The Too Hard Basket | Brian Easton

<>Keywords: Environment & Resources; Distributional Economics; Macroeconomics & Money; Political Economy & History; Regulation & Taxation; Social Policy;

<>Every government has issues it hopes will go away. They don’t. Here are some for our one.

<>Our Emissions Trading Scheme is looking like a dog’s breakfast, and/or something the US Congress dredged up, and/or a policy designed in the Muldoon era. It is almost certainly inefficient and probably not contributing much either.

<>Water is abundant (sometimes too abundant) here, but in many countries, the surplus water supply is diminishing from increased use. Their aquifers are run down and their rivers are exhausted and polluted. We’ve known about this for 15 years, but we continue to waste the opportunity to enhance New Zealand’s comparative advantage in agriculture by introducing an efficient allocation of water. <>We need a housing and construction programme. There are as many as 110,000 leaky homes, plus public and commercial buildings; other buildings need earthquake-proofing; Christchurch has to be rebuilt; many houses built in the 1950s are nearing the end of their natural life. I’d ease back on the roading programme to make the resources available for giving us decent housing. <>The Pike River coalmine deaths, the Rena grounding, the PSA kiwifruit bacterium and the finance company collapses may have been private sector failures, but in each case the state sector failed to respond effectively. Does the public service lack capability only in these areas, but nowhere else? Shouldn’t we be trying to anticipate other areas before disasters happen, rather than waiting for commissions of inquiry to tell us where we failed? <>People used to think of poverty and inequality as just moral issues. They still are, but they also directly affect the health and welfare of the nation – of all of us. Inequality may even increase crime. Our inequality arises from (i) reducing taxes on high incomes relative to middle incomes; (ii) reducing levels and entitlements of social-security benefits; (iii) higher unemployment; (iv) increasing demands for skilled workers, without increasing the upskilling of the workforce (especially the young); (v) failing to address the financial burden of children on families. How many of these matters do you expect will be addressed by those on the ministerial committee (average salary more than $250,000)? Is there a less divisive way to make progress? <>There is too much youth unemployment; many are unemployed for too long; others are temporarily hidden in ineffective training courses. Our youth need a major upgrading of relevant skills. (Some could become builders – now that’s an idea.) <>Everyone, but everyone, knows the current age of entitlement for New Zealand Superannuation is unsustainable. A person (Maori or Pakeha) turning 65 in 1898 when the Old Age Pension was introduced could expect to live just over 10 more years. Today a 65-year-old can expect to live to 86 – perhaps longer. Too many people assume the problems won’t turn up until after they are dead. The good news is they are going to live long enough to be wrong. It’s the bad news, too. Add the challenges of caring for those who are frail or demented. We need a Royal Commission to collect the evidence and find a national consensus for a policy course. <>Our savings record is appalling. Did you know that in the past 10 years the country has borrowed almost $100 billion? Our total net capital formation was only $130 billion. In effect seven dollars in 10 of it was financed offshore. Do we really think that the national economy will grow without our funding most of our capital formation; that we can prevent our assets being sold off to overseas interests if we haven’t the means to own them ourselves? <>Did you know that the more we borrow overseas, the higher the exchange rate? That makes it harder for the export sector to grow and earn foreign exchange. Are you surprised the economy has not been doing well? <>This year the Global Long Recession will preoccupy government policy – as it should. But observe how much effort will be put into dealing with the trivial and irrelevant to avoid the contents of the too-hard basket. <>Listener: 21 January, 2012.

<>Keywords: Environment & Resources; Distributional Economics; Macroeconomics & Money; Political Economy & History; Regulation & Taxation; Social Policy;

<>Every government has issues it hopes will go away. They don’t. Here are some for our one.

<>Our Emissions Trading Scheme is looking like a dog’s breakfast, and/or something the US Congress dredged up, and/or a policy designed in the Muldoon era. It is almost certainly inefficient and probably not contributing much either.

<>Water is abundant (sometimes too abundant) here, but in many countries, the surplus water supply is diminishing from increased use. Their aquifers are run down and their rivers are exhausted and polluted. We’ve known about this for 15 years, but we continue to waste the opportunity to enhance New Zealand’s comparative advantage in agriculture by introducing an efficient allocation of water.

<>We need a housing and construction programme. There are as many as 110,000 leaky homes, plus public and commercial buildings; other buildings need earthquake-proofing; Christchurch has to be rebuilt; many houses built in the 1950s are nearing the end of their natural life. I’d ease back on the roading programme to make the resources available for giving us decent housing.

<>The Pike River coalmine deaths, the Rena grounding, the PSA kiwifruit bacterium and the finance company collapses may have been private sector failures, but in each case the state sector failed to respond effectively. Does the public service lack capability only in these areas, but nowhere else? Shouldn’t we be trying to anticipate other areas before disasters happen, rather than waiting for commissions of inquiry to tell us where we failed?

<>People used to think of poverty and inequality as just moral issues. They still are, but they also directly affect the health and welfare of the nation – of all of us. Inequality may even increase crime. Our inequality arises from (i) reducing taxes on high incomes relative to middle incomes; (ii) reducing levels and entitlements of social-security benefits; (iii) higher unemployment; (iv) increasing demands for skilled workers, without increasing the upskilling of the workforce (especially the young); (v) failing to address the financial burden of children on families. How many of these matters do you expect will be addressed by those on the ministerial committee (average salary more than $250,000)? Is there a less divisive way to make progress?

<>There is too much youth unemployment; many are unemployed for too long; others are temporarily hidden in ineffective training courses. Our youth need a major upgrading of relevant skills. (Some could become builders – now that’s an idea.)

<>Everyone, but everyone, knows the current age of entitlement for New Zealand Superannuation is unsustainable. A person (Maori or Pakeha) turning 65 in 1898 when the Old Age Pension was introduced could expect to live just over 10 more years. Today a 65-year-old can expect to live to 86 – perhaps longer. Too many people assume the problems won’t turn up until after they are dead. The good news is they are going to live long enough to be wrong. It’s the bad news, too. Add the challenges of caring for those who are frail or demented. We need a Royal Commission to collect the evidence and find a national consensus for a policy course.

<>Our savings record is appalling. Did you know that in the past 10 years the country has borrowed almost $100 billion? Our total net capital formation was only $130 billion. In effect seven dollars in 10 of it was financed offshore. Do we really think that the national economy will grow without our funding most of our capital formation; that we can prevent our assets being sold off to overseas interests if we haven’t the means to own them ourselves?

<>Did you know that the more we borrow overseas, the higher the exchange rate? That makes it harder for the export sector to grow and earn foreign exchange. Are you surprised the economy has not been doing well?

<>This year the Global Long Recession will preoccupy government policy – as it should. But observe how much effort will be put into dealing with the trivial and irrelevant to avoid the contents of the too-hard basket.