A good critique

writes:

New Zealand has fallen to levels last seen during the Global Financial Crisis.

While the magnitude of the decline is hard to explain, as economic conditions are clearly far better than during the GFC period, the direction is far easier to understand.

Some commentators have blamed the decline on businesses not getting the Government they expected or wanted.

I think that is far too simplistic and what we are seeing is that businesses are growing increasingly concerned about the coalition Government’s lack of clear strategy and poor execution of policy. We are clearly experiencing management by an unwieldy committee.

New Zealand has been blessed for much of the last two decades, under both Clark and Key, for having political leaders who were more pragmatic and less ideologically driven than the current lot. Remembering that financial resources are scarce and that expenditure needs to be prioritised, let’s look at coalition execution around a number of policies.

Policy: Free tertiary education

Cost:

$1.5 billion over 3 years

Execution:

Who knew that this was one of the most pressing issues facing New Zealand but the Coalition government clearly decided it was and announced $1.5b of funding straight after the election.

Why students should receive this funding ahead of people going straight into the workforce or a trade or ahead of entrepreneurs setting up their own businesses has never been explained. A further weakness is that it initially applies to the first year of university not the last so that many unsuitable people will attend and have a go at the taxpayers’ expense. And being a universal benefit people receive it whether they need it or not, so even the children of New Zealand’s wealthiest families get a taxpayer subsidy. Targeted assistance would have been far more effective.

Policy: Support for overseas embassies and the Pacific

Cost:

$1b over 4 years

Execution: 
Clearly a sop to Winston Peters, it was unusual to see this expenditure prioritised above much-needed pay increases for teachers, nurses, and police.

Policy: Labour market reform

Cost:

Unknown, but will be substantial to business and employment

Execution: 
Simply dreadful. Andrew Little is a cloth-cap unionist who is still fighting a war that ended decades ago.

The biggest challenge facing most businesses is a shortage of skilled staff but these reforms, particularly changes to the 90-day rule and union rights to enter workplaces represent a triumph of ideology over pragmatism.

The 90-day rule was a huge success and resulted in many marginal people being able to enter the workforce and prove themselves. Labour laws are already skewed towards employees – just look at the steady stream of nonsensical decisions that flow out of the Employment Court.

Policy: KiwiBuild

Cost: $2b and rising

Execution:

There is no doubt that we have a housing crisis with affordability being the key issue. Government policies relating to restricting sales to non-residents, extending the bright-line test to 5 years and removing the tax deductibility of negative gearing are all sensible and long overdue.

The lottery system of KiwiBuild, however, is one of the more poorly thought out policies in recent times. Those who win the ballot will be able to sell their property after three years and keep the taxpayer subsidised profits.

Those who don’t get picked out of the barrel, who have equal needs, get nothing.

So billions of dollars basically wasted.

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