Further NZ reforms

Tyler Cowen at Marginal Revolution sets out six hypotheses on the future of reform in NZ. I’ll comment with my thoughts on each:

1. New Zealand reformed everything short of social welfare spending, education, and health care, which few voters wish or wished to reform. In fact the point of previous reforms was to preserve (and perhaps extend) previous levels of social welfare spending.

Social welfare reform is not in the too hard basket, and neither is education. There is public support for time limited benefits, work for the dole etc and centrist parties would also support change in this area.

Education reform is harder because of the teacher unions, but a change of Government will see a huge increase in the ability for parents and communities to run their schools, and for bad schools to not be propped up.

Health reform is near fatal until New Zealanders realise that if Labour can spend 50% more on health, get almost no increase in outcomes, and there is still a near bottomless demand for more, that one has to change the system. I don’t expect this to happen anytime soon.

2. Further reforms were thwarted by a move to proportional representation in the early 1990s, which gave minority parties undue influence and weakened threads of accountability.

This is a significant issue. However the small centrist parties do support education and welfare reform to various degrees. However further economic reform would be more difficult if reliant on them.

3. Asset privatizations in particular were oversold — remember the Auckland blackout? — and New Zealanders lost their appetite for further changes.

Aaarrgh that was not in any way related to privatisation. The issues with that company go back years and it was in fact in community ownership IIRC.

The major sale which turned NZers off asset sales was probably Telecom, as it retained the monopoly local loop and numbering plan etc and has used them to stymie most competition.

Asset sales can and have been popular. Even though one gets a bit less for the sale price, making sure a significant proportion of shares can be purchased by “mums and dads” sure Contact Energy sold off almost without significant opposition.

But due mainly to the Telecom experience NZers are react badly to the word privatisation. If you ask them whether the Government should really be owning hotel chains and the like again they will agree they shouldn’t, but they still react instinctively against more private ownership.

4. New Zealand policymakers were well ahead of public attitudes, and managed so many reforms only because the country’s (previous) Parliamentary system had few checks and balances. It is taking public opinion an entire generation to catch up to where policy stands. Only then might current reforms continue.

Certain aspects were ahead of public attitudes, but others were not. Free Trade is supported by all parties bar the Greens. In some areas like welfare reform the public have been ahead of the policy makers and wanted it tougher for much longer.

5. New Zealanders can once again sit content, since they are no longer in danger of being blown out of the water by Australia. If they start falling behind again, reforms will resume.

NZ is starting to fall again behind, and this will be a catalyst in years to come I predict.

6. Donald Brash will be elected Prime Minister in September, and reforms will resume then.

Certainly one will have welfare and educational reforms of some significance. Some further economic reforms, but not asset sales (bar a few farms being sold to you know farmers).

There are some good comments on Marginal Revolution blog itself which are worth a read. Anyone else got predictions (preferably not a hysterical reforms are evil and the public hate them rant)?

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