Back to ‘Think Big’?
Three ministers’ power to decide on projects
It’s an extraordinary concentration of power at the Cabinet table, but it’s not unprecedented.
Muldoon is back! Or at least an idea that enabled the notoriously interventionist prime minister’s “Think Big” nation-building project has returned to the fore.
Someone may need to coin a new phrase for what this Government is embarking on. Last week, Prime Minister Christopher Luxon stood with his triumvirate of soon-to-be-empowered ministers – Infrastructure Minister Chris Bishop, Transport Minister Simeon Brown and Regional Development Minister Shane Jones – at Wellington’s Basin Reserve and announced the Government will soon legislate a “fast-track” policy for projects with significant regional and national benefits.
The proposed law has already caused significant disquiet, and not just among expected opponents. Essentially it will empower Bishop, Brown and Jones to override other environmental and planning laws to give these large-scale projects the go-ahead, circumventing the usual, Byzantine resource consenting process that many people despise, but no-one has managed to fix.
It’s an extraordinary concentration of power at the Cabinet table, a concentration the country’s parliamentary system actively avoids. With limited oversight and advice from a panel of experts, and limited public input, the ministers can cut the ribbon on mines being dug in conservation land, roads carved through inner-city mountains, and large-scale salmon farms lying off untouched coast.
But it’s not unprecedented. “The ghost of Rob Muldoon has inhabited the mind and body of Shane Jones, and he is riding roughshod,” said Green Party MP James Shaw in the House last week.
Luxon called the comparison with Muldoon, who led a National Government through a rocky 1975 to 1984, a “complete irrelevance”. He wisecracked that he was eight years old at the time.
But Jones is happy to “wear the epithet with pride”.
“We got so much done in New Zealand in the 1970s... the infrastructure that we currently take for granted. We got a lot done in the early 80s.”
There are parallels between what the Government is doing with its Fast Track Act and what Muldoon sought to achieve with his own fast-track consenting law, the National Development Act 1979, to get major “Think Big” projects – the infrastructure Jones talks of – across the line.
And with it has come a now decadesold political argument between economic development and environmental degradation. Claims of anti-democratic capture of decision-making by Cabinet ministers and the diminishing of public input, local authority and parliamentary scrutiny. Concerns that industry and lobbyists – or the very ministers themselves – could unduly gain.
The problem apparently seeking a solution is similar – a need to diversify and develop out of economic malaise – and while there are differences in the solution, the parallels could come as a warning. Muldoon’s approach wasn’t quite the fix hoped for.
“It didn’t work. It was a policy disaster. It did not work,” said former prime minister Sir Geoffrey Palmer, of Muldoon’s national development law.
“When I first went into Parliament, the National Development Bill was the biggest political game in town. It turned out to be a policy and political disaster, and it was repealed.
“And so I hope the lessons have been learned from those failures, because this seems to be a horse of the same colour.”
Palmer, a key figure in the Fourth Labour Government that repealed the National Development Act, was also the architect of the Resource Management Act 1991, which set up the resource management system that remains more than 30 years later. He effectively won the political battle back then.
But when contacted about the fast-track announcement he was frustrated. The legislation wasn’t yet online, the whole thing had been hurried, he said.
So why was the National Development Act the “biggest political game in town”?
“Read the parliamentary debates, they're enormous. Read them all, and until you’ve done that, you won't get it.”
That was all he wanted to say, he did not find “little discussions” like this helpful. So he promptly hung up the phone.
Here’s a summation of the arguments given across the House on August 22, 1985.
Palmer called the “obnoxious and repressive” National Development Act an “outrageous piece of centralism” that overrode 22 other laws and was “so flawed that it had very little chance of succeeding”.
“It has been used only twice, and on one of those occasions it had to be fixed up by a special Act of Parliament… It did not provide fast-track for small projects, yet most of the employment in New Zealand is provided by the small businesspeople whom it did not help at all.”
National MP Ruth Richardson, later to become finance minister under prime minister Jim Bolger, condemned the overturning of the Act and its provision of a “one-stop hearing shop” for consents.
She argued that final consenting determinations for projects of national interest are better made “not by a tribunal that is not accountable, but rather by an entity that is accountable: the executive” – meaning Cabinet ministers.
All of this was for the “Think Big” projects, which still loom large in New Zealand’s political and economic history: the Clyde Dam, the Motunui gas plant in Taranaki, and expansions of the Marsden Point oil refinery and steel mill at Glenbrook.
Economist Brian Easton, who has written an economic history of New Zealand, effectively coined the phrase “Think Big” for the Muldoon Government’s economic strategy in a 1980 speech to the Electrical Supply Authorities Association.
He said there were two economic reasons for Think Big, the first being the economy continuing to struggle after the collapse of the wool price in 1966 and other minor shocks. “One could easily have argued it was stagnating.”
The 1973 oil crisis also put energy at the forefront of government policy. Easton said the Maui gas field was piping gas onshore by 1979, and the quantity of gas was so huge that it was profitable for Shell BP Todd to “flare”, or burn off the gas – but this was “politically unacceptable”.
So the Motunui synthetic petrol plant was built to convert the gas for domestic consumption.
The Think Big projects also suited Muldoon’s political needs, promising not only to boost the economy, but diversify and transform it.
Easton said most of the projects were private sector initiatives, but were guaranteed by the government. These guarantees – which were secret – were called in by the private firms at great cost to the government, which took on debt.
“The price of oil dropped precipitously as the major projects came into production and it turned out, the public did not know this at the time, that the downside risk was all carried by the Government – the taxpayer.
“With hindsight we would do it differently with less ambitious projects, less impact during the construction phase, and less fiscal overhang.
“In the long run there was no fundamental transformation and the gas faded out. We expected to find other big commercial fields, but they have never turned up.”
Such secret guarantees would not occur today with the transparency required by the Public Finance Act 1989, so such an event won’t likely be repeated.
“I’d like, too, to think that we would be more sensitive to the public’s exposure to fiscal risk,” Easton said.
More sensitive is certainly right.
The National-led coalition Government of today considers the country too heavily indebted so, while it pursues a policy of trimming government spending and providing campaign-promise tax cuts, the fast-track law will not come with a guarantee of capital if things go belly-up. Its focus is exclusively on getting projects approved.
Jones was a young policy advisor to Palmer in the late 80s, when much of the regime he’s seeking to circumvent was cemented. He said it’s now a mesh of “decrepit” laws such as the Wildlife Act 1953, Department of Conservation concessions, permits and Resource Management Act consents, that takes too long and is too expensive.
Jones said the Government needed to expand the likes of the aquafarming and extractive sectors to grow the economy and reduce the current account deficit – the country importing more than it exports.
But economic development considerations had been “overwhelmed by eco-catastrophisation” and he wants the Government to overcome the perception “that you can never get anything done in New Zealand”.
Jones points to a Ngāi Tahu proposal to build an open-ocean salmon farm off Rakiura-Stewart Island as an example of what’s wrong.
It was put forward for an RMA fasttrack under Labour’s scheme, but was declined by the Environmental Protection Authority panel that Jones labelled a trio of “unelected, unknown, obscure