultimately, the tension resulted in the dismantling of the SLT, which had been a champion of its region’s communities and clinicians. The centre retained its board.

The locals’ account points to central government failures with the agenda of generic mangerialism overriding medical professionalism and population needs. Presumably, Wellington has an alternative story but it has never been publicly articulated. Perhaps the failure of the Ministry of Health to handle this case well led to a decision to transfer responsibilities to a new agency. That certainly has been the effect of the establishment of HNZ.

Here lies an explanation of why the redisorganisation was so poorly thought through. In effect HNZ has been charged with the design of the new system.

The Post-Code Lottery

The most widely used justification for the redisorganisation was the ‘post-code lottery’, the image for access to treatment varying by region. The response has been typical of so much policy in New Zealand. An identified correlation was treated as causation and policy proceeded on the basis that if we abolish the regions there will be no post-code lottery. No attempt was made to consider alternative explanations for the disparity, although it does not take a lot of imagination to think of ones over which centralisation would have little impact.

The policy did not recall that while the health redisorganisation of the early 1990s was focused on competition and privatisation, there was also a concern that some areas suffered from a lack of attention from the central hospital. A positive reason for separating Middlemore Hospital from the rest of the Auckland hospital system was that South Aucklanders’ health had been neglected. This time the problem was the centre neglecting the periphery (although in this case at the regional, rather than national, level). The intention then was local accountability restraining neglect.

Additionally there has been the establishment of Te Aka Whai Ora (The Māori Health Authority). Yes, there is a correlation between health attainment and ethnicity, with Māori (and Pasifika) doing worse. Again there has been no careful evaluation of the reasons; just a leap of faith that a new agency will resolve the deficit. Curiously, the establishment of Te Aka Whai Ora is a decentralisation relative to HNZ. I leave others to explain the paradox, but observe that given the casual way we change policy, such inconsistencies can be expected.

We do not know whether the new institutions will reduce health disparities. It will take time to see any change – both were established only eighteen months ago – and systematic investigation.

Local Accountability

Undoubtedly a major purpose of the establishment of HNZ was to abolish the local input into what were once the DHBs. As we saw in the Canterbury fracas, the Ministry has difficulty dealing with local unrest. In the new system, opportunities for its expression have been reduced by the elimination of locally elected representatives in hospital management.

My guess is that local lobbying will eventually be taken up by local councils. How HNZ will handle this is uncertain. Will the councillors be well informed? Will they be able to understand the centre’s perspective? Will they be able to negotiate with local management or have to fly to Hamilton?

The centralisation has probably intensified the potential for confrontation. Given the usual lack of forward thinking in New Zealand, it may typically take an ugly confrontation – uglier even than in Canterbury in 2021 – to have the matter of local input addressed.

The issue of management of the entity has to be separated from patient grievances. There is a Health and Disability Commissioner who becomes involved when there has been a system failure so catastrophic that there is a death or substantial injury. It operates an ambulance at the bottom of the cliff. There needs to more attention at the top of the cliff.

Once hospitals had ‘visitors’ to whom one could take one’s grievances. Today’s visitors would be best locally elected rather than appointed, so that the community trusted them. They would not be involved in the management of the hospitals but would deal with the quality of the service. Patterns of systemic failure would become evident and improvements would be triggered. A modern visitor system should not antagonise medical providers. It is an integral part of a no-fault continuous-improvement regime.

The Quality of Management

Generic managers do not like such visitors for it makes they accountable downward. Simon Sinek underlines the issue:

‘One of the problems is that … hospital administrators don’t know what their job is. When you ask them ‘what is their priority’, they say ‘patients’. It’s not. It is to take care of the people who work in the hospital – of the people who take care of the patients. Every administrator, every senior doctor, every senior nurse should be preoccupied with one thing and one thing only: are my doctors OK, are my nurses OK, is my staff OK? And if you get that right, they will devote their time and energy taking care of each other and the patients. We have a broken system in which [management] think money is more important …’

Instead this centralisation ends up with the top of management further isolated from the medical providers and, presumably, even more focused on finances. Management in the localities will also have to look towards Hamilton than towards its medical professionals.

The common justification of the centralisation assumes that the quality of New Zealand management is high. It is not in much management of the health service nor in many other public and private institutions. A senior staffer in the State Services Commission told me that he thought only 60 percent of its appointments to chief executive were successes. That does not mean that all of the remaining 40 percent have been duds. Many have just been mediocre. One of the rules of the mediocre is that they appoint mediocrities, thereby reinforcing poor management performance.

The situation is exacerbated by politicians appointing cronies and the politically correct to management boards; it is a miracle if a new agency functions well. (Full disclosure requires mention that there are similar quality limitations among those involved in policy design and implementation.)

The more decentralised system of DHBs offered opportunities of managerial improvement. A major advantage of localisation is that it may is encourage innovation at the local level. For instance a couple of DHBs – Canterbury and Manukau – were widely admired for their innovations. The rational strategy would have been to encourage other DHBs to follow their successes. Instead, local initiatives have been further discouraged.

Conclusion

This is a pessimistic review of the latest redisorganisation of the health system. More optimistically, the changes may address some of the weaknesses in the previous system including an acceleration of the merger of IT systems, a better targeted funding system (although total funding will remain inadequate) and an attempt to plan the medium-term labour supply (a major failure by the Ministry of Health). Hopefully, some of the innovations the DHBs have been exploring – such as better integration of primary and secondary care – will continue. However, the isolated top-heavy bureaucracy may not address the most of other issues, is unlikely to be innovative and in likely to ignore medical needs (and the staff who meet them) in favour of bureaucratic ones.

The structure of the New Zealand health system is far from settled. We cannot rule out that there will be another redisorganisation soon. May it be better designed than this one.

A Revolutionary Economist

This entry was posted in Growth & Innovation, Portraits, Pundit on by .

Robert Solow transformed the way we think about economic growth.
When you are in the trenches, you may not always realise what the war is about. Years later you read an account and see more clearly. Thus it was with me in the 1960s when economic analysis went through a revolution.
My insight came later when reading the budgets in the 1960s of Minister of Finance Harry Lake about whom I had been asked to write. The speeches expressed an ambition to increase economic growth, but the analysis was around capital investment only, which sounds very incomplete to today’s economist. Reflecting, I realised Lake was using the explanation I had been taught in my economics courses.
However, I was also working at the NZ Institute of Economic Research, whose first director, Conrad Blyth, had brought back from his overseas studies a different account of economic growth which I had absorbed into my thinking without realising how radical it was. Later Bryan Philpott and I worked together in the area. The key founder of this approach was Bob Solow, who has just died at the age of 99.
Solow’s key finding was that output per worker rose faster than the quantity of capital in the long run. You may know the standard assumption in classical economics as the ‘falling rate of profit’ as in Das Kapital, but Marx was drawing on orthodox economics, beginning with Malthus and Ricardo in the early nineteenth century, and still held by great economists such as Keynes and Schumpeter in the 1930s.
The decreasing marginal return on capital is really a consequence of the laws of thermodynamics. So the laws must imply that there are other things affecting production as well as capital and labour. Solow was humble about what he found. (It was such a gigantic insight he could afford to be.) His seminal 1957 paper explained the paradox by ‘technical change’:
I “I am using the phrase ‘technical change’ as a shorthand expression for any kind of shift in the production function. Thus slowdowns, speedups, improvements in the education of the labour force, and all sorts of things will appear as ‘technical change’.” (His italics)
Solow’s paper is the source of the widely quoted claim that 80 percent of economic growth (output per person) is attributed to technology. But only if the word ‘technology’ has Solow’s particular meaning of what we cannot explain. Economist Moses Abramovitz called the unexplained residual the our ‘ignorance’. Today we call it ‘multi-factorial productivity’ (MFP) or Total Factor Productivity (TFP)..
Sloppy thinking has empowered any group – educationalists, managers, scientists, those in the creative sector – to promote its interests by claiming it is making a major contribution to the coefficient of ignorance. Each seizes on their version of the meaning of technology; it makes them seem important and seems to justify spending large quantities of public money on them. (Many of those who argue for increasing our ignorance are well placed to make a contribution.)
Economists have tried to explain MFP/TFP – to reduce the coefficient of ignorance. We have never been able to explain it all. (It has been difficult because we cannot do experiments.) Over the years economists have concluded it is not just a matter of technology in the narrow sense of plans on how to use resources but also covered such things as managerial performance and the speed at which innovations are taken up and adapted to local circumstances. But we have not been able to measure by how much.
More recently, a crucial feature of economic development has hit home. (It is a central notion of my Not in Narrow Seas.) There has been a shift to economic activity in the market from economic activity outside it. Women moving from the kitchen into the factory are included in the calculations, but what about the refrigerators and washing machines which reduced their household grind, making the move easier?
Or consider when in the 1860s New Zealand had the highest productivity in the world as conventionally measured. It was not that we were working smarter or using more advanced technologies then. Rather, we were moving alluvial gold in the river beds outside the market into the market economy – bank vaults. Had the effect been drawn to Solow’s attention, he would have wished he had mentioned the effect moving from outside the market to inside among the ‘any kind[s] of shift’ in his 1957 paper. But in those days, economists were not as sensitive to the resource issue in economic growth (land excepted).
Economists have never said that capital and labour were irrelevant. They are as necessary as classical orthodoxy thought they were, but in a different way. Technology (in the narrow sense of ‘plans’) has to be embedded in capital and labour. So developments in information technology are embedded in personal computers and so on – capital goods. And the developments have to be also imbedded in the skills of the persons using them.
Nor should we ignore the social technologies of how an economy is organised. They range from having a good judicial system, so that contractual arrangements run as smoothly as possible, to how workplace relations are organised.
A curious feature of economic growth is that over a long period the rate of change of New Zealand’s MFP/TFP (the residual contribution to economic growth) does not seem to have changed much. I’ve looked and looked.
Had another go with a new data base a couple of weeks ago and failed, yet again. I was looking for a slow-down in hourly labour productivity growth early this century, as posited by some economists internationally. I thought I had found a slight one but it turned out to be not statistically significant. Bother!
And so to the uncomfortable question of whether we can accelerate the rate of long-run productivity growth. Everyone has been saying that since seven decades ago when we first had reasonable measures of the rate of economic growth. Economists do it as a mantra: ‘adopt my economic policies and the economy will grow faster’. (The commentariat echoes them.) But they provide no systematic evidence that their prescriptions will work. It is more ‘trust me, I know what I am doing’, but since the prescriptions all differ whom do you trust?
The politicians’ slogan is that faster economic growth will mean we can meet the public’s demands for tax cuts and more public spending. It is easier to say this when one is opposition. In government the cruel reality is that no matter what they do, the long-term MFP/FTP growth rate chugs along much as it has for the last century.
It is difficult to identify any New Zealand government that has really changed the growth rate (with the possible exception of the neoliberal policies of the late 1980s and early 1990s which stagnated the economy; we still have not recovered from their damage). Short-term burst, such as the upswing of a business cycle, can be identified by judicious choices of end points which may satisfy those with an ideological bent. A scientist is less able to find a significant long-term change. (A change of 0.1 or 0.2 percentage points in the growth rate is difficult to identify because of noise in the data.)
Most of the paragraphs of this column could not have been written before the systematic measurement of economic output, led by Simon Kuznets, and the resulting analysis, led by Solow. One honours him for his pioneering insights. In the study next door, Paul Samuelson changed how we thought about economics; Bob Solow changed how we thought about the economy.
He wrote with elegance and clarity – he was drawn into the social sciences by reading great novels in his adolescence. They were spliced with wit. Here are some:
“Economists are divided between those who look at economic aggregates and those who look at the details. I belong to both sides.”
“Everything reminds Milton [Friedman] of the money supply. Well, everything reminds me of sex, but I keep it out of my papers.”
As an economist, Solow liked formal models and mathematics. But nothing too fancy. Over-refinement reminded him of the man who knew how to “spell banana” but did not “know when to stop”.
“Part of the job of economics is weeding out errors. That is much harder than making them, but also more fun.”
“To try effectively to wipe out hard-core inflation by squeezing the economy is possible but disproportionately costly. It is burning down the house to roast the pig.”
“Why does a public discussion of economic policy so often show the abysmal ignorance of the participants?”

The Stability of Ethnic Identity and Reporting

This entry was posted in Maori, Statistics on by .

Note written for circulation, December 2023

Ethnicity is not a well-defined notion for the majority of the population, but when asked for ‘official’ purposes (usually with a choice of tick boxes) most can ethnically identify themselves.  (Typically, they may check as many ethnicities as they wish.)

In the Population Census data used here there is no definition of ethnicity. I mean by ethnicity a grouping of people who identify with each other on the basis of perceived shared attributes that distinguish them from other groups. Those attributes can include common sets of ancestry, traditions, language, history, society, religion, or social treatment. There can be considerable heterogeneity within an ethnic group. For instance its young and old may have different views on many matters.

Ethnicity is not the same as ‘race’, which refers to genetic ancestry. There may be some overlap. Probably some people confuse the two notions.

The four key ethnicities in New Zealand statistics are ‘European’ (although this paper uses ‘Pakeha’, in order to make it clear that this is not a racial concept), ‘Maori’, ‘Pasifika’ and ‘Asian’ (although this is quite a polyglot since it includes large numbers of Chinese and Indians who would claim to have little in common). The data bases used here also distinguish ‘Middle East-Latin American-African’ (MELAA) and ‘Other’, which are also polyglots.

One’s ethnicity is subjective in the way one’s ancestry is not. You cannot change your ancestors, but you can change your ethnicity. Critical to the use of ethnicity in public discussion is the degree to which an individual’s notion of their ethnicity is stable or whether it changes over time and with changing circumstances. Public discussion assumes that it is largely stable. This paper explores the issue both in terms of self-identification and in the public record.

(The data base on which this discussion is based was supplied by Statistics New Zealand. The definitions and caveats associated with it are set down in an appendix (yet to be written). While kindly supplying the data base, neither Statistics New Zealand as an institution nor any of its people are responsible for the analysis on which the paper is based nor the conclusions drawn from the analysis.)

Self-Identification

As far as I know, there is no survey of individuals’ ethnic identity which enables us to monitor how they classify themself on a regular – say, daily or monthly – basis.[1] The best we have available is the self-identified ethnicity in the 2013 and 2018 population censuses.

However, it has been possible to compare the responses for 1.9m people who answered the 2013 and the 2018 censuses. This is only a selection of all the 2013 census respondents. The missing would include those who had died or migrated in the intervening five years and those for whom we have responses for both censuses but whose records could not be matched.

The data was supplied in 11 categories:

Pakeha

Pakeha & Māori

Pakeha, Māori & Pasifika

Pakeha & Pasifika

Pakeha & Asian

Māori

Māori & Pasifika

Pasifika

Asian

MELAA

Other

Slightly under 90 percent (89.9%) identified themselves in the same ethnic category in 2018 as they chose in 2013.

If we extend the categorisation to explore those who chose a self-identification of Pakeha in any of the five relevant categories, Māori or Pasifika in any of four, or Asian in any of two we find the successful identification rises to 93.1 percent. (There are some combinations such as Māori -Asian which appear in the data as other.

That means than 3.2 percent modified their ethnicity between 2013 and 2018 but retained at least one of their identifying labels. That also means that almost 7 percent (one-in fourteen) chose a category in 2018 which had nothing in common with their 2013 choice.

The implication of this result is that there is some long-term stability of ethic self-identification but a not insignificant minority change theirs.

Recording Ethnic Classification

Statistics New Zealand also provided a comparable tabulation between the 2018 census ethnic classification and the classification in the following six administrative data bases in the same (2018) year:

            The Statistics New Zealand Administrative Population Census (APC);

            A Ministry of Health data base (MOH);

            A Ministry of Social Development data base (MSD);

            A Ministry of Education (Tertiary) data base (MoET);

            A Department of Internal Affairs data base of children (DIAC);

            A Department of Internal Affairs data base of parents (DIAP).

In this case the administrative categorisation may not be by the individual being classified. Depending on the circumstances it could be by family or a friend, the person administering the record or an outsider.

The comparable ratios are in the following table, with 2013 included.

Matching between 2018 Population Census self-categorisation and categorisation in an Administrative data base.

<>   TOTAL Exact Match Some Match 2013 1921765 0.899 0.931 APC 1590232 0.810 0.870 MoH 3605252 0.923 0.939 MSD 1540228 0.887 0.920 MOET 1908985 0.880 0.914 DIAChild 820744 0.892 0.940 DIAParent 487172 0.928 0.962

In summary, the match proportions are similar to the census matches despite being in the same year. But different administrative data bases show differences. The least successful is the Administrative Population Census.

The matches for the four major ethnic classifications also show inconsistency.

Exact Match between 2018 Population Census self-categorisation and categorisation in an Administrative data base.

<>   Pakeha Māori Pasifika Asian 2013 0.945 0.812 0.933 0.979 APC 0.711 0.760 0.896 0.980 MoH 0.981 0.834 0.943 0.959 MSD 0.972 0.425 0.594 0.916 MOET 0.966 0.835 0.920 0.870 DIAChild 0.951 0.715 0.921 0.976 DIAParent 0.979 0.800 0.956 0.989

Partial Matching between 2018 Population Census self-categorisation and categorisation in an Administrative data base.

<>   Pakeha Māori Pasifika Asian 2013 0.945 0.905 0.946 0.975 APC 0.857 0.887 0.932 0.957 MoH 0.970 0.932 0.928 0.977 MSD 0.975 0.866 0.868 0.985 MOET 0.958 0.934 0.896 0.986 DIAChild 0.960 0.923 0.942 0.941 DIAParent 0.966 0.912 0.960 0.990

The matching seems reasonable for Pakeha and Asia, but much poorer for Māori and Pasifika, especially in the case of exact matching. The APC, MSD and DIA all do poorly.

Notice that the partial matching is better than the exact matching. What is happening, according to the data, in 2018 the MSD classified 15.3 percent of the sole Māori in the 2018 Population Census as sole Pakeha and 36.3 percent as Pakeha and Māori so that it had only 42.5 percent who were sole Māori. (Until we know how the MSD data base is compiled – this is the worst example – it is idle to speculate on the source of the discrepancy. It is not because the MSD population is unrepresentative of the national population; the comparison is between the MSD population and the same census population.)

Conclusion

The above data provides evidence that individuals change their ethnicity sufficiently often to be a potential concern. It also suggests that administrative data bases may be applying definitions or determining ethnicity differently from the self-categorisation approach of the Population Censuses. We should therefore be careful when we are comparing the aggregate ethnicities from administrative data with national proportions. More generally it is unwise to treat everyone’s ethnicity as fixed; for many it is fluid.

Endnotes

[1] The Wellington School of Medicine New Zealand Census Mortality and Cancer Trends Study found there was an imperfect match between Census ethnic responses and those on death certificates. Presumably ethnicity recorded on a death certificate is not a self-categorisation.

Was the 2023 Treasury Pre-election Economic and Fiscal Update Misleading?

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The new Minister of Finance implied that Treasury’s ‘books’ were deceptive. Can’t see it myself.

I was disturbed by media reports that the new Minister of Finance, Nicola Willis, had criticised the previous Labour Government ‘for leaving the books with “nasty financial surprises” that National will have to clean up’ and that ‘after looking at the books Willis said the outgoing Labour Government had left some “nasty surprises”.’ She went on that ‘the Labour Party had left the “cupboard bare” and spent New Zealanders’ money with “pretty wild abandon” … What I’ve now learned is it’s not just that the cupboard is bare, it’s that there are snakes and snails and all sorts of things in there, nasty financial surprises that we as an incoming government are going to have to deal with.’

I do not have an exact transcript of what she said – hence the confusion of quotation marks – and it is not uncommon for an incoming minister to make extravagant claims about an outgoing government.

What disturbed me was that the new minister seemed to be saying that the Pre-election Economic and Fiscal Update (PREFU) was misleading, with the implication that the Treasury was incompetent or dishonest. She was not probably intending to do so, but ‘the books’ are the Treasury’s, not the Minister of Finance’s.

To give a context. In 1990 the incoming National Government was surprised by the fiscal situation it took over. To ensure this would not happen again, it passed the 1994 Fiscal Responsibility Act (now incorporated in the 1989 Public Finance Act), which required two reports a year on the state of the government’s finances, one at budget time (BEFU) and one half-a-year later. (The Half-Yearly Economic and Fiscal Update (HYEFU) has just been published.) Additionally, it required a PREFU to be published a few weeks before any election. (September 12 in the case of the 2023 election.)

Willis seemed to be challenging the integrity of the 2023 PREFU. Each EFU makes it very clear that it is a Treasury document. Here is what HYEFU 2023 says:

On the basis of the economic and fiscal information available to it, the Treasury has used its best professional judgement in preparing, and supplying the Minister of Finance with, this Economic and Fiscal Update. The Update incorporates the fiscal and economic implications of government decisions and other circumstances as at 23 November 2023 that were communicated to me by the Minister of Finance as required by the Public Finance Act 1989, and of other economic and fiscal information available to the Treasury as at 24 November 2023.

Note that, as Treasury also states, HYEFU 2023 was ‘completed prior to the release of the Coalition agreements, the Government’s 100 Day Action Plan commitments and the decisions made on the Mini Budget.’ So it is really the Labour Government’s last EFU, rather than the National Coalition Government’s first EFU. (It is due in May 2024, just before the Budget.) The commentariat treated it as a dead duck, and focused on the Minister of Finance’s financial statement released at the same time.

I looked carefully at HYEFU 2023 to see whether it had changed much from PREFU 2023. Yes, there are differences but no more than normal. I am not surprised. Yes, there is a deterioration in the fiscal position between August and November 2023 but by far the most important reason is that the economy has deteriorated more than expected, which reduces government revenue. In my experience Treasury is scrupulous about following the law, although it readily acknowledges that it has to make its best judgements in applying it. Treasury macro-economists loathe getting their forecasts wrong; there would be no intention to mislead in PREFU 2023. The HYEFU economic forecasts were finalised on 6 November. Since then there has been more bad news. (I’ll review the state of the economy early next year, when I’ve had time to put in the grind.)

What then is Willis going on about? I put aside that she is trying to portray a crisis – the strategy of incoming governments in 1975, 1984, 1990 and 2008. Not all those portrayals were justified but some gave the new government the excuse to make radical changes including reneging on election promises. Undoubtedly though, Willis wants to portray the previous government as a fiscal disaster – that’s politics.

One problem she faces is that she may not have a good grasp of the ministerial challenges she faces. No matter how hard Treasury tries, there is always a bit of a fiscal shambles of things popping up unexpectedly. Cabinets never resolve all that they face each Monday morning. There were issues which the Labour Cabinet had not yet addressed when it closed down for the election campaign.

One such example may have been Kiwirail’s ambitions for the Cook Strait ferries. Willis has scotched them for being too expensive. The way she did so was unfortunate. Old Wellington hands – Willis is not among them – are too familiar with government agencies making ‘gold-plated’ claims for taxpayer funding in order to get a less ambitious project approved. The Treasury paper rejecting the proposal probably suggests alternatives.

There are also the ‘risks to the fiscal forecasts’, which take many pages in an EFU (48 pages in HYEFU 2023 compared with 19 pages of fiscal outlook). You have to be a bit of a geek to pay them much attention (I plead guilty). Many carry over from EFU to EFU, there are new ones and some have come to book in the period between. They might be deemed ‘snakes and snails’, but they can be identified if one puts in the effort.

One is left with the impression that the National Opposition did not. Willis complains that there were spending programs due to terminate which she did not know about. A bit of diligence in the Opposition Research Unit would have identified them – did they tell her? Or was the Opposition badly prepared?

I do not want to suggest that there are no fiscal problems facing the incoming government, even if it were not giving major income tax cuts. Days before the release of PREFU 2023 the then Minister of Finance, Grant Robertson, announced that most government departments were told to cut back their spending, alerting old hands to the challenges. (A few days before the election, a leaked paper reported that the Ministry of Business Innovation and Employment was reducing staffing and tightening up on expenses. Newbies reported this as though MBIE had assumed that a National-Act government would be elected and were anticipating the expenditure cuts it would impose. In retrospect, Robertson may want us to think that, but the reality is that MBIE was responding to his directions.)

As far back as I can remember, there has been Wellington-based gossip about Treasury losing its grip. There is no evidence of this in HYEFU 2023, despite what their new Minister said. In parallel, as far back as I can remember there has been a view that Oppositions are badly prepared for taking over the government.

PS. Some of the commentariat report that Willis had announced ‘expenditure cuts’ worth $7.5b up to June 2028. However, that total includes a tax hike of $2.3b from commercial depreciation becoming non-depreciable for tax purposes from 1 April 2024.  (The outgoing Labour Government went into the election with the same policy.) There are more expenditure cuts to be announced.

What is the Purpose of an Economy?

This entry was posted in Globalisation & Trade, Growth & Innovation, History of Ideas, Methodology, Philosophy, Political Economy & History, Pundit on by .

In his Economists in the Cold War, Alan Bollard contrasts Saburo Okita of Japan with Zhou En Lai of China to highlight a critical issue.

Saburo Okita (1914-1993) was in Manchuria (northeast China), in the port city of Darien (Chinese: Dalien) which was occupied by Japan at that time. Because they were politically unsympathetic to the increasingly militaristic occupation regime, his family moved in his teenage years back to Tokyo, where he graduated in electrical engineering and joined the civil service. During the Second World War, and despite reservations about Japan’s war policy, he was involved in managing the supplies of raw material such as coal and iron necessary for the war economy and food.

Japan lacks sufficient local supplies of many of these critical resources. One of the reasons for its territorial ambitions was to secure alternate supplies by conquest. Manchuria was a key source.

Defeated Japan was grim. Okita set up a group immediately after the war to plot the economic recovery. It met in a half-destroyed building. Many of the official records they needed were missing and they lacked even paper. Okita’s home had been bombed and he and his family had to pile in with the in-laws. He had to scrounge for potatoes and other basic food.

Bollard uses Okita’s life to describe the Japanese recovery from this misery to become one of the strongest economies in the world with Okita playing a central role in the planning and advice system, although he was never Minister of Finance.

As the economy flourished, he moved into the international arena including chairing the Pacific Economic Cooperation Council in Bangkok from 1986 to 1988.

In the course of his career, he helped develop a solution to the Japanese resource deficit which did not involve conquest and colonisation. The alternative was trade. New Zealand is a beneficiary. We were on the edge of the Greater East Asia Co-Prosperity Sphere, the creation of which was a Japanese objective in WWII. Instead, Japan is our fourth largest export market, and an integral part of the East Asian economy which New Zealand depends upon.

If a Japanese empire was not realised, neither were some of the victors’s plans. They wanted to ensure that after their defeat Japan and Germany would revert to rural economies, unable to provide the advanced technological resources to pursue modern warfare. Wiser heads (and the need to resist Communism) prevailed and today both countries are advanced economies playing an important role in the liberal international order. (On the other hand, Russia and North Korea demonstrate that less developed economies can sustain militarily aggressive intentions – at enormous cost to their populations.) This is an important lesson to be recalled if the West ‘defeats’ Russia. Putin’s claim the West wants to dismantle Russia. The West should make it clear that it wants Russia to be a part of a civilised, affluent, peaceful world. (That Japan transformed successfully might provide some optimism for such a goal.)

Okita and other Japanese economists of his time explained this international economic interdependence as ‘flying geese’. As characterised by the diagram of a flock of birds flying in a V-shaped formation, there is a leader with the rest tucked in behind it, benefiting from those in front. *

The flying geese model is intuitively attractive to explain the evolving pattern of East Asian development despite significant differences in resource endowments. As Bollard writes:

As the lead goose (Japan) grew stronger, its rising wages and growing investment moved it towards more capital intensive industry, releasing its labour intensive operations for economies further down the formation. Each economy remained outward-looking and trade-driven, with the possibility of positive spill-over effects, technology transfer, and international investment speeding the growth process.

The model can also be applied to the development of the European economy and to the North American economy (applied to regions and not just countries). Observe too, that in long flights the lead bird will ease back and another take over. Is China doing that? (Although you cannot see it, there is a small dot at the back of the right wing of the V; that’s us – New Zealand.)

Bollard contrasts Okita with Zhou Enlai (1898-1976) who also had a turbulent life until 1949 when the Chinese Communist Party took over the governance of China, and he came second only to Mao Zedong; unlike the latter he was a stabilising force.

Okita and Zhou met on a number of occasions. Bollard’s description of a conversation in 1971 is revealing.

As Zhou saw it, the main purpose of economic growth was to build defence and security, and Japanese growth could drive the country back to Manchuria in search of resources. Okita had been an advocate of peace policies in Japan, and he objected to the argument, saying the purpose of Japanese growth was to give its citizens better living standards and its consumers more choice. Indeed Japan’s internationalization would likely constrain militarism. The debate continued for some hours and, while very civil, there was no agreement. Zhou’s argument, that the economy must serve strategic national interests rather than improving the material lives of citizens, had deep roots in Chinese history but also fitted Communist Party thinking in many Cold War States. What was the real role of economics? To Okita, it was consumption for individual welfare, to Zhou it was production for state security.

The answer remains unsettled. (In contrast, the big economic question of how to organise a modern economy – getting the balance between markets and planning – is much better settled. The review of Bollard’s Economists in the Cold War which explores this is here.) You can easily identify countries which prioritise national security over their citizens’ wellbeing. Zhou’s strategy may still dominate Chinese thinking. Even though its citizens have experienced substantial rises in their material standards of living, there is a growing popular desire for their interests to be given greater weight.

It is easy to claim that Okita’s rather than Zhou’s strategy has long applied in New Zealand. Recall that during the trench warfare of the Great War – which has similarities to what is going on in today’s Ukraine – the New Zealand leadership was not nearly as ready to sacrifice its troops in the way the British military command seemed to and which appears to be the Russian approach in its Ukraine invasion. On the other hand, our commentariat often gets carried away with describing the economy as an entity which has a significance beyond that of the citizens. I am reminded of the sentiment: ‘my economic advisers tell me the economy is doing well, but I know the people are not.’

* I wish they had chosen swans rather than geese. One of the most moving moments in music is the glorious ‘swan theme’ in the final movement of the Sibelius Fifth Symphony.

The Reserve Bank Dual Mandate

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I have not weighed in on the vigorous and welcome discussion on the dual mandate of the Reserve Bank to both target inflation and maintain maximum sustainable employment. This note is about why the new government gave so much priority to abolishing it.

One reason for not joining in is that I am unsympathetic to the underlying paradigm which says a central bank can (normally) determine the level of inflation in the medium run. I have set out my views elsewhere, but briefly the underlying model assumes a closed, single-product commodity economy with a high degree of flexibility, simple financial markets, population homogeneity and hardly any government.

Aside from its unrealism there is little empirical evidence. Technically I don’t think the demand  for money equation is sufficiently stable. Sure, sometimes monetary policy has contributed to price stability, but sometimes it has failed, but not because of the incompetence of central banks but because it was being asked to do more than it was capable of.

I see the prime role of a central bank is to maintain order in money markets. Fortunately, under normal prudent financial supervision, a bank does not have to take a lot of actions to pursue this objective in normal times; in abnormal times (such as during the GFC) its role is crucial.

Setting the base interest rate in the economy is a part of that maintaining of order. So is price stability. Setting the interest rate with price stability in mind is a practical proposition in paradigms different from today’s favourite. In practice I have not particularly disagreed with the Reserve Bank settings – timing aside. I see much of its ‘failure’ as result of the paradigm failure because it is being applied in circumstances in which it does not practically apply.

For me the dual mandate with its inclusion of sustainable employment is to remind the Reserve Bank that while its primary purpose is to maintain in order in monetary markets that purpose is subordinate to the wider aim of the pursuit of the wellbeing of the population – employment is an integral part of that wellbeing.

So, I am relaxed about the dual mandate although I would not have framed the legislation in quite the way it has been. I do worry about the way it appears to give the Reserve Bank multiple targets with limited policy instruments (practically one); this infringes of the Tinbergen rule of (at least) one instrument per objective.

So, I can live with the current legislation or that with the dual mandate of the previous government, providing monetary policy is managed with commonsense. Moreover I can understand why others, more committed to the current paradigm and more involved with its setting  feel more passionate than I do. But that does not explain the speed with which the current Parliament reversed Labour’s amendment. (Do I mean Parliament or the Government?) Has it not better things to do? Especially as it seems it is almost universally agreed that the change will make no current difference.

I want to suggest that one reason for the repeal – perhaps the main reason for the hasty repeal – was that it was intended to be an ideological marker of the strengthening of neoliberalism in the government.

I am not arguing that all those who support ending the dual mandate are neoliberals. Many are strongly neo-Keynesian in their thinking. (To me a major distinction between neo-Keynesians and traditional Keynesian are the former’s faith in a stable demand for money equation.) The point here is the haste suggests an ideological rather than pragmatical explanation.

One of the core principles of neoliberalism is price stability – the stability of the value of money. Most economists see such stability as immensely helpful for a well-functioning market. Neoliberals see it as more fundamental than that. On the other hand, ‘full employment’ is not among their objectives.

I’ve only sketched their argument out here. I hope it sufficient to alert that the repeal was a signal – ‘we neoliberals are back in force; we have the ear of the government.’ How much force they will have in the coalition government is yet to be seen. But pragmatists need to think about the implications of the signal.

How Should We Organise a Modern Economy?

This entry was posted in Growth & Innovation, History of Ideas, Methodology, Philosophy, Political Economy & History, Pundit on by .

Alan Bollard, formerly Treasury Secretary, Reserve Bank Governor and Chairman of APEC, has written an insightful book exploring command vs demand approaches to the economy.

The Cold War included a conflict about ideas; many were economic. Alan Bollard’s latest book Economists in the Cold War focuses on the contribution of seven economists with each one paired with another, the contrast heightening the underlying theoretical tensions, I am not going to deal with two of the chapters, important as the topics are: the struggle by the US to dominate the international economic architecture (Harry Dexter White) and the development of the strategy for nuclear conflict (John von Neumann).  The focus here on the five which are about how to organise an economy.

The Cold War started almost eighty years ago. It began in the shadow of two economic events. The first was the Great Depression, when the capitalist economies miserably failed. It occurred closer to the publication of Marx’s Das Kapital than to today. That book seemed to predict the sort of economic catastrophe which happened and promised – albeit vaguely – an alternative economy. Many economists, including Keynes, whose General Theory had yet to be fully adopted, expected another great depression after the war.

Moreover, the Soviet Union, which was based upon Marx’s vision, seemed to have ridden through the Great Depression without the same agony. (The belief was not entirely true; things had been pretty rugged there too, including the Holodomor, the great Ukrainian famine of 1932-3 in which up to 7m died in a population of about 30m. Knowledge about what was going on in other countries was not as extensive as it is today.)

The second influential event was the Second World War, in which the economic power of the West – most notably the US – was harnessed by direction from the centre rather than by market demand, as is common in a capitalist economy. The detail of the direction during the war was extraordinary; in New Zealand it extended to the length of women’s dresses.

Again admiration fo the Soviet Union loomed large. During the war, a quarter of its people were wounded or killed, including around 27m dead. It was no wonder that many in the West, uninformed about the brutal internal oppression, admired the country. As Bollard records, some economists went so far as to become Soviet spies. Others were fellow travellers. And of course others were vigorously anti-communist.

It was a reasonable question straight after the war to ask how best to organise economy. The contrast was ‘command or demand’; was it better to have an economy directed and owned by the government from the centre or would a market-driven economy of individual decisions and private ownership work better?

Bollard covers the question by describing the life histories of five economists who answered the question in various ways. In each case he contrasts his choice with another economist who took a different view.

Oskar Lange (1904-1965) was a Pole who spent a lot of time in the US following persecution in his homeland. The contrasting economist is Austrian neoliberal Friedrich Hayek (1899-1992) who was a vigorous proponent of the market economy. Lange put much thought into how to make central planning work, especially by using price signals. He had an interesting life – sad because he when he returned to Poland after the war, this subtle economics thinker found himself having to mouth Stalin’s economic nonsense.

(It had not occurred to me how many of the era’s economists whom I respect lived politically turbulent lives. Unless you were American or British, you probably had to flee on at least once. Bollard also covers their personal lives. Some of those were turbulent too.)

The German chancellor Ludwig Erhard (1897-1977) was an economist who as Minister of Economic Affairs and later as Chancellor presided over the German postwar miracle. His strategy was a social market economy which aimed to provide a liberal market environment with public/social welfare support for individuals. He is contrasted with Jean Monnet (1888-1979), was a key founder of what became the European Union. French-German tensions aside, I am not sure they were too different.

Joan Robinson (1903-1983) was based in the stability of Cambridge, England. An ‘establishment rebel’ she was the closest to a Marxist of Bollard’s seven (but recall Karl said he was not a Marxist either). I greatly admire her economics but, sadly, she often ended up endorsing some very unsavoury regimes.

She is contrasted with American Paul Samuelson (1915-2009), with whom she had a long off-and-on correspondence. (Bollard does not discuss how Samuelson is probably the twentieth-century economist, second only to Keynes, provided a theoretical answer to big question of how to organise economies. It is called the ‘neoclassical synthesis’, combining Keynesian macroeconomics with an advanced version of neoclassical microeconomics.)

I am going to leave Japanese economist Saburn Okita (1914-1993), contrasted with Chinese premier Zhou Enlai (1898-1976), for another column because they moved on to an even bigger question of the purpose of an economy. Suffice to say here, that Okita played a key role in the Japanese postwar recovery and in the wider development of the East Asian economies.

Raúl Prebisch (1901-1986) is the last in the book. Although originally Argentinian, he fled to Chile, in between a number of internationally important jobs, to experience the turmoil which followed the Pinochet coup. His challenge was whether the models for the development of rich countries were as relevant to poor countries. His thinking was influential on New Zealand’s thinking about development policy in the early 1960s. In particular he argued that primary exports faced falling prices (terms of trade) relative to manufactures, which justified measures to diversify an economy. (There is an enormous literature about this ‘unequal exchange’.)

Prebisch was right for the first three-quarters of the twentieth century but the trend reversed towards its end as manufacturing-successful East Asia became hungry for food and raw materials.

Bollard contrasts Prebisch with American Walt Rostow (1916-2003), famous for his The Stages of Economic Growth: A Non-Communist Manifesto with its notion of an economy ‘taking off’ into sustained growth. (He was also national security advisor to Lyndon Johnson.) He too was also influential in New Zealand’s thinking in the 1960s.

So who won? Unquestionably, economic organisation via the demand side of the economy is dominant in today’s affluent economies. I am not sure that we should attribute its success to economists, even if they gave us a better understanding of how market economies work. Rather, the complexities arising from the increasing diversity of choice in affluent economies can only be met by a high degree of decentralisation. I watched how east-central European economies under the Soviet yoke became increasingly – but slowly – more wealthy. Eventually, central controls became over-burdened and failed. That was a major factor in the rise and fall of the Berlin Wall and hence the end of the Cold War.

The prize to one of Bollard’s seven – if any is particularly worthy of the prize – is surely to Erhard, whose vision of the social market economy (Samuelson’s neoclassical synthesis with an integrated welfare state) dominates much of our thinking, even in those economies seduced by neoliberalism.

A. E. Bollard (2023) Economists in the Cold War, Oxford University Press. 384pp. ISBN: 9780192887399 (Also available as an ebook)

Forward to 2017

This entry was posted in Governance, Pundit, Regulation & Taxation on by .

A comparison of the coalition party agreements shows commonalities but also some serious divergencies. They are mainly about returning to 2017 when National lost power.

The two coalition agreements – one National and ACT, the other National and New Zealand First – are more than policy documents. They also describe the processes of the new government. This column focuses on policy. The agreements give the impression they were negotiated separately, with National running between the two rooms. There are some common policies, some policies which with just a little cooperation could have been written jointly, and each also contains policies or sentiments that the other party – ACT or NZF – would have liked to have had in their agreement too had they known about them. But there are also differences which may lead to severe political tensions – even to a breakdown of the coalition government.

Summarising their combined 4500-odd words on policy is not easy. I set aside a number of individual policy proposals of the sort which come up on the floor of party conferences. Some are aspirational or pious, ranging from good and bad ideas which may or may not be adopted to special interest group demands. (NZF’s include detailed demands for improving the Northland region but nowhere else.) Some could have appeared on the floor of the Labour Party conference and even been adopted by its government.

(This column does not cover the fiscal – tax and spending – aspects of the agreement. An economist waits until HYEFU. However implementing the proposed tax cuts within the borrowing limits will require major expenditure cuts. The NZF agreement includes increased spending proposals, while ACT also wants to spend a bob or two.)

The dominant policies in the agreements can be summarised as a return to 2017 when National lost power. (Each agreement states that items not covered by the National manifesto are the default.)

The most prominent change is the winding back of Treaty and Cultural issues. All three parties reject co-governance and agree ‘public services should be prioritised on the basis of need, not race’. NZF directs that ‘all public service departments have their primary name in English, except for those specifically related to Māori’ (adding that it requires ‘public service departments and Crown Entities to communicate primarily in English – except those entities specifically related to Māori’; something I would support if the word ‘plain’ had been inserted before ‘English’). Both agreements abolish the Māori Health Authority. NZF also wants to replace all references in legislation to the principles of the Treaty of Waitangi with ‘specific words relating to the relevance and application of the Treaty, or repeal the references’.

ACT is more ambitious. Its manifesto proposal for a referendum is replaced by introducing ‘a Treaty Principles Bill based on existing ACT policy [sent] to a Select Committee as soon as practicable’. NZF says nothing about this. Perhaps it will support the introduction of a more moderate bill than ACT had in mind. Neither National nor NZF is committed to supporting the amended bill when it is reported back to Parliament.

All three parties want to repeal the Natural and Built Environment Act 2023 and the Spatial Planning Act 2023, returning to the Resource Management Act 1991 which, however, they want to amend.

Both agreements stop some of the big projects that Labour had under way. ACT’s is most explicit:

‘Immediately issue stop-work notices on several workstreams, including:

            – Three Waters (with assets returned to council ownership).

            – Auckland Light Rail.

            – Let’s Get Wellington Moving.

            – Income Insurance.

            – Industry Transformation Plans.

            – Lake Onslow Pumped Hydro.’

ACT also wants to revert monetary management by the Reserve Bank to the pre-2017 approach without the ‘dual mandate’ which took unemployment into account. (Most economists think that will make little difference to the actual way the RBNZ manages monetary policy.)

Both agreements continue to support the zero carbon target, the NZF one more explicitly. However they presage a change in the way it will be done. My impression is that there is a realisation in the deep bureaucracy that the current system is not working, and some changes would be desirable. A change of government enables them to obscure the source of their proposals. Greenies will be wild any way.

Another unwinding is that parties want to revert to the more judgmental 2017 approach to law and order. (The Act document has changes it wants in regard to gun laws which were tightened after the Mosque Massacres.)

There are also reversions in education and healthcare policies. Perhaps the most contentious is the proposed repealing of the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Act 2022. Renters will find it harder.

And so such things go back. There are a number of proposals which amount to commercialisation, outsourcing and privatisation. Both agreements have proposals to reorganise immigration although it unclear whether they want more immigrants or whether they just think the current system is a shambles.

Labour laws are to be returned to their earlier status which were more pro-employer. Even so, while National has agreed with ACT to repeal the Fair Pay Agreement regime, NZF has committed National to ‘moderate increases to the minimum wage every year’.

I leave nitpickers to reconcile these and other policies. However, the contrast between the two agreements on regulation is stark ACT’s proposals for economic liberalisation are the centrepiece of its agreement. Its leader, David Seymour is to be Minister of Regulation, there is to be a new ministry and numerous proposals aim to roll back government intervention to improve ‘efficiency’ (there will be other effects). There is a commitment to pass the Regulatory Standards Act as soon as practicable. I have cautioned that an Act in its form of the 2021 Regulatory Standards Bill is unworkable. Even so, it is the one really innovative proposal in the two agreements, which are otherwise unremittingly back to 2017.

If the RSA is passed, it is likely to be watered down. Even so, to pass it requires the support of NZF. Their agreement with National proposes a number of policies which would increase regulatory interventions in a way that is anathema to ACT. Will there be a standoff?

The agreements are clear that standoffs can happen. ‘As provided for in the Cabinet Manual, the Parties can “agree to disagree” in relation to matters on which the Parties wish to maintain, in public, different positions’ and ‘no Party is obliged to support another Party’s Members’ Bills’.

It has happened before. Labour’s ambitions for its Seabed and Foreshore Act were thwarted by – yes, it was coalition partner – NZF. (The NZF agreement mentions the need to revisit the legislation – now replaced by the Marine and Coastal Area (Takutai Moana) Act 2011 – following a decision by the Court of Appeal; since Te Parti Māori is not in power the parliamentary situation may not be as fraught.)

It will require the wisdom of Solomon to find a way through some of the potential conflicts. There are commentators on the right who think there is not such wisdom in the current National leadership. Any doubts are reinforced by the mess of the forty-day negotiation which generated these two coalition agreements.

Peters as Minister

This entry was posted in Political Economy & History, Portraits, Pundit on by .

A previous column looked at Winston Peters biographically. This one takes a closer look at his record as a minister, especially his policy record.

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1990-1991: Minister of Māori Affairs.

Few remember Ka Awatea as a major document on the future of Māori policy; there is not even an entry in Wikipedia. The impression is that Peters left the writing to officials as was not greatly interested in it. We shall see a repeated pattern of his not being a policy wonk.

I am not sure about Peters’ vision for Māori in New Zealand. He is proud of his Māori heritage as well as his Scottish one. (He is not fluent in te reo; English was the language in his childhood home and he was not allowed to speak Māori at his primary school.) The right wing account of Māoridom is not well articulated; attempts to explain it are drowned by cries of ‘racism’, not all of which are justified. I am confident that Peters does not support the views of the majority on the left. He has specifically rejected the He Puapua report and co-governance.

1996-1998: Treasurer (And Deputy Prime Minister)

Peters is not remembered as a great minister in charge of the Treasury; his deputy, Bill Birch, did the grunt work. I am told his approach was ‘legalistic’ rather than policy-focused. My impression is that he does not have a grasp of the technical side of economics – just the political side. His limitations are illustrated by his failed retirement scheme.

During the coalition negotiations in late 1996, Winston Peters asked me to prepare a proposal for a contributory retirement superannuation scheme as a part of NZF entering government. His one requirement was that it had to be implemented within the three years of the electoral cycle. My advice was based on the 1974 New Zealand Superannuation Scheme which had been implemented within three years with much of the work already done. Peters’ scheme – the one I advised on – was adopted as a part of the coalition agreement with National under Jim Bolger.

When Peters became Treasurer he asked Treasury to design an earnings-related contributory scheme. The available papers suggest that the officials did not look at the scheme in the coalition agreement. Instead, they latched onto Douglas’s neoliberal scheme set out in Unfinished Business.

It was dreadful scheme. Some people – more of them women – would have made contributions throughout their working life and received not an extra cent in retirement support (they would have actually got less because the Treasury proposal cut back the level of the non-contributory scheme by indexing it to prices rather than wage changes). The Treasury proposal went to a referendum in 1998; it lost heavily.

It was Peters rather than Treasury who suffered. The trashing of his pet scheme weakened his political position. Peters’ original scheme would have been popular. Michael Cullen introduced it as Kiwisaver in 2005. Woe betide any politician who tries to abandon it. (When Treasurer Peters introduce the Treasury proposal to Parliament in 1998, Cullen pointed out it was far from the scheme agreed in the coalition document.)

Shortly after his death, Cullen’s name came up in discussion with a nurse of Asian ethnicity. She became effusive because her family had used their Kiwisaver funds to purchase their home. I said I had a small role in its development – I meant ‘small’; I kept the remembrance of the 1974 Labour scheme. She thanked me three times.

Perhaps the course of politics would have been different had a ‘Kiwisaver’ type scheme been offered to the voters in 1998 instead of a neoliberal one. Perhaps the strengthened Peters would have survived as Treasurer and NZF would have returned in the 1999 election – possibly it would have joined the Labour Government.

(Almost as an aside, I recall thinking when neoliberal Jenny Shipley toppled Bolger, that ‘they are out to get Peters’, who got on very well with Jim. Peters made a tactical error which led to his downfall – he interpreted the coalition agreement legally rather than politically. But my guess is that they would have got him anyway, especially after he lost the referendum.)

2005-2008: Minister of Foreign Affairs

By all accounts Peters was a successful Minister of Foreign Affairs. He liked the job of putting New Zealand first, listened carefully to briefings, while ministry officials were comfortable with his redirection towards the Pacific and delighted about his ability to extract additional funding.

There is a revealing story on the wider policy front. In 2003 the Court of Appeal ruled that iwi might (sic) have a limited claim to interests in the foreshore and seabed. The Clark-Cullen Labour Government decided that legislation was needed rather than leaving the matter to the tortuous processes of the courts. Its preferred solution was blocked by a lack of parliamentary support. (National opted out; according to Chris Finlayson, the Key-English Attorney General, who was not in Parliament at that time, their thinking was muddled.) Labour depended on New Zealand First, whose support came, according to Michael Cullen, at a ‘heavy price’, including the loss of ‘a lot of high moral ground’.

Peters’ objection seems to have been that the original Labour proposal created a new legal principle to which, as a legal conservative, he objected. Ironically the New Zealand First shaped legislation led to the formation of the Māori Party (Te Pati Māori) – a nice example of very unintended consequences.

(Cullen thought that National’s replacement 2011 Takutai Moana Act (supervised by Finlayson) was closer to what Labour wanted in 2004 than what could be negotiated with New Zealand First. Even so, when that bill was passed, Labour voted against it. The Court of Appeal has just raised serious objections to the Takutai Moana Act which will have to be sorted out by the Luxon Government. Peters will be involved again.)

2017-2020: Minister of Foreign Affairs (and Deputy Prime Minister)

Ministry officials were so pleased to get back Peters after the harrowing experience of his predecessor, National’s Murray McCully (after a brief interregnum by Gerry Brownlee). Labour’s Nania Mahuta, who took over after him, was not liked as much either.

An authoritative history of the first term of the Ardern-led Government is yet to be published. I shan’t be surprised if it shows Peters’ experience was a key element in stabilising the new government which consisted largely of ministerial neophytes. However, on his account, there seems to have been a breakdown in consultation and trust by 2020, presumably as the parties headed towards the election. Will this pattern be repeated in the Luxon-led government from 2023?

In summary, generally Peters has been a reasonable but not outstanding minister showing very good political skills but mediocre policy ones.