The lack of interest in the public interest

Dr Bryce Wilkinson
The National Business Review
29 June, 2018

Late last month Housing New Zealand was widely condemned for being overzealous about amphetamine contamination.

A report by the chief scientist had concluded that tenants were being evicted and state houses de-contaminated when there was no clear scientific evidence of a threat to human health.

Some media articles asked how this could happen.  How could perhaps $100 million be spent, people evicted and houses left vacant by Housing New Zealand alone for no good reason?

Having studied the analytical basis for government spending and regulatory decisions for several decades now, I wonder instead how people could expect it not to happen – again and again and again.

When the electorate rewards governments merely for ‘doing something’ that looks at best well-intentioned, recurring waste on a grand scale must be expected.

As I see it, the essence of the problem is that governments are under relentless pressure in the media to spend and regulate more on whatever is newsworthy, regardless of the cost.  Self-serving lobbying by vested interests and influential political constituencies is an additional and more ceaseless factor.

Non-partisan assessments
Nothing currently forces the government, or parliament, to provide the public with timely, competent, non-partisan assessments of the likely net benefits for affected New Zealanders.

This would matter less if the public pressures were soundly based. But commonly they are not.  Calamities, such as the Pike River deaths, generate an emotional clamour for government to “do something”.  Fears and prejudices about big business, trade unions, foreigners, gang violence, drugs or whatever are another emotional driver.

This year I had occasion to examine most of the regulatory impact statements used to government bills since the 2017 general election.  Hardly any made a cogent case that the benefits for New Zealanders could be expected to exceed the costs.

Currently, laudable aspirations seem to be reason enough to justify a policy.  For example, the government has not demonstrated that banning overseas persons from buying houses will materially house more New Zealanders.  Houses are too costly because regulation has been made land artificially scarce.  Foreigners are not to blame for that. 

The ban on further offshore oil and gas exploration is another example of a policy without a competent accompanying assessment of benefits and costs for New Zealanders.

Occupational health, safety and environmental regulation seems to be particularly immune from any serious need to weigh up benefits and costs to New Zealanders. Tail Risk Economics estimated in 2014 that the earthquake strengthening code could cost New Zealanders over $10 billion for a benefit of less than $100 million.  A New Zealand Initiative report calculated that scaffolding regulation could be saving only about 1/3rd of the lives that could be saved by spending the same money on road safety. The Taxpayers Union is repeatedly documenting cases of ill-justified spending and regulation.

The reason for the lack of any serious, systematic government interest in New Zealanders’ welfare in the ‘first 100 days” case is obvious. New Zealand First conferred the mandate to govern on the Labour Party in return for certain concessions.  The Green Party did likewise. Having reached agreement on the immediate policy agenda, why put it to a public interest cost-benefit test that might prove embarrassing? 

Of course, this is not a criticism of any of these parties; it is MMP working as intended.  The electorate no longer determines who will form the government. Coalition formation is now a deal done behind closed doors.

Tweaking the system
It is not hard to conceive tweaks to the checks and balances on government policy actions that would produce better-informed public debate about their merits for New Zealanders’ well-being.

Ministers would produce competent non-partisan assessments of the net benefits of their policies for New Zealanders if parliament could oblige them to do so.

The 2009 Regulatory Responsibility Taskforce proposed a very modest tweak to the checks and balances on government regulatory impulses. The tweak was to adopt the UK practice that allows its courts to find that a government law or regulation was incompatible with enumerated legal and constitutional principles. The offending measure would remain in place. This declaration would be like a public slap with a wet bus ticket.  Stronger remedies could be contemplated.

Spending and taxation proposals are more political than legal. In 2004 I proposed a measure that would give the electorate a direct say in such matters. It would have allowed the electorate to reject an expansive proposal by direct referendum, should a majority so decide.

Independently, Sir Geoffrey Palmer and Andrew Butler have been promoting constitutional changes aimed in good part at preventing “governments from abusing power”.

More recently, The New Zealand Initiative proposed a fiscal council.  It would be a parliamentary body rather than a government agency. It could commission non-partisan assessments of government policy proposals. Those assessments could help inform public debate, select committees and parliament itself.

The design of the government’s mooted fiscal council may be a small opportunity to do better.

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