Is the New Zealand State Equal To Covid-19’s Economic Challenge?

Sufficient Leverage? Years of underfunding and down-scaling, and countless restructurings, have routinely wiped away decades of institutional memory. Grant Robertson's 2020 Budget has engaged the levers of government action - but do they still work?

THE FINANCE MINISTER would appear to have pulled hard on every economic lever he could find. The 2020 Budget is breath-taking in the sheer scale of its ambition. What we are all about to discover now, however, is how many of those levers are still attached to machinery that works. Can the Government’s orders be carried out, or, like Adolf Hitler in his Berlin bunker in April 1945, is it urging forward armies that no longer exist?

Think about the early stages of the fightback against Covid-19. How long it took for meaningful interventions against the virus to kick in. In the minimum possible time, the Ministry of Health was required to reach maximum effectiveness – and all from a standing start. Years of underfunding and down-scaling; countless restructurings during which decades of institutional memory had been routinely wiped away: all of these ideologically-inspired weaknesses had to be overcome not in months and years – but in days and weeks. They were, but the effort required from Ashley Bloomfield and his team to make sure everything worked was nothing short of heroic.

If the entire population of the tiny Mediterranean island of Malta could be awarded the George Cross for their stoicism and bravery under relentless German bombing in 1942, then I cannot see why our entire health service should not be similarly acknowledged in the next Honours List.

Now we shall see how well the other major ministries of the state meet the economic challenges of Covid-19. Impelled by the same sense of urgency; required to respond across a similar number of critical fronts; how will they perform? Will the massive amounts of financial and practical assistance that our failing businesses and vulnerable employees need arrive in time? Will the strategies required to haul the New Zealand economy out of the deep hole into which it has fallen be forthcoming? More importantly, will they – like the Ministry of Health’s responses – be subjected to the same searching examination and ruthless critique?

Frankly, I am sceptical of the chances of either of these crucial objectives being achieved. In the key state ministries: Treasury, the Ministry of Business, Innovation and Employment; the Ministry of Social Development, the Ministry of Primary Industry and the Ministry of Foreign Affairs and Trade, the record to date has been one of lethargy, procrastination and imaginative failure. Certainly, all of them have been subjected to the same spending cuts as the Ministry of Health (thankfully now remedied by Grant Robertson’s Budget) but the malaise in these ministries goes much deeper than a mere dearth of funds.

Since at least the fundamental reorganisation of the public sector in the late 1980s, the record of every successful state-sector CEO has demonstrated not how much he or she could make their ministry do, but how much he or she could make it do without. Under New Zealand’s all-conquering neoliberal ideology, the state is an institution whose ineffectiveness is accepted a priori: the less there is of it, the more efficiently our economy is predicted to perform. It was the far-right American ideologue, Grover Norquist, who recommended shrinking the state to the point where it could be drowned in a bathtub. For more than 30 years, New Zealand’s state-sector’s CEO’s (and the Ministers they advise) have made it their business to keep it on a crash diet.

The Ministers of the present government have learned to their political cost just how weak the New Zealand state’s starvation diet has left it. The unfortunate Phil Twyford tried pulling levers at Housing only to discover that, methodically, under governments of every hue, the wires connecting the political will to give New Zealanders affordable houses with the bureaucratic machinery needed of get them built had been cut. No matter how hard Twyford pulled Housing’s levers – nothing happened.

Yesterday, the Minister of Finance rolled out his blueprint for Responding, Recovering and Rebuilding New Zealand’s crisis-stricken economy. He is borrowing and spending billions to make it happen. Of necessity, a very large part of the work that lies ahead will be undertaken by the state. It is, however, far from certain that New Zealand’s core economic ministries will rise to the Covid-19 challenge as effectively as its Health Ministry.

There is, you see, a huge difference between the action mandated by science, and the inaction dictated by ideology. 

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 15 May 2020.