Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search


NZ can’t afford any boondoggles in post-Covid-19 recovery

New Zealand can’t afford any boondoggles in the post-Covid-19 recovery, new report says

Wellington, 8 May 2020 - More economic freedom will be the key to surviving the next phase of the Covid-19 recovery, and the Government should step aside as soon as it can, according to a new report For better or for worse: How governments respond to crises by The New Zealand Initiative.

After placing the country in enforced lockdown for nearly two months, the Government is now considering its options to reopen many Kiwi businesses sometime in the next few weeks.

Research fellow Dr David Law said the empirical data from previous recessions and economic downturns shows the more a Government keeps its hands off the regulatory levers, the faster the economy can return to normalcy.

“Though it is understandable the Government wants to move quickly, it can’t rush policies.

“Past crises reveal the danger of choosing grand-sounding projects which end up being wasteful and potentially causing even more long-term harm. New Zealand needs a sustainable plan if it is to secure a lasting recovery,” he said.

Dr Law pointed across the Tasman to programmes chosen by the Rudd Government after the 2008 global financial crisis. While the goal for many of its projects was to stimulate Australian consumers back into spending to avoid a recession, it led to some bizarre and expensive boondoggles.

For instance, some sleepy towns suddenly found local council workers using taxpayer funds to build enormous public playgrounds. The Government also set up a project to put insulation in every Australian home. But without enough regulatory oversight and proper training, much of the finished work was unsafe and, in some cases, led to deaths.

Then there is the notorious “Cash for Clunkers” scheme in the US – again, to help stimulate consumer activity after 2008. Under the programme, the US Federal Government offered incentives of between $US2500 and $US4500 to anyone trading in a gas-guzzling, older vehicle to buy a new, more fuel-efficient car.

Unfortunately, about 60% of the funds went to people who would have bought a new car anyway. Since many environmentally-friendly cars already had subsidies to encourage people to buy them (making them cheaper), the overall consumer spending dropped as a result of the scheme.

Dr Law said these examples would be worth keeping in mind as the Government plans its new projects.

“Thankfully, New Zealand had very low public debt before the Covid-19 crisis, which will help insulate it. The Government should try its best to maintain those low debt levels.

“But this country is also known for its economic freedoms and light business regulations. Coming out of this crisis, the empirical data clearly shows the best path to recovery is to retain those freedoms – and ideally even expand them,” Dr Law said.

He added that the Cabinet’s decision this week to suspend the Regulatory Impact Analysis framework (RIA) – a tool used to conduct cost-benefit estimates on Government proposals – is not a good sign.

“New Zealand’s strong institutions will be crucial now. The Government’s looming post-pandemic decisions will be some of the most pivotal any administration has ever made in this country.

“The Government should not jeopardise this country’s long-term economic health by carving those institutions away for some quick wins,” Dr Law said.

Read more:
For better or for worse: How governments respond to crises is available here.

© Scoop Media

Top Scoops Headlines


Gordon Campbell: On The Media Collusion With National’s Attack Lines

For most of the past week, any consumer of this country’s management of Covid-19 would think New Zealand was actually Brazil, or Texas. The media language has been full of claims of “botches” at the border, and laxness and inexcusable errors ... More>>

Gregor Thompson: Don’t Be Too Pessimistic About New Zealand’s Future.

With the first hurdle hopped our Government will be turning its attention to trying to soften the economic damage this pandemic has on our little archipelago. More>>

Eric Zuesse: U.S. Empire: Biden And Kerry Gave Orders To Ukraine’s President

Eric Zuesse, originally posted at Strategic Culture On May 19th, an implicit international political warning was issued, but it wasn’t issued between countries; it was issued between allied versus opposed factions within each of two countries: U.S. and Ukraine. ... More>>

Binoy Kampmark: Budget Cockups In The Time Of Coronavirus: Reporting Errors And Australia’s JobKeeper Scheme

Hell has, in its raging fires, ringside seats for those who like their spreadsheets. The seating, already peopled by those from human resources, white collar criminals and accountants, becomes toastier for those who make errors with those spreadsheets. ... More>>

Binoy Kampmark: Altars Of Hypocrisy: George Floyd, Protest And Black Face

Be wary what you protest about. The modern moral constabulary are out, and they are assisted by their Silicon Valley friends in the Social Media club. Should you dare take a stand on anything, especially in a dramatic way, you will be found out ... More>>

Binoy Kampmark: Welcome Deaths: Coronavirus And The Open Plan Office

For anybody familiar with that gruesome manifestation of the modern work place, namely the open plan office, the advent of coronavirus might be something of a relief. The prospects for infection in such spaces is simply too great. You are at risk from ... More>>

Binoy Kampmark: Why Thinking Makes It So: Donald Trump’s Obamagate Fixation

The “gate” suffix has been wearing thin since the break-in scandal that gave it its birth. Since Watergate, virtually anything dubious and suggestive, and much more besides, is suffixed. Which brings us to the issue of President Donald Trump’s ... More>>

Binoy Kampmark: Brutal Choices: Anders Tegnell And Sweden’s Herd Immunity Goal

If the title of epidemiological czar were to be created, its first occupant would have to be Sweden’s Anders Tegnell. He has held sway in the face of sceptics and concern that his “herd immunity” approach to COVID-19 is a dangerous, and breathtakingly ... More>>