Just the day before John Key announced that he was stepping down as Prime Minister, I wrote the article below and submitted it to the editor. The editor kindly gave me the opportunity to modify it in the light of his resignation. Actually, after thinking about the matter, I decided to alter nothing but a few of the verbs. Though it is customary to say lots of flattering things about those who have died, or even resigned, I didn’t want to change my essentially rather negative view of John Key’s legacy.
As we enter into another election year, it’s a good time to reflect on how the John Key-led Government performed for New Zealanders.
In some respects, the Government has performed well. Faced with the challenges of the Global Financial Crisis and the Christchurch earthquakes – followed now by the Kaikoura earthquakes – the Government has managed to steer the economy to economic growth which is very good by the standards of other developed countries; and now enjoys the happy prospect of having Budget surpluses for the next several years.
This gives the Government the option of cutting taxes, spending more on social services and infrastructure, and reducing government debt all at the same time. Most governments would give their eye teeth to be in that happy situation.
But in four important policy areas, I’d give the Government led by John Key a fail mark.
A few weeks ago, the Treasury produced their assessment of where the government’s debt would be if policy continued on its present track – and their conclusion was very sobering. Government debt is projected to exceed 200% of GDP by 2060 (compared with around 25% currently) if present policies continue. Why? Because with the ageing of the population, the fiscal cost of New Zealand Superannuation, healthcare and care for the aged is set to explode. Of course, policies will change before that disastrous level of debt is reached, but it is an indictment on the Key Government that it resolutely refused to warn the public that policy change will be needed. On the contrary, Mr Key insisted, for example, that there need be no change in the age at which people become eligible for New Zealand Superannuation, despite it being obvious to a blind dog that some increase in that age will be necessary as people live longer and longer.
Secondly, when Mr Key first became Prime Minister in 2008 he committed his Government to accelerate New Zealand’s per capita growth so that, over the 17 years to 2025, New Zealand living standards would catch up with those in Australia. But more than eight years later, Australian living standards are still about one-third higher than New Zealand living standards, as they were when the Government first came to office. Ultimately, what determines per capita incomes is productivity, and in recent years, labour productivity – the average amount produced per hour by people employed in the economy – grew more slowly in New Zealand than in all but three of the 34 countries in the OECD.
There are a variety of reasons for that poor performance. One of them is almost certainly the costly delays occasioned by the way the Resource Management Act operates. But though the National Party has recognized that since before it won office in 2008, it has lamentably failed to do anything more than tinker with that legislation in the years since.
Thirdly, another policy area where I have to give the Government a fail mark is in housing. Auckland now has some of the most unaffordable housing in the developed world, relative to incomes; and many other New Zealand cities, though not as badly off as Auckland, also suffer from ridiculously over-priced housing. This is having very serious social consequences in the short-term; and will have even more serious consequences in the longer-term as people who are now forced to rent reach retirement while still not owning a roof over their heads.
I’m not here arguing that the Government should have spent more on social housing, or on “affordable housing”. I’m arguing that the policy framework within which the housing market operates has produced a grossly distorted outcome for all housing. That’s a result of immigration policy, tax policy, land-zoning policy (though in the first instance that is a local government issue of course), the way in which the RMA has worked, and many other factors. The National Party was very conscious of this issue when they first became Government. Sadly, they have tinkered with the issue in the years since. And an additional consequence of this failure is that far too many people have assumed, rightly to date, that the best way to become very wealthy is not to acquire a skill, or to invest in a new export venture, or to invent a better way of doing something, but simply to buy land, preferably just before it is zoned for residential development. That distortion of incentives also carries a high cost.
Finally, the Government has been rewriting New Zealand’s constitution by legislating for special political rights for those with a Maori ancestor – hence the Independent Maori Statutory Board in Auckland; the writing into law that the Hawke’s Bay Regional Council, and now the Taranaki Regional Council, must include appointed tribal representatives to key committees; the proposal in the Bill to amend the RMA now before Parliament which would require all local governments to invite their local tribes into so-called “iwi participation agreements”; the clear intention to give tribes some special authority in the allocation of water, something traditionally the responsibility of local authorities; the failure to scrap separate Maori electorates (promised as part of National’s 2008 election campaign); the intention to ensure that half the members of the Hauraki Gulf Forum are appointed by tribes.
Most New Zealanders don’t quarrel with paying compensation where it can be reasonably established that some injustice was done to a tribe in the past. But more and more New Zealanders feel uneasy about the standard of proof required to establish that an injustice was done, and overwhelmingly New Zealanders reject the notion that those with a Maori ancestor should have some permanently superior political rights. When the so-called Maori king expresses the hope that, by 2025, Maori will be able to “share sovereignty” in New Zealand, one would have hoped that the Government would have told him that he already “shares sovereignty” with all other New Zealanders, in that he has a vote.
My overall assessment of the John Key-led Government? Could have done much better.
Copyright © 2024 Don Brash.