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SMELLIE SNIFFS THE BREEZE: Inconvenient Treasury

SMELLIE SNIFFS THE BREEZE: An Inconvenient Treasury

By Pattrick Smellie

Oct 30 (BusinessWire) - Treasury Secretary John Whitehead looked a bit coy this week when journalists asked him whether any of the bombshells dropped in his department's latest 40-year fiscal outlook could ever be managed politically.

"I'm not a political expert," he demurred, "but I'm sure the politics are very difficult."

A delightfully disingenuous statement for a public servant leading the most influential economic policy advice agency, presenting a report whose cover carries pictures of schoolchildren, summer at the beach, and a much smaller image of someone actually doing some work. This is a public relations document.

Whether you think it's OK for the Treasury to state views about reform options that are routinely damned as "right wing" in New Zealand will depend on whether you are bothered or not about the allegedly unduly politicised "Plain English" campaign run by TVNZ7. I'm not.

And if no one says some of the things the Treasury is saying, who will?

Saying things like that there's nothing wrong with NCEA and that it's helping New Zealand kids do as well as their international peers, and often somewhat better.

Or that smaller school class sizes don't necessarily make any difference to the achievement of all but a few very disadvantaged pupils.

Or that GST needs to be higher? Or that public policy should concentrate on whether people are healthier or crime rates are falling, rather than how many doctors there are or how many more prisons?

Or that the 25% of pensioners who only rely on the pension for 20% or less of their income should get less in exchange for a bigger spend on the health system?

Or that economic growth alone is not the answer? That even if we double productivity growth from 1.5% to 3% a year and have 15,000 new migrants arriving each year instead of 10,000, we are still planning to spend too much, and that net public debt will still blow out from under 20% of GDP today to between 146% and 223% by 2050. Even if the assumptions which drive those numbers are inevitably a guess, a completely unsustainable trend is clear, and that's what the Treasury wants us to think about.

On the subject of prisons, the report is both particularly strong and completely out of step with prevailing political wisdom. The Treasury can't quite say "this is a nationally embarrassing waste of money".

But it does say: "Spending in the justice system doubled in inflation-adjusted terms from 1994 to 2009. The increase in spending has not been linked to recorded crime rates, which have been broadly stable over the same period."

Yet in the past 10 years, the prison muster has risen from 150 people per 100,000 to 195 per 100,000, putting New Zealand fifth in the global gaoling stakes, just below Mexico, the Czech Republic, and Poland. Everyone is miles behind America’s 760 prisoners per 100,000 citizens, which is a very scary thought.

At current growth rates, New Zealand will be imprisoning 225 people per 100,000 eight years from now, when the Government says it will only have $1.1 billion (inflation-adjusted) a year available for new spending initiatives.

If that all comes to pass, prisons will be taking one in five of those few available dollars for new spending. Is that what we all want? the Treasury asks.

When you put it like that, it cannot be what people want, despite the never-ending calls for ever tougher sentencing. In the meantime, the corrections industry is helping buoy the construction industry, so that recession-busting fiscal stimulus is partly thanks to gaol-building activity. Hardly a great outcome when you think what that kind of money could do in hospitals, schools, universities and just about anything else you care to name.

The Treasury argues, in classically bland prose: "It is not clear that further increasing our imprisonment rate would be the most effective way to reduce crime. Some studies have shown that, while imprisoning more people can reduce crime, the size of that impact diminishes as imprisonment rates increase.
"Other studies suggest that, when imprisonment rates reach a certain level, further increases can lead to increases in crime rates."

This is not coming from some woolly woofter Nanny State bit of the bureaucracy. It's the Treasury, the hatchet-men, arguing what amounts to both a fiscally conservative and a human rights agenda.

What should justice policies try to achieve? How about lower crime rates, and at a cost the nation can afford? There's nothing to show either of those things is happening as part of the current politically driven corrections boom.

"Given that New Zealand's imprisonment rate is already one of the highest in the OECD, and recent increases have had little impact on recorded crime rates, it is unlikely that further increases in our imprisonment rates will be the most cost-effective way to achieve lower crime rates," the Treasury concludes.

Tell that to the nutters at the Sensible Sentencing Trust, in whose thrall most of the political parties remain.


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