Dom Post on costing policies

January 29th, 2016 at 11:00 am by David Farrar

The Dom Post editorial:

The Greens’ idea of an independent agency to cost parties’ new policies is a good one, and the Government should take it up.

I agree.

Prime Minister John Key has been dismissive so far, but he should remember that it is his side of politics that typically claims superiority when it comes to financial literacy.

“Show me the money!” Key famously called to former Labour leader Phil Goff during a 2011 election debate. It was part of a broader charge that Labour had wildly underestimated the costs of its policies during that campaign.

Perhaps he was right and perhaps he wasn’t. But if there had been an independent authority to give its own take, voters needn’t have taken Key’s word for it.

The parties of the left tend to always dramatically under-estimate the cost of their policies. This is why National should support such an agency. It would mean we would have credible estimates of what their policies would cost, and voters would better understand how much more in taxes would be needed to fund them.

The Greens will have mixed motivations for announcing their sober new policy. It would be straightforwardly useful to the party, for one, by handing it more resources to propose feasible ideas.

It is true parties can pay to have their policies costed at the moment but this is not independent. Normally a party hires an ideologically sympathetic economics firm to cost the policies using the most favourable assumptions. Hence they tend to greatly under-estimate the true costs.

If one was to set up such an agency, one could help fund it by reducing the funding for parliamentary parties in recognition of the fact they would no longer have to pay for their own costings.

More sophisticated policy from the small parties would be nothing to lament; consider that at the last election, NZ First promised to wipe GST off all food, which it laughably said was “fully fundable” by cracking down on $7 billion in tax avoidance.

NZ First had such outlandish policies they were in fact impossible to cost. They’re more slogans than policies.

Where the Greens have it wrong is to suggest the agency be a unit of the Treasury. That is no recipe for a truly independent institution; its budget, staffing and priorities might easily be massaged into oblivion by a minister eager to avoid embarrassment, or a bureaucrat happy to help with the same.

It should either be an independent advisory body to Parliament, or else made part of an investigative agency such as Audit New Zealand.

I think it should be part of Parliament. It could come under The Parliamentary Service, as the Parliamentary Library does.

An excellent initiative from the Greens

January 27th, 2016 at 10:49 am by David Farrar

Metiria Turei announced:

The Green Party has announced a policy to bring more clarity into the political system today, in Co-leader Metiria Turei’s State of the Nation Speech.

Green Party Co-leader Metiria Turei proposed the formation of the Policy Costings Unit (PCU), which would operate independently to cost the policy of political parties.

“New Zealanders deserve more transparency from their politicians so that they can better engage in the political system,” said Mrs Turei.

“That’s why the Green Party is proposing the establishment of the PCU, to provide independent costings for the policies proposed by political parties.

“The PCU would be an independent unit within the Treasury and available to all parliamentary parties. It would help cut through the noise of political party promises and deliver New Zealanders unbiased information.

This is an excellent idea, and something I have long advocated.

Politicians often release uncosted policies that would require massive take hikes to fund.

It is because of this, that the Taxpayers Union spent a lot of money hiring a top economist to cost the policies of major parties at the last election. We called it a bribe-o-meter. We found that that in 2014 the cost of policies proposed was:

  • National $1.4 billion
  • Labour $5.81 billion
  • Greens $6.54 billion
  • NZ First – impossible o calculate

Since the election I have kept a running total of demands for more spending by politicians, media and lobby groups. Since the 2015 Budget there has been an extra $11.7 billion in new annual spending demanded. This would require a top tax rate pf 87%!

So an agency to cost parties policies is an excellent idea. It would allow parties to get expert advice on the cost of a proposed policy and the public to them understand how much their taxes will have to increase by, to fund those policies.

My only quibble is that I would have the agency attached to one of the parliamentary agencies, so it is like the Congressional Budget Office in the US. Having it in the Treasury may open the Treasury up to (even more) partisan attacks if a party doesn’t like the costing.

I’m staggered National has rejected this proposal. They should be supporting it strongly. It would be a welcome step towards greater fiscal transparency and a better informed voting public.

Government Investments

December 2nd, 2015 at 11:00 am by David Farrar

The Herald reports:

The Government has released detailed reports on the progress of its major investments for the first time, showing which projects are on track and which are at risk of blowing their budget.

The two reports published by the Treasury today are part of a drive to increase transparency in Government procurement and detect any potential cost overruns or delays at an early stage.

One of the reports provided a snapshot of $6.4 billion in Government spending over the next year on 409 projects, including ICT, new schools, defence and construction. These projects had a whole-of-life cost of $74 billion.

The report showed construction projects were the riskiest investments for the Government, while defence investments carried the least risk.

It assessed each project according to a five-level scale from green to red. Of the 409 investments, 237 were given a “green” status (on track), 39 were given an “amber” status (requiring attention) and five were given a “red” status (major problems). The remainder had not yet been assessed.

The projects which were classed as “red” made up 0.1 per cent of the $74 billion investment programme.

This is not sexy stuff, not is important. It is applying greater commercial disciplines to $74 billion of capital spending. Too often large projects only get attention when it it too late. This approach may help prevent another INCIS or Novopay.

UK spending cut predictions did not come true

November 28th, 2015 at 4:00 pm by David Farrar

Fraser Nelson writes in The Telegraph:

George Osborne could disband the Army, fire every diplomat, release every prisoner, discharge every policeman, axe the entire foreign aid budget – and still not be able to balance the books.

In NZ that would save $7.1 billion a year. We now have balanced books but at the height of the GFC and subsequent deficits the deficit hit $20 billion!

Councils certainly weren’t protected: their funding fell by 40 per cent. Many of their leaders predicted one long winter of discontent; the Mayor of Liverpool went so far as to predict riots in the streets. The leader of Birmingham City Council warned of “the end of local government as we know it”. They should have had more faith in their own staff. One of the greatest untold stories of the last few years is how councils have found new ways of delivering better services for far less money. The Local Government Association’s own polling has found that council taxpayers are just as satisfied as they were before the cuts.

Maybe NZ Local Government could learn from the UK.

The arts budget is down by a third, yet the calibre of theatre, galleries and musical performance in Britain has never been stronger – as the arts pages of this newspaper regularly attest. Government belt-tightening has not damaged British cultural life because so little of our culture depends on the government. The most important factor is the genius and creativity of playwrights, composers, musicians and poets — of which there is, happily, no shortage.

Yet Labour here complain that Radio NZ has not had any funding increase, and that this is crippling the country. They’re damn fortunate compared to their commercial counterparts who have had huge revenue drops.

Perhaps the greatest single surprise has been law and order. The Police Federation warned that the government would “destroy policing in this country for ever”. That was 10 years ago, when the spending boom was in full flow. Under Theresa May, the policing grant has fallen 20 per cent – yet surveyed crime is down by 30 per cent. As it turns out, the size of the police budget does not dictate criminality levels.

Spending and outcomes are not the same thing.

Another billion demanded

November 18th, 2015 at 9:00 am by David Farrar

The Hikoi for Homes has demanded $1 billion a year more for pubic housing.

This brings the total of extra spending demanded by politicians and lobby groups since the May Budget to $9.4 billion per year.

To fund these demands we would either have to move the top tax rate from 33% to 77% or increase GST from 15% to 24%.

And that’s just to cover six months of spending demands from the left.

I’m hoping their demands will exceed $14 billion before 12 months are up, at which stage the top tax rate would need to be 100% to fund their demands.

Five months of spending demands are more than actual increase of six years

October 23rd, 2015 at 7:00 am by David Farrar

I blogged last week how various lobby groups and political parties had made $8.4 billion of spending demands in the five months since the Budget.

Well by coincidence that is just about the level of actual increases over the last six years. So five months of demands (and I probably missed some) are at the same level of actual increases over six years.

2008/09 core crown expenses were $63.7 billion and in 2014/15 they were $72.3 billion.  An increase of $8.65 billion. That is less than just the last two years of Labour which saw spending go up $9.95 billion.

The reasons we are back into surplus is because of six years of fiscal restraint.

A $140,000 TV!

June 19th, 2015 at 12:00 pm by David Farrar

The Herald reports:

A whopping $140,000 has been spent on a new display screen for the reception of the Ministry of Business, Innovation and Employment’s central Wellington building.

The hefty price tag follows controversy over revelations this month that the ministry spent $70,000 of taxpayer money on a stone sign for the building entrance.

MBIE spent $140,747 on the display monitor – a cost Economic Development Minister Steven Joyce was “slacked off” about, Radio New Zealand reported.

Taxpayers would not be happy about the spend, he told the broadcaster.

“No, I don’t think they’ll be happy about this one, in the same way they weren’t happy about the sign, and, frankly, I’m not happy either, but I would like to verify the information before I make any further comment on it.”

Staggering – $140,000 for a large monitor. How can anyone think that was a good idea?

A $70,000 stone

June 4th, 2015 at 2:00 pm by David Farrar

Stuff reports:

The Government’s business super ministry has admitted its controversial sign outside its headquarters cost almost $70,000, about 50 per cent more than it previously claimed.

The culture in MBIE is obviously not right, if no one involved in the project of moving offices flagged that this was a wasteful idea.

On Tuesday, MBIE said the sign was designed to be in character with the historic building it uses for its headquarters.

Many cheaper ways to do that.

A spokeswoman said the sign “was a one-off cost in a relocation programme projected to achieve around $40 million-$50 million in public sector savings over 20 years”.

The savings come from a cut in the amount of office space used by the ministry.

It’s good money was saved elsewhere, but a saving in one area doesn’t justify extravagance in another.

Labour blames Govt for an NGO’s expenditure problems

May 19th, 2015 at 7:00 am by David Farrar

Grant Robertson has exclaimed:

The National Government has big questions to answer about how a provider of services to thousands of vulnerable New Zealanders is set to fold, Labour’s Finance spokesperson Grant Robertson says.

Relationships Aotearoa which provides support and counselling to families, individuals and survivors of domestic violence is set to shut its doors, minus any last minute intervention.

“There are thousands of vulnerable people and families who rely on Relationships Aotearoa for critical services. The government cannot leave them in the lurch.

“Like other non-governmental organisations, Relationships Aotearoa has been seriously underfunded in recent years. It has been asked to do more with less and the strain has clearly started to tell.

This is typical Labour. If an NGO has financial issues, then the answer is the taxpayer must throw more money at them. In the same breath they expect us to believe they would ever have lowered the deficit.

Let’s take a look at the latest accounts for this NGO:

  • Income of $9.8 million – mainly from the Government
  • Expenditure of $10.3 million
  • Central expenditure has doubled in one year from $984k to $1,957k
  • Equity of $1.5 million
  • Cash in bank of $3 million
  • Central salaries doubled from $551k to $1,065k

So the obvious conclusion from all this is it is all the fault of the Government – yeah right.

Does Labour ever find an issue, where the answer isn’t tax people more and spend more.

Why not stop funding all music videos?

March 16th, 2015 at 6:59 am by David Farrar

The Herald reports:

A researcher is calling for curbs on taxpayer funding of music videos that contain violence after his group found “high levels” of violence in the music videos shown on TV.

I don’t think the Government should choose which music videos are worthy of funding, or not funding.

Instead I don’t think taxpayers should fund any music videos at all.

IMF on expenditure rules

March 3rd, 2015 at 3:00 pm by David Farrar

An IMF paper looks at expenditure rules:

Our findings suggest that expenditure rules are associated with spending control, counter-cyclical fiscal policy, and improved fiscal discipline. We find that fiscal performance is better in countries where an expenditure rule exists. This appears to be related to the properties of expenditure rules as compliance rates are generally higher than with other types of rules (on the budget balance or debt, for example). In particular, we find that compliance with expenditure rules is higher if the expenditure target is directly under the control of the government and if the rule is not a mere political commitment, but enshrined in law or in a coalition agreement. 

So the most effective type of fiscal rule is a binding expenditure rule.

Evidence of adverse side effects is mixed. The introduction of expenditure rules is associated with a decrease in public investment only in emerging economies. A possible explanation is that any adverse effects on public investment could be mitigated in advanced economies by welldesigned budgetary frameworks and procedures. Instead, the empirical analysis points to two positive side effects. First, expenditure rules reduce the volatility of expenditure, thus imparting a degree of predictability to fiscal policy and making it less destabilizing. Second, expenditure rules are associated with higher public investment efficiency.

I’d love NZ to have an expenditure rule, such as restricting core crown expenditure to 25% of GDP over say a three year cycle or restricting the growth in expenditure to say 1% after taking account of population growth and inflation.

Expenditure rules are currently in place in 23 countries (11 in advanced and 12 in emerging economies)

So we would not be alone if we did this.

 

Another IT blow out

March 3rd, 2015 at 11:00 am by David Farrar

The Herald reports:

The cost of implementing a new child support system has rocketed to $163 million – a blowout that dwarfs the bill for fixing the controversial Novopay school payroll system.

The new figure has been described as “gobsmacking” by a former top Government executive who was in office when the cost was originally put at $30 million.

The child support reform affects 134,000 paying parents and 138,000 receiving parents. The $30 million estimate was issued in 2011.

But implementation has been delayed until April 1 this year, to allow Inland Revenue time to change its computer system.

Further amendments to the 2013 enabling legislation were introduced to Parliament last week to make more changes. These, if passed, will take the cost to $163 million – $133 million more than first budgeted.

Robin Oliver, former Deputy Commissioner of Inland Revenue, says this is “gobsmacking”.

“I baulked at the $30 million, so $163 million on IT costs and administrative costs for simply changing little bits of the [child support] formula around is an enormous sum of money to be spending.”

Staggering amounts.

Taxpayers’ Union director Jordan Williams said the child support blowout was the biggest since his group was formed in 2013.

“This dwarfs Novopay,” he said. “$163 million is an extraordinary cost, more than $100 for every New Zealand household.” The changes in the formula are in fact the biggest since the current child support system was created in 1991.

 

A formula change should not cost that much to implement.

Debt and spending

September 11th, 2014 at 4:00 pm by David Farrar

A reader asked if I could provide data on what spending increases have occurred under National and Labour, as Labour keeps blaming National for the increase in debt.

Considering that Labour have opposed basically every measure of spending restraint in the last six years, I’m amused they think attacking National for too much debt is a convincing strategy.

The reality is that Governments have relatively little control over how much revenue they’ll receive (short of major tax changes), but what they do control is spending. And the reality is once new spending is added on, it is very very difficult to get rid of.

So how much has spending increased in the last five years of National, and Labour before that.

expenses

In 2004 core crown expenses were $41.6 billion. Labour increased them by a massive 54% over just five years to $64 billion. Yes 54% increase in five years. This is from the party that claims they will keep to the same fiscal track as National!

From 2009 to 2014 (based on PREFU forecast) core crown expenses only rose a further 11.4%.

Do you think a party that increased spending by 54% in five years, will get NZ back into surplus? Even with all their extra taxes, I can’t see it happening.

$18 billion and rising

August 12th, 2014 at 4:00 pm by David Farrar

Steven Joyce points out:

Updated figures today show that Labour’s election-year spending spree is now up to almost $17.9 billion over four years – and counting, Associate Finance Minister Steven Joyce says.

“Labour’s own numbers show spending promises to date of $16.4 billion over four years,” Mr Joyce says.

“However, they have woefully underestimated the costs of introducing compulsory KiwiSaver, dismantling the electricity sector and paying a 12.5 per cent R&D tax credit.

“For example, Labour claims to be bringing 500,000 extra people into KiwiSaver from 1 October 2015, and would be paying them a tax credit that averages around $370 a year plus a $200 a year kick-start for the first five years. A simple calculation shows that the cost of this must be approaching $250 million in the first year, rather than $141 million as Labour is claiming.

“It’s interesting that Labour’s costing of exactly the same policy in 2011 was more than two-and-a-half times higher than it is now in 2014, so it  looks like they’ve cut a few corners this time around.”

Mr Joyce says when you put more realistic costs on these policies it takes Labour’s numbers to $17.9 billion over four years.

“More will be added to this bill as Labour makes more desperate promises – and that’s not counting the big spending of their prospective coalition partners the Greens,” Mr Joyce says.

Bye bye surplus, hello deficit it will be. Which means that Labour will have to keep increasing taxes.

The Ministry of Taxis

July 28th, 2014 at 1:00 pm by David Farrar

Stuff reports:

When it comes to walking the talk, it seems Ministry of Health staff would rather just take a cab.

Last year ministry staff took more than 1000 taxi rides for less than $10 – at the same time as officially advocating walking as a way to increase New Zealand’s low levels of physical activity.

In the 2012-13 financial year, staff based in Wellington charged taxpayers for 8645 taxi trips with 1076 of those for journeys costing less than $10. Another 1942 taxis were taken for $10 to $15.

The Star-Times took a $10 taxi in central Auckland to see how far it would take us. We travelled 1.7km. The return journey on foot, at a leisurely stroll, took just over 16 minutes.

That’s around four taxi trips a day of under $10. It is hard to get a fare for under $10. The initial cab hire and phone call is almost $5 so you won’t get to go much more than a km.

The Ministry of Health’s physical activity guidelines suggest people should be active every day in every way possible, doing at least 30 minutes of physical activity five days a week.

The ministry’s website says you should walk whenever you can. “Remember: Even small increases in physical activity can produce measurable health benefits,” the site says.

Do as we say, not as we do!

$760,000 to study religion!

October 30th, 2013 at 1:00 pm by David Farrar

The Dom Post reports:

A university professor who left the priesthood after a year has been awarded more than $760,000 of public money to study Kiwis’ spirituality and religious beliefs.

Joseph Bulbulia, of Victoria University, is one of 109 researchers who will receive a total of $59 million from the Marsden Fund over the next three years.

Professor Bulbulia said religion was “intensely important” to him, but “as for an afterlife, or God, I have no idea”.

I thought God and afterlife tended to be a fairly important part of religion!

Well except for Scientology, which is really a money making scam.

He migrated to Wellington from the United States in 2000, having left the priesthood earlier in his life and then had a daughter before he was married.

He hasn’t been to church for 20 years, other than to please his mother, but said research showed that some events, such as the Christchurch earthquakes, renewed people’s religious beliefs.

Do we need to spend $760,000 to research this?

The full list of Marsden Awards is here. The grant for a study of religious belief is one of the largest, which surprises me. Many of the other grants involve physical science which tends to be far more costly. Some of the more useful physical science ones include:

  • Does the southern edge of the Hikurangi Plateau control Otago tectonics?
  • Unraveling the magmatic processes responsible for phonolitic volcanism using the Mount Erebus lava lake and magmatic system
  • Reconstructing complex ground motion effects in Christchurch during the Canterbury earthquakes: what does this mean for future ground motion prediction?
  • Does investment into seed dispersal alter with plant height and island size?
  • UV-B radiation as a master regulator of photosynthetic performance and leaf organ development in sunlight
  • Improving radiotherapy outcomes: Chain release of drugs to kill refractory cancer cells and inhibit metastatic spread

All of the above awards (except the cancer one) are for less than the religion one. Other fairly dubious ones include:

  • The Crown: Perspectives on a Contested Symbol and its Constitutional Significance in New Zealand and the Commonwealth $604,000
  • Territorial Disputes and Civil Society in Northeast Asian Democracies

University staff can and do research in all sorts of varied areas, as is their right with academic freedom. But I would have thought with a relatively small pool of contestable grants for research beyond the normal, they would be prioritized towards things of more direct relevance for New Zealand.

Regional spending

October 9th, 2013 at 1:00 pm by David Farrar

spending

 

This table comes from a just released Regional expenditure report by the Government.

What is interesting is that less spending by the Government occurs in Auckland than their share of the population. Wellington gets proportionally more direct Government spend, but apart from that most of the country is pretty proportional.

Real fiscal restraint

May 18th, 2013 at 12:00 pm by David Farrar

Issue 17 2013 graph

 

This graph from the NZ Initiative is an insightful one. It shows the massive increase in real spending per capita up until 2009 and the fiscal restraint that has occurred since then.

Imagine if the growth from 2002 to 2009 had continued? Wed be approaching Greece.

Science funding grows

May 2nd, 2013 at 12:00 pm by David Farrar

Stuff reports:

The Government has announced a multimillion dollar investment into science and innovation to help combat the biggest science challenges facing New Zealand.

At the Auckland War Memorial Museum today Prime Minister John Key announced an extra $73.5 million in funding for the science and innovation sector.

It brought the total funding to $133.5m over four years for Budget 2013.

Key said the funding put science at the heart of much of the Government’s thinking.

Science and Innovation Minister Steven Joyce said the funding would go towards 10 “challenges” that scientist could tackle.

These included research around helping New Zealanders’ health at the beginning and end of their lives, research into natural disasters, helping promote and protect the country’s biodiversity including its marine reserve, and the southern ocean.

The advisory panel, led by chief science advisor Sir Peter Gluckman, received 200 submissions on the challenges.

Joyce said not all challenges would be solved overnight but some had refined research areas.

I quite like the idea of funding for some specific challenges or goals.

It appears the Government is on track to be back into surplus for 2014/15. They have stopped the previous runaway growth in spending across the board – but allowed some increases in a few key areas such as science, tourism and hospitals.

The 10 national science challenges announced today are:

+ Ageing well – harnessing science to sustain health and wellbeing into the later years of life;

+ A better start – improving the potential of young New Zealanders to have a healthy and successful life;

+ Healthier lives – research to reduce the burden of major New Zealand health problems;

+ High-value nutrition – developing high-value foods with validated health benefits;

+ New Zealand’s biological heritage – protecting and managing our biodiversity, improving our biosecurity, and enhancing our resilience to harmful organisms;

+ Our land and water – research to enhance primary-sector production and productivity while maintaining and improving our land and water quality for future generations;

+ Life in a changing ocean – understanding how we can exploit our marine resources within environmental and biological constraints;

+ The deep south – understanding the role of the Antarctic and the Southern Ocean in determining our climate and our future environment;

+ Science for technological innovation – enhancing the capacity of New Zealand to use physical and engineering sciences for economic growth;

+ Resilience to nature’s challenges – research into enhancing our resilience to natural disasters.

 

NZ Herald on private sector

January 11th, 2013 at 1:01 pm by David Farrar

The NZ Herald editorial:

An economy does not work very well, many countries have found, if every worthy service is financed from taxation and none need to put some of their energy into raising independent sustenance. Many a worthy service is provided from the private sector for a profit. But some of those that cannot carry a charge and make profits can offer value to commercial sponsors and capitalise in other ways on their popular appeal, and it is economically healthy that they should rely on those sources as far as possible.

The misconception that any good and essential service deserves a government grant is not confined to those who are not seeking a profit. Commercial firms are no less susceptible to government hand-outs and no less reluctant to present a case for them.

A mixed economy prospers when as many as possible of its goods and services are financed by voluntary trade and the proceeds of taxation are reserved for those that are essential and could not otherwise survive.

Absolutely. I’ll happily donate money to good causes, so they need less taxpayer funding. We have a wonderful volunteer ethos in New Zealand.

The rescue helicopter gives good value to its name-sponsor, Westpac bank, and its well-publicised work is guaranteed to elicit a good response to any appeal for public donations. The same is true of the Starship children’s hospital and of some prestigious state schools that can command high parental donations. Consequent reductions in their public grants are socially and economically justifiable.

Far from complaining that they are being penalised for success, the fortunate should be quietly proud of their reduced dependence on public money. They should be praised and celebrated for the proof of value that voluntary finance provides, and for the public money their fund-raising success has left in the purse for the less fortunate.

I just hope the Herald remembers their own editorial when there is some controversy over government funding!

State property costs

November 23rd, 2012 at 10:00 am by David Farrar

Jonathan Coleman announced:

State Services Minister Dr Jonathan Coleman says a new Public Service property strategy is likely to reduce the office space foot print in Wellington by the equivalent of three Reserve Bank buildings.

Dr Coleman says Cabinet has approved the start of a centralised negotiation for future public service office space in the capital with accommodation leases due to expire for five large government agencies.

The leases due to expire include the Ministries of Social Development, Health, Education and Business Innovation and Employment, and the Crown Law Office.

The Property Management Centre of Expertise based within the Ministry of Social Development has been delegated to lead the negotiation for the accommodation needs. …

A business case presented to Cabinet indicated a reduction of the office footprint in Wellington of 30 per cent will save $338 million over 20 years, which is a 20 per cent reduction in cost compared with the status quo baseline.

Sounds good to me. If that achieve that, there are benefits beyond the direct savings. The ever increasing size of the public sector in the 2000s saw office rental costs in Wellington CBD skyrocket. This imposed significant costs on private businesses. Having reduced demand from the public sector should see smaller increases in rental prices for commercial tenants.

Can we do this in NZ please

September 11th, 2012 at 10:00 am by David Farrar

The Brisbane Times reports:

 A national public health body has slammed the Newman government’s “gag order” on community organisations, saying it will strip service providers of one of their vital roles.

Queensland Health grant contracts now included clauses preventing non-government organisations advocating for state and federal legislative change, a spokesman for Minister Lawrence Springborg confirmed last night.

“We’re making it clear that we want to fund outcomes but not advocacy,” the spokesman said.

We badly need this in NZ. I’m all for funding of public health groups that provide actual public health services. But we spend tens of millions of dollars on groups that take the money and use it to lobby MPs on what the law should be. It is quite wrong that bureaucrats hand out money to lobby groups, to try and dictate policy to MPs.

There is nothing wrong with a taxpayer funded health group doing select committee submissions and the like. But some health groups are 95% taxpayer funded and as far as I can tell spend 95% of their resources on lobbying activities.

The Newman government raised concerns about advocacy when it announced in May that it was stripping about $2.5 million from the Queensland Association for Healthy Communities, which Queensland Health had previously funded to target HIV/AIDS prevention among gay men.

The group, which has a focus on lesbian, gay, bisexual and transgender health, spoke up in favour of the former Bligh government’s civil union legislation and has recently criticised the Newman government’s plans to ban same-sex couples from having a child through surrogacy.

In an interview to mark his 100th day in office in July, Mr Newman argued the organisation had not improved HIV rates “and they had become an advocacy group [and] we’re not going to fund advocacy groups”.

That’s a good example. I personally favour same sex marriage and adoption. But I don’t think taxpayer funded NGOs should be campaigning for them. I’m not saying that has happened in NZ, just using the Queensland example.

A bill banning funding of NGOs that are greater than say 25% lobbying activity would be an excellent bill for a backbench National MP.

$300m saved

August 9th, 2012 at 7:00 am by David Farrar

David Fisher at NZ Herald reported:

John Ivil is the $300 million man – that’s the amount of money he and his team of public servants have saved the taxpayer in two years.

The former army logistics officer heads a team of negotiators who have turned the Government’s approach to spending money on its head.

Government departments have always taken an individual approach to buying goods and services, with $30 billion spent by agencies, hospitals, local councils and schools.

Public servants need cars, flights and office supplies, and each agency will head out into the market to try to strike the best deal with taxpayer money.

Now Mr Ivil and his team of 30 people at the Ministry of Business, Innovation and Employment promote the Government as the “customer of choice”, using the combined purchasing power to drive costs down and secure discounts.

Instead of Government departments going looking for the best deal, they now have the best deal looking for them.

Mr Ivil said his team had made $293 million in savings over the life of contracts secured so far (five to seven years).

Good stuff. Some people think that you can not save money in government without cutting services, but this is a good example that you can.

CIS on think-tank funding

July 3rd, 2012 at 2:00 pm by David Farrar

Andrew Baker from CIS writes:

 One of government’s favourite ways to solve a problem is to throw money at it.  But what if the problem is a think tank or public policy institute?  The true value of a think tank is that they can say what they think – whether to the benefit or detriment to the government of the day.  When the government starts throwing money at think tanks, there is a real danger that they undermine their capacity to critique the government effectively and make a positive contribution to civil society.

I agree.

Unlike the CIS, many think tanks and university-aligned public policy institutes receive financial assistance from the Government.  This often takes the form of endowments, donations, corporate memberships or grants.  The latest example is the Gillard government’s $7 million contribution to refurbish the building that will house the Labor-aligned Whitlam Institute, the Whitlam Prime Ministerial Library and an art gallery.

Other examples include a $112 million contribution towards the Australian National Institute for Public Policy in 2010; the $30 million that the Brumby and Rudd governments gave to establish the Melbourne based Grattan Institute; the Centre for Social Impact’s $12.5 million endowment; the $7 million for the University of South Australia to establish the International Centre for Muslim and non-Muslim Understanding ‘under the leadership of former Prime Minister, the Hon Bob Hawke AC’; and the Howard Government’s $25 million endowment of the United States Studies Centre at the University of Sydney.

That is a huge amount of money being spent.

recent report by the Institute of Economic Affairs in the UK illustrated this point well when it found that thousands of politically active charities only survived because of taxpayer support.  Government intervention in the marketplace of ideas distorts public debate and the organic growth of civil society.  Allowing ‘zombie’ ideas without popular private support to live on long after they are declared dead by the marketplace is not in the public interest.

For the last 36 years the CIS has relied on philanthropy, private donations and individual memberships to fund our research and advocacy for small government and free markets. This makes the CIS more productive and efficient, and we are more able to say what we think is right than similar organisations that take taxpayer money.  Only without financial assistance from the government can a think tank be truly independent.

It is staggering how many lobby groups are effectively funded by the Government.

More taxpayer funded lobbying

June 26th, 2012 at 10:00 am by David Farrar

Last month I blogged on taxpayer funded lobbying. This should be of grave concern, because what it means is effectively you have Government Departments funding NGOs to lobby MPs on what the law should be.

I had a response from the Public Health Association, which was:

Hi David, We would like to respond briefly to your 14 May post about taxpayers funding lobbying. The Public Health Association (PHA) acknowledges you have a valid concern and would like to make it clear that none of the public money we receive is spent on lobbying or advocacy. It is part of our contract with the Ministry not to do so. Any lobbying we do is funded by membership fees, individual donations and fund-raising. Money we receive from the Ministry is spent only on activities such as supporting the public health workforce.

The reality though I believe is that if the vast majority of your expenses are staff, then there is no way you can say that no public money is spent on lobbying.

Now I do not advocate that a body which receives some taxpayer funding should not be allowed to express a view on issues. That would be wrong. But when a body is both primarily funded by the taxpayer, and the bulk of its work appears to be advocacy and lobbying – that is when I think it should not be allowed.

The PHA openly states “The PHA is a voluntary association that takes a leading role in promoting public health and influencing public policy.”, and over 50% of their income is from the Ministry of Health. Most of the remainder is their conference which is I believe 90% public sector funded. Actual voluntary membership fees are only 5% of their income.

I’ve also been sent examples in the alcohol area. An OIA from the Ministry of Health reveals taxpayer funding of Alcohol Healthwatch with $3.35m, the vast majority for “alcohol health promotion”.

Have a look at their website. It is all about lobbying MPs on the Alcohol Reform Bill.

The Health Sponsorship Council has a presentation on their website from ASH. Slide 16 is about how they must “Hold the Government to account”.  ASH is 89% taxpayer funded, and was saying this at a taxpayer funded conference.

This outbreak of taxpayer funded lobbying is not unique to New Zealand. The Institute of Economic Affairs in the UK has published a report called “Sock Puppets: How the Government lobbies itself and why“. It is a compelling read. They note:

For political parties, the benefits of supporting ‘sock puppet’ organisations extend beyond the short-term utility of progressing their legislative agenda whilst in government. Once the party loses power, these groups become a ‘shadow state’ using public money to promote the same political ideology. The new government must therefore choose between withdrawing the funding (which will prompt outrage from the threatened groups) and keeping it in place (which will mean funding politically hostile organisations).

I think the Government should apply a simple litmus test. No organisation which spends say more than 25% of their time or resources or lobbying should be eligible for government funding. They should be forced to split into totally separate organisations if they provide genuinely useful services which should remain funded, but this should not be used to have the bureaucracy use sock puppets to lobby Parliament and MPs on what the laws should be.

Lobby groups should be funded by their members and supporters, not by taxpayers.