Wednesday 18 January 2017

Is "Social Investment" Bill English's "Think Big"?

Think Big Data: In many ways Muldoon’s Think Big and Bill English’s Social Investment policies are alike. Both feature ideas more associated with the left than the right, and both, if sensibly implemented, could be of immense benefit to New Zealand. Unfortunately for Muldoon and, almost certainly, for English, the essentially left-wing character of the programmes they are advocating makes it practically impossible for the National Party to implement them in a sensible fashion.
“SOCIAL INVESTMENT”, as promoted by Prime Minister, Bill English, is one of those policies that can make or break political parties. “Social Security”, for example, was the policy principally responsible for lifting the Labour Party’s share of the popular vote from 46.1 percent in 1935 to 55.8 percent in 1938. The “Cradle to Grave” welfare state it established kept Labour in office until 1949 and remained the foundation of New Zealand social policy for the next 50 years.
By contrast, National’s “Think Big” economic development programme of the late-1970s and early-1980s, very rapidly turned into an albatross around the neck of Rob Muldoon’s government. By the mid-1980s, the very expression, “Think Big”, had become political shorthand for the unwisdom of large-scale state intervention.
It was in the context of Muldoon’s increasingly costly and strike-plagued Think Big projects that the Leader of the Labour Opposition, David Lange, delivered his devastating put-down: “You can’t run a country like a Polish shipyard!”
With the benefit of hindsight, however, Muldoon’s alleged political folly looks more and more like economic and environmental prescience. Conceived as a means of escaping New Zealand’s dependence on foreign oil (which had skyrocketed in price during the 1970s) and of substituting domestically produced agricultural and industrial inputs (such as electricity, fertiliser and steel) to improve New Zealand’s precarious balance of payments, Think Big bore a startling resemblance to the industrial development programme pitched to Walter Nash’s Labour Party in the late-1950s by the left-wing New Zealand economist, W.B. Sutch.
The electrification of the North Island main trunk railway line, for example, was one of Muldoon’s Think Big projects. Had it been completed we would not now be witnessing the environmentally retrograde replacement of KiwiRail’s fleet of electric locomotives with carbon-dioxide-belching diesels. Indeed, a mischievous commentator might predict that if the Greens ever come up with a comprehensive industrial development programme, it will look more than a little like Think Big!
In many ways Muldoon’s Think Big and Bill English’s Social Investment policies are alike. Both feature ideas more associated with the left than the right, and both, if sensibly implemented, could be of immense benefit to New Zealand. Unfortunately for Muldoon and, almost certainly, for English, the essentially left-wing character of the programmes they are advocating makes it practically impossible for the National Party to implement them in a sensible fashion.
One of the reasons Think Big became such a gift to National’s opponents was the Economic Development Minister, Bill Birch’s, unwillingness to assign the job of building the energy and industrial projects solely to the New Zealand State. Rather than expand the public sector’s capacity, Birch entered into a succession of largely secret contract negotiations with an assortment of multinational construction firms. Not only did this substantially increase the projects’ costs, but it supplied the Government’s opponents with a smorgasbord of extremely tasty political meals.
English’s Social Investment policy will very likely suffer the same fate as Think Big.
On its face, the idea of using the government’s dramatically improved capacity to gather and cross-match critical data streams from the Social Development, Vulnerable Children, Justice, Corrections, Health and Education ministries, in order to improve the targeting of public services to those individuals and families most in need, is a good one. If additional resources and assistance can be channelled to these vulnerable citizens before they become the state’s permanent, eye-wateringly expensive and essentially intractable “clients”, then Bill English’s claim that Social Investment, introduced now, will save the taxpayers billions of dollars, later, is entirely justified.
English’s problem is that the implementation of Social Investment policies will require a substantial increase in spending on the people National most loves to hate: the poor, the brown, and the “welfare-dependent” working-class. The only way English will be able to “sell” his Social Investment policy to the National caucus, therefore, is by showering resources on the tiny number of people fingered by the State’s data-crunching algorithms, while simultaneously reducing assistance to all the other beneficiaries on its books.
English’s problem is Labour’s problem, too. Ever since David Shearer waxed eloquent about his (apparently apocryphal) “beneficiary on the roof”, it’s been clear that most Labour MPs are extremely wary of identifying their party too closely with the despised “underclass”. So, rather than embracing the principles of Social Investment, Andrew Little and his colleagues, like the Lange-led Labour Party, will focus public attention on the inevitable stuff-ups associated with the application of the prime minister’s pet project.
Social Investment: a policy offering potentially huge improvements in the delivery and effectiveness of social services; will thus go the way of Think Big. A good idea undermined by the ideological hostility of those responsible for its implementation and politically demonised by a Labour Opposition much more interested in breaking the right than in making its policies work.
This essay was originally published in The Press of Tuesday, 17 January 2017.


Rob said...

i thought Labour's role was to represent the " despised underclass?"

greywarbler said...

I remember feeling gobsmacked at hearing an economics tutor say that NZ couldn't sustain our level of living standards and that no country that relied mainly on agriculture could achieve and hold a good income. I had always thought that we were getting on well and had a lot to learn as has been shown in the decades since the 1980s.

Muldoon would have had us in a better state than we are if he had kept on with Think Big. Now we know more about the reality of government investment and economics, building things that don't pay off completely isn't a nil return to the country. It at least results in trades people with useful skills and experience, who are able to go on to other matters, it puts wages into the national system too.

And we withstood money wasted having to bail out banks and bail out Air NZ after the debacle of Australians getting rid of Ansett to collapse on our shoulders. And then there are the IT disasters, Incis and the latest national health systems that are being constantly refined, reneged, revised and re-evaluated up.

At least Muldoon had something lasting, and showed willing to have NZ
prepared to cope if fuel was threatened. He wasn't into asset stripping and quick political gains like the present shower. But he was very dogmatic and conservative, a bit more flexibility and he could have reigned on.

But we believed running NZ was easier than it is. We had by that time a sort of cargo cult mentality. Everything would work out fine, we could keep asking for more, so the unions did, and went over the line in the sand. Maybe because of the widespread belief in our agricultural prowess being tops in the world. Talking to a Myanmar refugee, he has been told how lucky NZ is to be a food producer (particularly milk) and that our produce was needed to feed the world.

I think NZ has for a long time been captured by the thought that we 'punch above our weight', do marvellous things, 'the world is our oyster' if we only go about opening it in the right way. So we are always ready to criticise, be wiseacres from the sidelines, about other people' efforts to achieve something higher, different than average because it all seems so little compared to the great new advance just around the corner that someone else will come up with.

Jens Meder said...

Is not the NZ Super Fund an example of the most perfect, fair and egalitarian social investment - economically and educationally - imaginable ?

Jack Scrivano said...

Alas, this is where the Westminster system comes unstuck, Chris. The idea that the Opposition should keep the Government honest makes sense. But the reality is that the Opposition is focused on simply scoring points at the Government’s expense.

Just imagine a world in which, when the Government announced a good, positive, productive policy, the Opposition said: ‘Great idea, chaps. And here are a few thoughts on how it might be made even better.’

Oh, well … a boy’s allowed to dream.

Nick J said...

I dont buy targetted social investment strategies as "leftist". They appear as a bandage applied rather than a wound prevented. A real Leftist policy would obviate the need for targeting. The obvious and demonstrable effective policies are "full employment" and "universal access to social security". Of course both strike at the heart of "market" based policies. Without them as core policy what incentive do NZs dispossessed classes have to side with Labour?

Guerilla Surgeon said...

Equally farsighted were the rail transport schemes of the nineteen fifties which were abandoned by National in favour of motorways. With these in place, they probably wouldn't need a fifteen cents a litre petrol tax on Aucklanders.

cricket? said...

Muldoons think big was a culmination of the industrialisation of NZ started in the fifties ie dams railway upgrading in the cities and the main trunk because of the sparseness of our population centres from each other by road
Muldoon left office with a govt debt of 16 billion and a bunch of jackals tearing him to pieces because they were corporate troughers who hated the tax percentage they were paying
National now looking at upgrading the social welfare system
The Problem any govt is facing is that China and India are calling the tune on what we can afford to do in this country and really if we saw the writing on the wall we would be thinking differently than we have since the 90s and realize we are in the position of if we dont change our transport ideology and our attitude to employment and ownership of our businesses we will continue to sell our sovereign control of NZ in the manner that our govts are increasingly required to do in order to benefit from those countries that have and will continue to be our overseers
So put away the false nationalism and face the fact that we are in a position of having to move from what we traditionally have done to earn a crust and find industries that will protect the country we live in from environmental disaster by for example not closing our railway workshops but restructure them to go green and stop feeding the war machine by telling Rio Tinto we are going to produce thermite grade aluminium and plug our trains and cars into the extra power and dump the diesel and the trucking industry and it never ending cost of roading repairs

Patricia said...

Social investment can't happen until we have a better, and fairer, taxation system where everyone and every company contributes to the country they live or do business in. Income tax with all its deductions and exceptions is a relic from the past and should be abolished in its entirety. There is a huge industry designed to exploit income tax deductions and exceptions and while the international companies are the extreme example of this, it happens at every level of society. As only 3% of money in circulation is cash then government revenue can be obtained by tax on all, including electronic, deposits in the Banks. The word ''Banks' being widely defined. In the the 1970s Prof Tobin recommended a 1% tax on all hot money to help developing nations but there is no reason why this idea should not be used to tax all deposits within a country to replace income tax within that country. ALL money deposited in the Bank would attract a 1% tax. It would attract more revenue than the current system and cost next to nothing because the Banks would collect the tax and pass it on to government. Only if there is a replacement of the current tax system can there be social investment which is, and always will be, a political decision.

nolajo said...

Sometimes I think that before elections we should vote for policies not parties, and then let the parties show whether and how they would implement the "elected" policies. I know it begs the question of how the policies to be voted on would be defined separately from party manifestos. But with good will you can see where I am coming from. Good will unfortunately in generally short supply in the blogosphere. But dream on Jack Scrivano, perhaps we can put playground mudslinging, sorry Westminster style adversarial debate, behind us and get stuck in with the policies that most people turn out actually to want, whatever they may be.

Brendon Harre said...

Isn't the social investment model spin?

The implication seems to be that Bill English and his team of big data number crunchers are evidence based and what we were doing before in health, education and social services was not based on evidence, research, science etc.

Personally as a registered nurse I find the way the social investment model is being publicly pushed disturbing. I think it is a subtle way to distract attention away from public services with a proven track record. Many of those services have had a per capita cut or are clearly inadequate, but the government by spinning that it's commitment to social investment manages somehow to avoid criticism.

My area of work is mental health in Canterbury. We get funded $220 per capita and the national average is $250. All the international evidence about disasters shows that the earthquakes will cause a generation of stress related illnesses -mental illnesses, cardiac complaints etc. Yet the funding formula cannot change -there have been a few years of one-off grants. But no changes in funding to respect the evidence of need.

The social investment model is very selective on which evidence it respects...

I suspect that what the social investment model is really about is contracting out public services away from professional providers such as doctors, nurses, teachers and social workers......

I think it is a clever power grab by Treasury......

Brendon Harre said...

Chris here is a question for you?

Would a small public service unit -made of train professionals, that has established links into the community benefit from the Social Investment Unit (SIU) taking an interest in it?

Do you think the SIU would be assist the unit in providing a better public service or not?

P.S here is link to help you

greywarbler said...

There is a reference to Muldoon on the debt when he was 'deposed'.
This is a graph showing Government debt to gdp ratio 1071-2016.

Unframed has some nice straightforward graphs showing our ballooning debt under National.

We are high on the list for national household debt (largely because of housing).

I think that this blogger makes a good point about NZ attitudes to authority and disagreement being frowned on. The author says it is a naive view, which indicates wisdom but this quote matches my observation.
And there is much to remember in this thoughtful summary.
From caverock -
As an aside, I mention that I recently heard a social commentator say on radio (Ian Collins, journalist, Lincoln, Sunday Supplement, National Radio ) that New Zealanders were iconoclastic and had little or no respect for authority.

In my opinion that is a naive and erroneous point of view; time and again New Zealanders have shown themselves to be as putty in the hands of skilled orators; Muldoon, Kirk and Lange to name three*. New Zealanders are the opposite; due to strong Protestant influences in at least the upbringing of an older generation, they are in fear of authority and do not dare to challenge it.

Such* people have shown time and again that no matter what the truth of a situation, if they say something often enough and loud enough most of the New Zealand populace will come to accept it as the gospel truth and indeed ridicule anyone who vocally opposes the new socially accepted flavour of the month. (In my opinion, we are largely a nation of woosses). The 'tall poppy' syndrome is also highly active; if you stick your head up (and give out a contrary view), it will be knocked off.

Ian said...

Jack the problem with "a good, positive, productive policy" (such as Ruth Richardson's Mother of All Budgets) is that some people thought it was a great policy, there were other people (including the Opposition) who thought it was the worst thing ever. Policy isn't always different people's ideas on how to achieve the same goal. It is often different people's ideas on how to achieve very different goals. In the later case no amount of tinkering with the policy will make it achieve the goal it isn't designed to achieve.

Actually there are areas on which the Government and Opposition agree with each other. In such cases laws are passed quickly, without argument and take up no time on the News. But politics is about the differences, and how to get one's own ideas implemented despite opposing ideas, not the bits where everyone agrees. This is why making theft illegal isn't a political issue, whereas making euthanasia legal is.

Back to the subject of Social Investment. One of its problems (which it shares with the existing models of contracting out services) is that it tends to drive down wages and reduce job stability. Like cleaning services, medical lab services, alcohol and gambling addiction services, it is assumed that the people who work in the industry will be "transferred" from the provider who won the last contract to the provider who won the new contract (often with inferiour wages or conditions). Or worse still will magically disappear when the service is judged to be no longer required.

The other problem is will NZ governments with their 3 year electoral cycle be happy to wait 10 or 20 years before measuring outcomes (which would be necessary if you wanted to measure the outcome of reducing childhood poverty on criminal offending once those kids grow up)?