Scoop Election 08: edited by Gordon Campbell

Treasury and the Don Brash revival

July 22nd, 2009

zombie don brash

People are just so suspicious. When you have Treasury touting the virtues of contracting out public services and Don Brash – clearly, our best and brightest lateral thinker – being entrusted with the job of lifting our productivity game, then some cynics are getting a nasty feeling that this is all a dream we’ve had before, and that it ended badly. Why, some cynics even feel these moves are more about right wing political correctness than any workable plan to get us out of recession. For shame! Finance Minister Bill English is very, very disappointed in us.

Well, colour me skeptical. Brash wants to know why New Zealand wages are lagging behind those in Australia. How likely is it – do you think – that he will consider even part of this gap goes back to the industrial legislation passed in the 90s, the express purpose of which was to drive down wages, for the short term benefit of New Zealand employers? Isn’t it kind of ridiculous that the same Nationa Party that deliberately set out to cut wages in the 90s, is now throwing taxpayer money on a commission to find out why our wages are now so much lower than in Australia? Keep in mind that Brash is getting this cushy sinecure in the same week that the rest of are being told to batten down the hatches and tighten our belts.

Is Brash likely to sheet home our low productivity levels to the past failure by the likes of Telecom and the various owners of NZ Rail to do much more than asset strip their New Zealand operations? Has the readiness of business to piss away its profits in dividends and repatriated profits ( rather than make capital investments) got anything to do with our low productivity rates? What Brash and his mates in National and Labour did was create an economy where the few could extract monopoly or near monopoly rents from a captive population of consumers. Is that process likely to be critically examined by our new productivity police?

Moving right along….is business likely to be blamed for its failure to make capital investment in the new technology basic to any genuine and sustainable lift in our productivity levels? Is Brash likely to berate the private sector for its failure to invest in r&d, and for its ongoing parasitical reliance on the government to carry out r& d in this country – as underlined by the scrapping of the Fast Forward Fund. Is Brash likely to condemn the investment flows out of New Zealand, and the contribution this makes to our current account deficit?

I think we know the answer to all of these questions. Treasury and Brash are blinkered ideologues, and always have been. Yes, substantive problems are facing this country, The books are in terrible shape, and the tax revenues to fund public services are in steep decline. That only makes it all the more unfortunate that the government is coming up with the same tired Treasury prescriptions and the same tired old faces to spearhead its response. Would that we had a swine flu vaccine that was as immune to real world outcomes as Don Brash, and the captains at Treasury.

In other words, if English wants these moves to be taken seriously and discussed on their merits, he could start by convening a genuine multi-party, multi-ideology response to the economic crisis. Lets get the Brian Eastons and Susan St Johns and Kel Sandersons in there around the table as well. National’s ongoing failure to support an inquiry into the banks – in the same week that it is letting loose the dogs on the public service – shows just how narrow the current agenda really is. It is the same old ideological campaign against Big Government, with the recession being used as the latest convenient excuse. Memo : it wasn’t Big Government that caused this recession. It was the unregulated private sector.

Treasury you might have thought, could have had some views on how – during a recession – a menu of job cuts and contracting out is likely to impact on the regional and national economy. Is it a good idea or a bad idea to argue for deflationary policies when we are trying to keep the economy from seizing up? Just asking. Just looking for some coherent, co-ordinated plan for economic recovery. What we got instead from John Key in his speech a week ago was public relations fluff – work harder, keep on doing what we’re doing only smarter somehow, and oh yes, rely on primary industry and tourism to get us out of this hole. Yeah, that’ll get us back up the OECD ladder. The OECD is just full of examples of thriving modern economies reliant on agriculture and tourism.

If, as appears to be the case, the government hasn’t a clue about how to proceed, then I suppose its little wonder they are falling back on their old mantras – privatize, contract out, and attack the public service bureaucracy. As many have noted,. Treasury is hardly taking its share of the burden. It is getting nearly a ten per cent boost to its budget this year, at a time when other departments – including those that are at the frontlines of service delivery – are facing cuts of five to ten per cent.

Minor, but relevant issue : as Labour MP Grant Robertson pointed out, if there really is a problem with public service performance and delivery, why isn’t the call to arms coming from the State Services Commissioner, rather than from the head of Treasury? What gives Treasury the right to think that it is part of the solution, rather than part of the problem? Answer : it may have something to do with ideological correctness, and a desire to impress its political masters.

Treasury after all, is not exactly the best placed body – in a practice what you preach sense – to be chiding others on how to lift their game. As many commentators have noted, the process should begin with Treasury being required to contract out its forecasting work. For years and years, Treasury has been notably more inaccurate than the competition – it miscalculated the likely tax revenue for instance, for six years in succession. Treasury boss John Whitehead must know this. He has been in his current post since 2003, and thus bears ultimate responsibility for his department’s forecasting track record. No sign of a mea culpa in his speech, though.

Treasury should also be willing to open up its policy advice to competition. (On a range of economic issues that affect exporters, the government would be doing much better to contract with Berl for policy advice. Why not ask the exporters who they think is on the right track about interest rates and the exchange rate – Berl or Treasury?) In coming days, there will be a lot of discussion as to whether the alleged cap on the public service still remains – and if so, whether that pertains to the core public service or to state service entities etc etc.

While important, these really are details. The overall process is being driven by ideology – one that is a proven failure, to boot – and not by any rational long term plan. More and more the public service is looking like a Guantanamo detainee. Beaten, ritually humiliated, forced to confess to the sins imagined by its captors and kept in limbo about when this process will end, and what purpose and plan its masters really have in mind, if any. Basically, we’re all in Gitmo, now.

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    1. 11 Responses to “Treasury and the Don Brash revival”

    2. By sue on Jul 22, 2009 | Reply

      i will never understand why don brash needed money raised by the national party hacks goudie and foreman for his clothing during his election campaign, i would have thought a successful business man like him would have had an adequate wardrobe? if a man cant manage his own clothing needs how can he be trusted to manage anything on behalf of nzers?

    3. By VCD on Jul 22, 2009 | Reply

      Productivity?
      Or does rash Brash really mean keep up with Australia’s debt production?
      Did anyone bother pointing out to Brash (during his latest privatization promo popout) that Australia is not New Zealand .
      I don’t think we should be looking at Australia as the ‘Jones’ .

      I wonder what mars looks like this time of year?
      I should ask Brash as currently he seems to be actively taking part in Australia’s space program .

    4. By BOBBY on Jul 22, 2009 | Reply

      LOOKS LIKE ANOTHER ROUND OF HOLLOW MEN IS UPON US …….AND WHO THE HELL IS FRANK.

    5. By paul bieleski on Jul 22, 2009 | Reply

      When asked on Morning Report, Brash could not say what the measure of “productivity” was! All the people who I have heard talk about “productivity” dont seem to me to be in the slightest, productive. Is it just not a word to beat other people with to make them feal bad!

    6. By Clarke on Jul 22, 2009 | Reply

      Oh I don’t know … I’m quite content with the idea that Brash got appointed to this gig. At least it removes any pretense that there will be objective assessment of the facts, input from other points of view, or careful weighing of the different approaches. The outcome is obvious from the get-go, so we won’t have to waste any time on making submissions, listening to the pontifications or paying attention to the outcomes.

      Say what you like about Brash, at least he’s easy to ignore.

    7. By Dr Strangeglove on Jul 22, 2009 | Reply

      Mr Magoo I thought I was exceedingly polite regarding Banal Brash.

    8. By VCD on Jul 22, 2009 | Reply

      Mr Finkelstein -so these pretenses don’t bother you.
      Would anything that KeyS and his lot do bother you?
      If KeyS pooped on your shoe would you tell him ‘what a smashing choice of location’.

      You are much better than I at ignoring central bankers waving their smelly little pretenses.

    9. By Jade on Jul 23, 2009 | Reply

      On all the big environmental and economic issues facing NZ, this government is proposing weak and ineffective (non)-solutions. It is making itself irrelevant.

    10. By stuart munro on Jul 23, 2009 | Reply

      The limus test of any democracy is not the degree to which it adheres to its self-created constitutional documents, but how well it responds to the needs and legitimate aspirations of its people.
      A government like John Key’s, a corrupt vehicle for an unsavoury selection of secretive or offshore commercial interests, is the kind that properly has citizens building tumbrels in their backyards, and a scaffold on the steps of parliament.

    11. By Rob on Jul 31, 2009 | Reply

      A good summary of the position Gordon
      English regards himself as something of an intellectual but to used a borrowed man like Brash is a major worry. Also the treasuary perspective has always mirrored the ultra right and English did start of there.
      The world doesn’t owe us a living and those from the right have always been into making a buck rather than making a future! That is why our dairy farmers are now in the shit, they have paid far too much for land and the servicing of the debt for that rather than ensuring their product is commanding the world market. Lets face it they did a major cock up in China just like Myers with NZ breweries.
      If we cannot have a controlling interest in the ultimate sale of our product we will always fail despite producing the worlds best food products.
      Our wine is an example, a bottle of London bottled Tesco Sav Blanc will soon convince anyone, as it undermines our real qualty product that doesn’t have an appellation or reliable quality assuarance that it isn’t mixed with grape juice from Czech Republic or anywhere else!!

    12. By peasantpete on Aug 2, 2009 | Reply

      English is an ex treasury policy wonk.

      Treasury has been for many decades an incubator of economic ideologues.

      Brash is right at home with this lot.

      (Sigh) talk about “Back to the future” (or “Ground Hog Day”)

      All we need is a feminine perspective. I suggest Ruth Richardson, Jenny Shipley, Michelle Boag as likely starters to add a feminine perspective.

      I am sure John Key would be relaxed about any of them helping Don.

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