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Gordon Campbell on Treasury and the resurrection of Brash

Written By: - Date published: 1:33 pm, July 22nd, 2009 - 12 comments
Categories: articles, national/act government - Tags: , , , , , ,

Gordon Campbell has a great piece over at Scoop about Treasury’s latest ideological outburst and the resurrection of Don Brash. He points out the futility of choosing a man who played a large role in creating our wage gap with Australia in the first place to head a commission designed to close it:

Brash wants to know why New Zealand wages are lagging behind those in Australia. How likely is it – do you think – that he will consider even part of this gap goes back to the industrial legislation passed in the 90s, the express purpose of which was to drive down wages, for the short term benefit of New Zealand employers? Isn’t it kind of ridiculous that the same National Party that deliberately set out to cut wages in the 90s, is now throwing taxpayer money on a commission to find out why our wages are now so much lower than in Australia? Keep in mind that Brash is getting this cushy sinecure in the same week that the rest of are being told to batten down the hatches and tighten our belts.

Is Brash likely to sheet home our low productivity levels to the past failure by the likes of Telecom and the various owners of NZ Rail to do much more than asset strip their New Zealand operations? Has the readiness of business to piss away its profits in dividends and repatriated profits (rather than make capital investments) got anything to do with our low productivity rates? What Brash and his mates in National and Labour did was create an economy where the few could extract monopoly or near monopoly rents from a captive population of consumers. Is that process likely to be critically examined by our new productivity police?

Moving right along .is business likely to be blamed for its failure to make capital investment in the new technology basic to any genuine and sustainable lift in our productivity levels? Is Brash likely to berate the private sector for its failure to invest in r&d, and for its ongoing parasitical reliance on the government to carry out r& d in this country as underlined by the scrapping of the Fast Forward Fund. Is Brash likely to condemn the investment flows out of New Zealand, and the contribution this makes to our current account deficit?

I think we know the answer to all of these questions. Treasury and Brash are blinkered ideologues, and always have been.

Full article here.

12 comments on “Gordon Campbell on Treasury and the resurrection of Brash”

  1. What an excellent article. This is such a lost opportunity to actually do something about productivity and closing the wage gap with Australia. Instead we’re going to have 15 year old economic ideology rolled out in front of us again.

    It didn’t work first time around, why the heck would it work this time?

  2. Quoth the Raven 2

    This was a really good bit of the article:

    Treasury after all, is not exactly the best placed body in a practice what you preach sense – to be chiding others on how to lift their game. As many commentators have noted, the process should begin with Treasury being required to contract out its forecasting work. For years and years, Treasury has been notably more inaccurate than the competition – it miscalculated the likely tax revenue for instance, for six years in succession. Treasury boss John Whitehead must know this. He has been in his current post since 2003, and thus bears ultimate responsibility for his department’s forecasting track record. No sign of a mea culpa in his speech, though.
    Treasury should also be willing to open up its policy advice to competition. (On a range of economic issues that affect exporters, the government would be doing much better to contract with Berl for policy advice. Why not ask the exporters who they think is on the right track about interest rates and the exchange rate Berl or Treasury?)

    Treasury should practice what it preaches.

    • Ari 2.1

      I’m curious who he’s actually comparing Treasury to, though. It’s really hard to qualify inaccuracy of forecasts because being forecasts there is always some degree of inaccuracy. People seem to think we should be hitting it on the button all the time, but that’s certainly not practical.

      Which of treasury’s counterparts is doing better, and what would Gordon attribute it to, I wonder.

  3. Pete 3

    Surely a must-read for everyone – though be warned, much of it is dripping with sarcasm.

    Campbell is preaching to the choir here, but it would be good to have the questions he raised made explicitly answerable in the workings of the ‘Productivity Taskforce’.

  4. Zaphod Beeblebrox 4

    This “Productivity Taskforce” is a golden opportunity for Labour to show how they would handle things differently. Maybe they should appoint one of their own. Would be a really good way to drive home the point.

  5. Mr Campbell’s piece is excellent and, in the main, correct. There is an obvious sequitur. We, that is, the Left of Centre, were in government for 9 years, in which labour utilisation remained high, capital shallownesss continued, labour productivity was low, management capability remained at best modest, and a whole-of-government approach to improved performance was mooted, but never achieved. We can rightly criticise policy settings in the 1990s, but we need to be equally robust in challenging our own performance on this front, for one day, we will be back in power.

    • So Bored 5.1

      Rob,

      I like the expression “capital shallowness”. I interpret that to mean lack of automation / mechanisation etc, hence labour intensive. One of the primary reasons why we should be cautious of the capital intensive approach is that it is per se energy intensive. Whist oil and electricity has been relatively cheap its a valid approach, the issue will come when energy becomes scarce and the price makes the automation marginal.

  6. stormspiral 6

    Closing the wage gap with Oz doesn’t necessarily mean higher wages or more jobs.

    In the Brash/Whitehead constituency, it can just as easily mean higher wages for the top people and less for the lower waged. If the median or the average is raised, it can simply mean more for the rich and less for the poor and the middle income people.

    Productivity increases and automation can also easily transmute into fewer jobs.

    …and don’t let me get started on the price of electricity or their rorting practices.

    • Pascal's bookie 6.1

      …it can just as easily mean higher wages for the top people and less for the lower waged. If the median or the average is raised, it can simply mean more for the rich and less for the poor and the middle income people.

      Kevin Drum over at Mother Jones gets quite shrill after reading an interesting WSJ piece on this trend.

      • RedLogix 6.1.1

        If the median or the average is raised, it can simply mean more for the rich and less for the poor and the middle income people.

        The median is not the same as the average. Statistically they are quite different measures.

        The average income is the sum of all incomes divided by the total number of all incomes. It is prone to the kind of distortion that you are thinking of because a relatively few high incomes will lift an arithmetic average significantly.

        The median income is when you rank all incomes from smallest to largest (like getting everyone to form a long line from shortest to tallest)… and picking the one that is exactly half-way. Exactly 50% of people will have an income smaller than this, and 50% larger…. and is generally considered a much better ‘average’ measure of incomes.

  7. RedLogix 7

    What also fascinates me is why Don Brash’s political star has been so rapidly ressurected. With someone pressuring the Police to investigate ‘stolen emails’ and now this high profile appointment, one has to wonder who are the patrons of this spectacularly failed and flawed ex-leader.

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