Tuesday, January 22, 2008

Initiative or Compliance? Lao Tze had the answer.

Rosemary McLeod had a very important wee comment in her Sunday Star-Times column recently. The theme of her article was on how by regulating the disciplining of children we are actually hindering it. She cites the example of a Christchurch dad out riding with his kids who gave an older child a clip for failing to heed his safety warnings. As she points out having Police charge the father for this "assault" sends a very odd message to the children. She expands on this theme by pointing out that the Justice Ministry's youth crime prevention scheme report paints a sorry picture of complete failure. Whereas social discipline in nations like Japan is exemplary this is rejected because it is achieved at the cost of considerable domestic violence.

McLeod's point however goes to the very core failings of the Nanny State. In the Nanny State there is no initiative only compliance. The Nanny State knows best about everything. The Nanny State revolves around the rules and the rules are meant to deal with every contingency. It tells us what to do.

The problem is that it places a huge demand on the those making up the rules.The position was brilliantly lampooned by Vladimir Nikolaevich Voinovich in "The Life and Extraordinary adventures of private Ivan Chonkin" when one character bursts into tears in sympathy for Joseph Stalin at the beginning of the war.

"Its so hard for him because he has to think for all of us", she sobs.

Under the Nanny State people don't think for themselves, the State thinks for them. Thus a father who in the fear of the moment takes the initiative to drum a lesson into his errant son's head must be brought to compliance without any regard for the consequences of that action in itself. What is ironic is that when the legislation was introduced the public were assured the Police would use their initiative. It turns out however that under the Nanny State the Police feel they aren't allowed any. They too must comply.

A perfect example of the idiocy of is the latest case of schoolyard rapes in Lower Hutt. According to this report teachers were given long explanations about what they could and couldn't do sometime before these attacks happened. Now once upon a time a teacher with a stick would have prevented these crimes by whacking the miscreants. Sore bums and kids know their place.

Now, thanks to the Nanny State the safest course of action for the teachers is not to take responsibility but refer everything to another department (ie Police). Teachers are now more concerned about compliance than initiative or responsibility and the criminal element among their charges knows it. And now the Minister Chris Carter is getting in on the act by blaming the teachers again! The messages are so conflicted nobody knows what the masters want.

Worse the official system of compliance is failing. The average time spent waiting for justice for important cases is now 305 days. People are getting away with crimes because the system of compliance is proving too slow to deal with events. Without initiative everything ends up floating to the top and the top simply can't cope with the workload. The result is we are building a nation of compliers who wait for others to take responsibility - who in the end don't. In the end this just perversely rewards those who defy the system altogether!

Unfortunately a nation of compliers is not a nation that achieves anything. Achievement in every field comes from initiative. Initiative comes from taking an idea and running with it. By its very nature the outcome of initiative is unknown. Compliance is about preventing initiative. Its about denying people responsibility. And worryingly it is, in essence, the heart and soul of today's New Zealand government. Throughout government every official quivers in their shoes hoping they have correctly second-guessed the Ministers desires. Ministers appropriate all initiative and the Government goes into a state of thahn (from Watershipdown: terrified seizure).

To my mind this should be turned on its head. Instead the whole purpose of government should be to encourage initiative in the schoolyard and in the adult world. Government needs to embark on a new quest. A quest for empowerment and initiative. This is actually quite simple because it means Government does less and people do more.

All Government must focus on very strongly is what it is against rather than what it is for. What Government's are against is actually quite a short list, namely: corruption; dangerous selfishness; malice and thoughtlessness. Government is not a place to create things. Governments are hopless at that. It is a place to stop things and the things it should stop is behaviour we don't want. Moreover it needs to be do so with maximum initiative of its own.

A government built on initiative is one that passes down a lot of freedom and a lot of responsibility. Its sole concern is to swiftly and appropriately punish corruption, dangerous selfishness, malice and thoughtlessness. At the same time, however, the punishers themselves must not be capable of evading responsibility (as for example the IRD or Police who seem to be so good at it). Nor does this mean endless recursion. There are simply three lines: the first line which responds to infringers ofthe rules (Police, IRD etc), the second line which audits the enforcers, and the third line which represents those enforced. A triangle in effect.

Of these at the current time it must be said it is the second line which is weakest. Too many Ministrys and Departments simply audit themselves. The role of the Ombudsmens Office, State Services Commission, the Audit Office and the Statistics Department has been badly weakened. These independent offices need the resources to protect citizens against state corruption; dangerous selfishness; malice and thoughtlessness.

At all times the focus must remain on the means. Have those charged with a responsibility achieved their required outcome with corruption, selfishness, malice or thoughtlessness? If not leave them alone and let them get on with it. If not intervene quickly and effectively so that the benefit of behaving badly does not gain any positive reinforcement. This is precisely what adults supervising children do and it makes immediate sense as a philosophy of government as well.

Restructuring Government for initiative means dismantling a lot of it. It also means politicians following the advice of Lao Tze " Do nothing that everything may be done". For the opposite is indeed "do everything that nothing may be done". It is a hard lesson for those who wish to believe they are achieving something in politics but a vital one if our nation is not to slowly lose its capacity to think, grow and adapt.

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Wednesday, January 9, 2008

Wellington Delenda Est!

Well perhaps not destroyed - after all I live here too - but at least seriously deconstructed. Why? Because (in my view) our government is badly maladjusted. It has ceased to provide the population with the benefits of communal regulation and ownership that government is needed for and has become a temple for a vast community of self-serving Mandarins whose principle purpose is self aggrandisement.

The problem is at once simple and intractable. Government has forgotten who its customers are. Ask in high places of most government departments who an official serves and the answer is either a Minister or a Ministry or a set of client government agencies. The notion that the object of government is to facilitate the wealth, health and security of New Zealand citizens has vanished into the PC-waffle of an enormous library of strategies, annual reports, manuals and guidelines. Process has replaced outcome as a measure of performance. If the process is correct the outcome doesn't matter.

Perhaps the best illustration of this over the past nine years has been the Government's transition of emphasis from when it was first elected, back in 1999, to where it is today. Back in 1999 the Government made a great deal of noise about the need for New Zealand to become an innovative economy. In 2001 we had the "Catching the knowledge wave" conference featuring Professor Michael Porter with the new Prime Minister talking up innovation. Then slowly Labour lost interest in innovation as it failed to achieve anything and became aware of how badly past governments had neglected infrastructure. It threw ever increasing sums at infrastructure and yet for all the money it spent progress remains painfully slow. Then last year the Labour decided that climate change was the go and brought out plans to introduce the world's most ambitious greenhouse gas market. The result will have serious consequences for most of the productive economy. Slowly the Politicians have given in to our bureacracy which has proven itself to have no idea how to create opportunity and innovation but is very good at penalising people and burying them in regulation.

If you want a metric of New Zealanders views on opportunity one need go no further than net migration figures. The simple fact is people migrate to where they see safety and opportunity. After 9/11 foreigners fled here and kiwis either came or stayed home. Since then those who live primarily in the UK and South Africa see opportunity in New Zealand. Those who live in New Zealand see it in Australia. Today, from this metric, we can see New Zealanders are nearly as disillusioned as they were after nine years of National.

To my mind the issue of Kiwis migrating to Australia is more significant than wave of Poms migrating here. Britons (or British based kiwis) are comparing their opportunities in a very competitive labour market with their opportunities in New Zealand. Their incentive is to achieve a better life-style by trading off less income against less stress. Kiwis by comparison are simply comparing their potential opportunities in our sister Australian states with their opportunities at home. In other words the go-getters are going. The cruisers are coming. Looked as a single domestic Australasian migration market New Zealand does well at pulling in outsiders who want to take it easy but very badly in competition with New South Wales, Victoria, Queensland and most recently Western Australia for those who want to "get ahead".

The reason we do badly has nothing to do with the intrinsic qualities of any of these Australian States. Australia's advantages as a land are easily matched by its disadvantages. It has everything to do with the way we are governed - and the fact is New Zealand is governed very badly indeed. What attributes am I referring too?

  • Small-mindedness - NZ government is immensely small-minded
  • Penny-pinching - the notion of investment is unknown to our bureaucracy
  • Mean-spirited - NZ government policy is dour, harsh and grasping
  • Arse-covering - Covering butt is more important than outcomes
  • Knocking - NZ government prefers to knock citizens down than help them up

Nowhere could this be better documented than in the New Zealand short film "Here to help". Now it is certainly true that seeking broadminded, helpful generosity in any inland revenue office in any government of the world is likely to be a somewhat Quixotic venture but there is a special distinction that applies only to New Zealand government revenue agencies. That is that New Zealand has the fourth highest tax revenue/GDP ratios in the world. It is fully a third higher than Australias. Moreover the New Zealand tax surplus is nearly the size of Norway's despite the fact that Norway is primarily an oil producing nation and New Zealand's main export is cheese. In short our government is at its best when bleeding us white.

And perhaps having a high tax/GDP ratio might make sense if New Zealand had a particularly generous social welfare system, excellent healthcare and/or education system but the social welfare system is barely adequate, the healthcare system can't compete with first-world nations and the education system holds together more on good will than good management.

For what a lot of this comes down to is the apalling cock-ups perpetrated by the 'reforming' Labour government between the years 1984 to 1990 and then further compounded by the National Party from 1990 until 1993. This was a set of reorganisations and privitisations following in the line documented by Naomi Watts in The Shock Doctrine. But as
Reforming Education, 1989-1996, The New Zealand Experience, written by Graham and Susan Butterworth shows most of the reorganisation was carried out by the operationally ignorant pursuing half-baked interpretations of foreign theories. The result was a Government system which is hugely inefficient and distortionary.

A few examples are perhaps required.

The Electricity Department was broken up into a series of State-Owned Enterprises. Originally intended as an interim step toward privitisation that never happened. The result is disputes that used to be resolved in Rutherford House now get resolved in Court at enormous cost. All Electricity SOEs generate not only huge profits but also pay large amounts of tax while the price of electricity rises. The market, which was meant to encourage private sector investment in generating capacity has, in fact never done so. The net result is that we have pretty much the same electricity system we always had but pay loads more mostly for huge overheads for administration.

The Health Department was broken up into first a series of Crown health agencies and then later District Health Boards. The idea was that they would provide better financial management of burgeoning health expenditure. In fact what has happened is that nearly all of them are in huge debt to the Crown (ie spending didn't stop) any attempts to sell health services to foreigners were politically crushed (so much for innovation), the doctors are pissed off and leaving and the nurses and service workers striking to recover lost income. The notion that local communities would hve input through elected representation is, like local government democracy, a farce. And when things go badly the Minister steps in and appoints a new board (as for example at Capital Coast Health). Meanwhile important preventative functions that were once managed by the Department (food safety) have been largely lost.

And perhaps the ugliest of all the 1990 creations is our system of local government. Before the reforms New Zealand had a hotch-potch of buroughs, city councils, catchment authorities, pest destruction boards etc. This was all rolled into a system of very corporate little territorial local authorities and regional authorities based on catchment boundaries. The result was that a lot of smaller communities lost their sense of control over local resources while some mayors let their newfound corporatism go to their heads and embarked on raising debt to silly levels. Gradually over the years however more and more central Government duties have been delegated to local government on the assumption that it is 'representative' but with voter turnout averaging below 50% it is hard to claim that these institutuions are democratic at all. Left with no other levers to raise funding local Government has pressed its powers into private property at an astonishing rate such that now practically any improvement becomes a matter between a property owner and fee collecting local government rather than property owners. Local Government has also done its best to raise property prices ( on which its rates are derived) by limiting the supply of land for development. The result as this study by MED economist Arthur Grimes has shown is that prices have been unduly increased.

For the simple fact is New Zealand, with only 4 million people, is very small. Some city councils manage four million people without anything like the overheads or tax-take of the New Zealand Government. In theory the government of New Zealand should be very light, very nimble and very cheap. In fact it is very heavy, very slow, and very expensive.

All of this is basically to suggest that Wellington needs a complete and total ground-up overhaul. But instead of carrying out more 'Shock' tactics what is really needed is a serious investigation into the principles of Government in New Zealand. We need to think long and hard about the framework for governance and administration. Setting objectives and limits which do not get changed every six years when one Party finds them inconvenient.

We need to think about:

  • Who is government for? and how is that demonstrated?
  • How is its integrity to be protected?
  • What output targets should be defined either as absolutes or as ratios?
  • What must the New Zealand Government never do? (one should never constrain what is allowed only what is not allowed).
  • What are the processes for defining interim strategies and targets?
  • What are the limits of Ministerial authority?

Ideally these issues would be set in a Constitution but the practically of that is somewhat wanting. A better approach would be to begin by developing a set of principles for the State Services Commission and the Audit Office. The State Services Commission together with the Audit Office would then require the Commissioners and chief executives of the various Government agencies to work towards meeting these objectives.

If nothing else the 1980s proved that the revolutionary approach to restructuring produces hastily cobbled together structures at enormous cost and disruption. What is needed is an evolutionary approach towards clear goals and targets. Ideally in this way government will then progress toward a smaller size, greater responsiveness and a more supportive approach toward the endaevours of the private sector which ultimately supports it.

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