Gordon Campbell on big, bad government spending

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On Wednesday, the ANZ economist Cameron Bagrie provided some economic data that –co-incidentally, I’m sure – sought to back up the centre right argument that government spending is chronically mis-directed. Bagrie took care to point out that he wasn’t saying a thing about what the levels of government spending should be. No, the ANZ research was all about the spread of the spend.

Basically, the ANZ report claimed to show an ever-increasing share of government spending is going on administration, rather than on ‘front line’ activities. That always sounds like a potent argument. We can all think of areas of waste, make work, and ineptitude – and we all assume that it would be dealt to, rationally. The trouble is, whenever costs get cut, the carving is done along ideological lines – and the good gets swept away with the bad, or the bad not at all. More ‘back room’ activities then get added, to serve the new ideological mindset. Anyhoo, according to the ANZ, teachers, nurses and the like are losing out on the resources they need, and why ? Because galloping amounts of cash are being lavished on bureaucrats, with their well known urge to monitor and regulate for no good reason !

Bagrie’s major supportive fact for this suspicion ? “Growth in total departmental outputs has averaged close to 7 per cent a year since 1997, while front-line spending has averaged 5 per cent a year.” Theoretical billions may have been lost. Obviously though, it matters a lot in this kind of exercise just what you choose to put in which column. To achieve his outcome, Bagrie has put a lot of things that some people might think of as social goods, into the bureaucratic ‘bads’ column.

Such as ? Well spending on education services for children with special needs has gone into the bad, ‘back office’ bureaucracy column. Bagrie himself casts the spending on arts, culture, heritage and recreation in a negative light, as ‘non-productive’ - which probably says as much about why Cameron Bagrie became a bank economist, as it does about the state of the nation.

Trevor Mallard has pointed out a few more of the assumptions in the ANZ research : “Defence spending, Police, Corrections, and the Courts spending is ‘ [defined as ] back – office, as are school property costs….Work and Income frontline services, Child Youth and Family frontline services and IRD call centre staff,. This type of spending alone accounts for more than $6 billion, or 60 per cent of all the departmental output spending which Mr Bagrie says is ‘back-office.’” Perhaps not surprisingly, Bagrie sees some of these bad trends as picking up pace from 2001 onwards.

Only an ideologue could regard the majority of the above spending as dispensable, or capable of re-direction to the frontlines. In most respects, special needs education is the frontlines. I’d like to pick up another of Bagrie’s examples. Social welfare, he seems to believe, is a further case of bureaucracy run riot :

For example, spending on welfare benefits had increased by an average of 3 per cent a year, but back-office departmental spending by 7.5 per cent.

One sure way of fixing that troublesome ratio of course would be to raise the benefit levels, but I doubt that’s what the ANZ has in mind. In fact, the expanding ratio could have a simpler and quite positive explanation. Namely, that with the economy booming, the people who could be easily moved off the welfare rolls have already gone into work, leaving the hard core – who, almost by definition. will be more expensive to administer, Mainly because the physical and mental healthcare that such people need to become more work ready is likely to cost a packet.

In other words, the ratios identified are not so much consistent with bureaucratic featherbedding, but with a hard nosed ( and going by the welfare statistics, successful) programme to get more people into able bodied condition, and into work. Its called investing in long term outcomes. The private sector in New Zealand – and their bank economists – are notoriously bad at it.

Yeah, I know. I should have more faith. Given time, I’m sure National will be able to devise a neutron bomb that kills only bureaucrats, tax collectors and regulation-writers, thereby freeing the good and the uncomplaining for more productive toil on current rations. I’m not opposed to efficiency. In fact, just to throw in my own five cents on how government spending could be improved….in April, MFAT got a circa $600 million funding boost to be spread over the next few years.

Maybe, some of that money could be spent on providing credit card facilities at the NZ Embassy in Washington DC, and at the NZ Embassy in Berlin. That’s right. Neither of our flagship diplomatic posts in the heart of the United States and Europe have the ability to take payments for services rendered, with a credit card. You have to bring a bundle of cash in a sock, or a money order. Amazing.

So, instead of spending more money on cocktail parties, art collections, and the rest of the diplomatic circuit paraphernalia….could Winston Peters seek to ensure that MFAT equips our major embassies overseas with the same capacity to do business that we can reasonably expect to find down at the corner dairy? That would be cool. It could be the one thing that Cameron Bagrie and I might agree on.

As the Salon website indicates, the Rob Walker book Buying In – The Secret Dialogue Between What We Buy and Who We Are, has some interesting applications to the world of politics. Walker’s entry point was the marketing of the energy drink, Red Bull. To quote, from Laura Miller’s article :

“ Walker noted that instead of attempting to assert the brand's identity to a mass market, the manufacturer pursued a strategy of what he calls "murketing," sponsoring low-key events geared to distinct niches; ask any of these groups what Red Bull is and you're likely to hear a different answer. By refusing to define Red Bull, advertisers allowed each slice of its overall market to interpret the beverage for itself. “

Instead of Red Bull, think in our country, about John Key. Similarly, National has not marketed its policies or its leader in a direct fashion to the voting public. Key has instead been encouraged to address his message to niche audiences who have carried the debate forwards, by adding spin according to their own aspirations. By ‘murketing ‘ Key in this value-added way rather than by marketing him, National has been able to turn the “ Who Is John Key, Really ?” question to its advantage, by allowing all kinds of different people to project onto him their own desires and blueprint for change. The blurrier the Key template the better. In this process, even the criticism helps by making Key’s identity the focal point, and crowding out policy.

This week Key’s doppleganger – I’m talking about David Cameron, the leader of the resurgent Conservatives in Britain – gave a speech in Glasgow that one can expect to hear from Key in coming months, albeit with a few local variations. Cameron’s basic message at Glasgow was one of responsibility and choice – that if bad things happen to you ( poverty, unemployment etc) there is a 90 % chance that this was because of choices made by you, and not due to the outcome of social forces acting upon you. As the Times put it :

Mr. Cameron pointedly called for an end of moral neutrality, asking whether it was right to talk of people being "at risk" of poverty, obesity or social exclusion. "It's as if these things are purely external events like a plague or bad weather," he said.
The message is old and has been unfashionable - pull up your bootstraps, get on your bike and woe betide anyone who steps out of line - but it is coming fast and furious from both ends of the political spectrum. There remain distinctions: The Tory message is more of "the feckless should sort out their own problems," while Labour's is a slightly more threatening "we will sort you out."

Which is pretty much where the debate rests in New Zealand right now, as well. The election choice on welfare is likely to be one between benign neglect and benign authoritarianism. And if David Cameron is a very important role model for the centre right in New Zealand in this election, he has also (unwittingly, I’m sure ) been something of a role model for the centre left as well. Earlier this year you may recall, a group of Labour and Green MPs donned hoodies as a gesture of solidarity with youth and youth culture.

The catalyst for this idea was almost certainly David Cameron, and the famous ‘hug a hoodie’ speech he made in July 2006.

Back then, Cameron had this finely honed ‘compassionate conservative’ message to convey, one that was intended to outflank a Labour government that had proven itself impotent at fixing the law and order problems associated with poverty :

'The hoodie is a response to a problem, not a problem in itself. We - the people in suits - often see hoodies as aggressive, the uniform of a rebel army of young gangsters.

'But hoodies are more defensive than offensive. They're a way to stay invisible in the street. In a dangerous environment the best thing to do is keep your head down, blend in. For some the hoodie represents all that's wrong about youth culture in Britain today. For me, adult society's response to the hoodie shows how far we are from finding the long-term answers to put things right.'

In a piece of karmic black comedy, the Cameron aide who crafted that speech got beaten up last week on a London street by some young guys who were wearing…. hoodies. Earlier this year, National MPs boycotted Hoodie Day at Parliament. Now that Cameron has reverted to the tough-love message he was preaching in Glasgow, we can expect to hear a whole lot more Cameron-speak out here, during the coming months.

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