Job one for new Govt: The regulatory rollback
Action is needed — and fast — to create momentum and cut spending
With the votes finally counted, the shape of the new Government is becoming clearer. While there are still a few hoops to jump through before we know exactly who does what and what’s on the agenda, everyone’s thoughts will be rapidly turning to the programme for the all-important first six months in government.
Therein lies the first challenge for the new administration — to create first a sense of and then actual momentum, after being becalmed for three weeks post-election while the bureaucrats counted and re-counted the votes.
With the best will in the world, by the time ministers get their feet under the desks and staff hired, the Government won’t be fully into gear for a few more weeks, while the people who voted for them have already banked their decision and moved on. There will soon be impatience for change.
Ministers will sense that, and there is a danger that by the time they get their hands on the wheel, they will be wanting to drive off in all directions. That could be messy.
The new Government must therefore frame up its first six months in the job to ensure it gets underway with some of the big stuff, particularly the things that affect our economic and social performance.
Job number one is the regulatory rollback. These are the economystifling laws passed by the previous Government that take the wrong direction, and which National and its associates have collectively pledged to remove from the statute books. Things such as rolling back the RMA reforms, the Three Waters legislation, fair pay agreements, and the oil and gas ban.
Some sort of omnibus regulatory rollback law, to be passed before Christmas with the support of all coalition partners, would make sense, followed by a second one in the first half of next year for the more difficult jobs. Priority should be given to changing laws that stifle investment and growth.
Task number two is getting started on fiscal repair. This, too, will be a long job, but the new Finance Minister will need to demonstrate early intent. Nicola Willis has indicated she will move quickly, with a mini-budget before Christmas. Whether a full mini-budget is possible in the time now available will be resolved in the coming days, but there is a definite need for a round of sacred cow culling in order to stop spending money on doomed projects.
First on the chopping block will obviously be big and expensive lemons such as the Onslow power scheme, Auckland Light Rail and the ironically-named Let’s Get Wellington Moving, but there are any number of things that need a big red “cancelled” stamp in order to start stemming the flow of taxpayer cash out the door. The new bureaucracies that achieve nothing in actual service delivery for example, such as the Ma¯ori Health Authority and the Te Pukenga head office. And all the money planned to be spent on implementing a bunch of about-to-be cancelled new laws.
Then you get down to the projects worth mere tens of millions. These are all the various boondoggles that were sprayed about by people such as previous transport minister Michael Wood and Climate Change Minister James Shaw — such as the $10 million gifted by the Government to a private logistics firm to buy a now-cancelled coastal ship (yes, who knows why) and the money given to New Zealand Steel and Fonterra to upgrade their factories for climate change (pretty much their core business). The list is huge and adds up to real billions.
Willis needs a hand-picked team, backed by Treasury, to go around unearthing these savings “opportunities” as quickly as possible, thereby building her a savings war chest which can be reapplied to other needed initiatives and to tax relief, probably in next year’s Budget. Again, it might need to be tackled in a couple of rounds: the easy-to-stop stuff, followed by things that may need some negotiation.
Closely related to job number two is job number three — shrinking the core public service. The new Government will undoubtedly cap it where it sits now, but more than that will be needed. Given the wider economic environment the new Government will inherit, the amount it spends on the core public service is one of the biggest levers it has for reducing debt and putting more money in taxpayers’ hands.
Getting it under control is also important in helping the Reserve Bank tame inflation.
In this job, it will be helped by current State Services Commissioner Peter Hughes choosing to vacate his seat. This is not intended as a criticism of Hughes, but the new commissioner will by necessity have to undo a lot of what happened under the watch of the Ardern/Hipkins Government. Frankly, it will be easier for a new broom to do the sweeping. The new Government should focus first on the work it wants done by each department, and then require that each be right-sized for that work. A useful tool would be to treat 2017 as a baseline, and require agencies to justify departures from that. I also wouldn’t get overly distracted by the “restructuring” tool.
As we saw with the previous Government, rearranging the deckchairs mostly just chews up valuable money and time.
The last two jobs are longer burners, but only because it takes time for their benefits to become visible. For that reason alone, they need to be embarked upon quickly.
Likely new Infrastructure Minister Chris Bishop needs to work out quickly which agency he is going to rely on to get stuff built. Thanks to the previous Government, we have a plethora of oversight in this area, but not many agencies with the authority and funding to do the work. Who among the Infrastructure Commission, the Recovery Taskforce, Waka Kotahi, Crown Infrastructure Partners and so on is going to hold the funding and be trusted to get on with the job? Time to get anything constructed over the next three years is already running low.
Couple that with the Government deciding on its approach to regionalisation. The previous Government’s control-freakery saw Wellington take even more control of big areas of life as diverse as health, education and water services, with the predictable result of even bigger bureaucracies and more poorlyperforming frontline services. With a swag of new regional MPs, and New Zealand First as a partner, the Government will be predisposed to trust regional leadership more. Its “regional deals” idea has real merit. The trick will be applying that regionalisation actively across a range of policy areas, with the express purpose of shifting decision-making closer to the front line.
The above is not exhaustive (I haven’t even mentioned law and order), but just breaking it down this much shows how much needs to be done, and the co-ordination challenge across government to get started on it all. Some organising principles are going to be needed. And the final coalition agreements need to be written with those first six months firmly in mind.
The amount [the Government] spends on the core public service is one of the biggest levers it has for reducing debt and putting more money in taxpayers’ hands.