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ImperatorFish: Is National Really Hands-Off Then?

Written By: - Date published: 4:03 pm, January 29th, 2013 - 16 comments
Categories: david shearer, national - Tags:

Scott at Imperator Fish has kindly given us permission to syndicate posts from his blog – the original of this post is here.

In David Shearer’s speech on Sunday he made much of National’s “hands-off” approach to governing the country, comparing it to Labour’s preference for a more interventionist “hands-on” approach.

There has been some debate about what the terms “hands-on” and “hands-off” really mean, and it appears that some within National don’t like it when people use the term “hands-off” to describe National’s style of government.

It’s true of course that this government still has its hands on a whole lot of things, and will continue to do so. National can point to various spending initiatives to show that it is just as “hands-on” as Labour or the Greens would be.

But “hands-off” doesn’t mean “do nothing” or “spend nothing”. Every government is active in numerous areas. When David Shearer uses the term “hands-off” he is really talking about a mindset that influences almost everything John Key and his government do.

A hands-off government prefers market-based solutions to problems to those imposed by the state. State-imposed solutions require active interventions and active management by government, and these often require more regulation and more spending. A hands-off government looks for the private sector to take the lead, and will only reluctantly intervene in markets.

Political considerations will normally require a hands-off government to do things it would rather avoid, or to hold back from pushing ahead with reforms that would reduce its involvement in market activities. If a hands-off government becomes hands-on in a particular area, this will often be a result of lobbying from business interests who generally support the hands-off government’s approach, but wish to have the benefit of the government’s largesse for their particular sector. This explains why a hands-off government might still spend billions of dollars on a particular type of infrastructure, such as roads.

It’s also important to understand what isn’t mean by “hands-off”. It doesn’t automatically follow that a hands-off government will have a reduced part to play in everyone’s lives. For example, a government can only achieve its desire to have a reduced role in the provision of welfare if it moves people off benefits. A hands-off government might achieve this by putting in place procedures that target people perceived as slackers or undeserving, but these procedures can have devastating consequences for people.

So is National really hands-off? In absolute terms the answer is no, because the National government continues to be involved in lots of activity. But relative to Labour and the Greens the answer is yes.

Here are just a few examples of hands-off activity by National.

  • National clearly has a preference for private ownership of assets over state ownership. An obvious example of this in action is the partial asset sale programme. The only thing preventing a larger asset sales programme is public opinion.
  • National wants a smaller government and sees the public service as a necessary evil rather that a vital tool to transform the economy. Both John Key and Bill English regularly express the desire for a smaller public service, and National has taken active steps to reduce the number of public service employees.
  • National believes that the state should not be involved in providing welfare or other entitlements to those in need except where absolutely necessary, because welfare results in dependency. Welfare reforms have focused on pushing beneficiaries off the government’s books, when a more hands-on government might have instead focused more on finding work for those people.
  • There is a mindset that people should self-insure wherever possible, rather than rely on the state to provide. The government’s efforts to dismantle the ACC system are a good example of this mindset in action. The government has made no secret of the fact that it wants to open up some areas of accident compensation to private providers in the long term.
  • National has actively sought to outsource the provision of many services traditionally provided by the state. For example, private prisons, Whanau Ora.
  • John Key appears driven by an overriding belief that markets and businesses works best when governments don’t interfere. This belief has resulted in further moves to deregulate the labour market, giving employers more freedom and flexibility, and reducing the influence of unions. e.g. the 90 day trial period law, the “Hobbit” law.
  • National believes that private providers may be better at educating children than the state. This has led to the creation of a charter school system (albeit only a trial at this stage).
  • National also believes that parents are better placed to provide for and make decisions about their children than the state. This manifests itself in a National Standards system opposed by educationalists, and the government’s reluctance to implement a “food in schools” programme.
  • National continues to show a reluctance to explore options for addressing New Zealand’s volatile currency, such as giving the Reserve Bank more powers. The preference is to leave the currency markets to go where they may.
  • John Key appears to prefer that the government does deals with private companies to provide infrastructure, rather than itself provide that infrastructure e.g. PPPs, the Sky City convention centre deal.
  • There is a general unwillingness to look at serious tax reform as a tool to stimulate economic growth and encourage investment. Tax reforms have mostly been tweaks around the edges, and the readjustment of tax rates.
  • There is also a belief that additional layers of government create complexity, delay and bureaucracy. This explains the establishment of the Auckland “Supercity”, and the government’s actions in the Canterbury region.
  • National has a reluctance to intervene to address the nation’s long-term problems, because long-term planning would require a more active government. John Key’s refusal to take any action to address the problem of our ageing population is a good example.
  • National is also reluctant to involve itself heavily in the housing market, although this may change if housing continues to be a hot political topic.
  • Influencing almost every decision is an all-consuming focus on reducing government spending (and thus governmental activity) and meeting an arbitrary budget-surplus deadline, as opposed to continuing to run deficits in order to stimulate growth and encourage economic activity.
  • National’s broadcasting policy has at its heart a belief that the state really shouldn’t be involved in broadcasting. This allows commercial players to do largely as they please, encourages monopolies, and provides very little funding for the few remaining state-owned broadcasters, who are encouraged also to behave like commercial players.
  • The desire not to burden businesses with regulation has resulted in a reluctance to take active steps to protect the environment. Progress on protecting the environment has tended to be slow, and business interests have dominated policy-making. For example, the rewriting of the emissions trading scheme to favour polluters.

Some people will argue that these kinds of hands-off activities are appropriate and desirable, and my aim with this post isn’t really to argue that National is all bad and Labour is all good.

But it should be obvious that, compared to Labour or the Greens, National is very much a hands-off government.

16 comments on “ImperatorFish: Is National Really Hands-Off Then? ”

  1. Salad 1

    I agree with the conclusion. These are the differences in policy/underlying philosophy that Shearer and co. should be articulating. Making some vague references to “hands off/on government”, and not “big government” but “smart government”, as is being done at the moment, just invites confusion. I hope things improve on this front, because I think it’s basically a good approach.

  2. ad 2

    “A hands-off government prefers market-based solutions to problems to those imposed by the state. State-imposed solutions require active interventions and active management by government, and these often require more regulation and more spending. A hands-off government looks for the private sector to take the lead, and will only reluctantly intervene in markets.”

    This relates pretty closely to the post on the Manufacturing Inquiry.

    I would argue that this is a very interventionist government – but the progressive political end doesn’t like which industries get the intervention, or who is taking the credit.

    Faced with the same situation of Hobbit or No Hobbit, would a Shearer-led Labour behave much differently? Certainly they would have folded on the tax rebate, just as Key did.

    Faced with sustained droughts and a need to improve per-hectare productivity, would a Shearer-led government not invest directly in pastoral irrigation?

    Faced with “no need to pay for convention centre” and compromise policy, versus massively expensive convention centre and purer policy, again, would a Shearer-led government do much different?

    Faced with a motorway PPP to better redistribute intergenerational procurement costs of any transport infrastructure, not just a motorway, would a Shearer-led government do different?

    Or Rugby World Cup, or Crown research institute commercialisation fo research, or much, beyond the policy limits of selling electricity generation assets?

    If Shearer had been asked for cash from Windflow Technology, without asking whether it competed against the government’s own generators, what would he do?

    Much of the above has been longstanding Labour policy for quite a while.

    I don’t think your binary is strong enough not to collapse after any scrutiny. If the answer progressive types is always “the state”, what’s the question you really want to answer in the first place?

    • Draco T Bastard 2.1

      Faced with a motorway PPP to better redistribute intergenerational procurement costs of any transport infrastructure,

      That’s physically impossible. The true costs of anything built must be met now. As far as i can make out the “pay for things over their lifetime” BS is just another excuse the rich come up with for us to give them even more money.

      • Coronial Typer 2.1.1

        Public debt, spread over many generations, is at the core of “hands on government”. Left to the market, what major infrastructure would get done without the state procuring it? Rhetorical question. Almost none at all.

    • Excuse me, but there is no way to fairly distribute infrastructure costs intergenerationally. (granted, there are ways that are blatantly UNfair, but the status quo is not one of them) That denies the reality that as our knowledge and expertise increase, we are capable of transitioning to more expensive infrastructure. If you want that infrastructure in your lifetime, you have to either borrow or pay for it up-front, like previous generations did. Selling something off is not building public infrastructure, it is the government funding private infrastructure, which may be appropriate in circumstances like the housing market failure, but is completely unjustifiable in cases of monopoly infrastructure like transport.

      These attempts to sell infrastructure aren’t fair, they’re intergenerational theft from the public. If you want to build it with public funds, it needs to save the public money and it needs to have significant and wide social benefits before I’ll accept that is okay.

      • Coronial Typer 2.2.1

        A ppp is a way of procuring something, with a broad set of subtypes, and need not have anything to do with selling anything. Agree that one generally raises public debt to do it.

        • Draco T Bastard 2.2.1.1

          The government can create money, use taxes to then remove that money from the financial system, and thus has no need to go into debt. The money will be provided today to supply the resources to build the infrastructure today and paid for through taxes today.

          • ad 2.2.1.1.1

            That is just not how it works, and likely here never will.

            • Draco T Bastard 2.2.1.1.1.1

              The problem is, of course, that the present system doesn’t work. That’s what all the GFC, The Great Depression and every other recession in the last 5 centuries was ever about.

              If nothing changes then nothing changes.
              Definition of insanity: Doing the same thing over and over again and expecting a different result.

  3. karol 3

    A hands-off government prefers market-based solutions to problems to those imposed by the state.

    That’s the rhetoric, but it is not always the practice. The “neoliberal” philosophy is the spin used to sell the policies of the New Right. In practice, they will do anything to ensure the dominance of the wealthy and powerful, corporate-loving elites.

    As Aaron Etteringer describes it in the article “Neoliberalism and the Rise of the Private Military Industry”, neoliberalism involves two moves. The intial one is a “roll back” of the state. This is followed by both continued roll back, and “roll out” when it is deemed necessary. Roll out involves drawing private enterprises into the realm of state activities: e.g. PPPs.

    On p 2 of his book, David Harvey explains the general theory of neoliberalism. On p19, he argues that the practice is often very different from the “hands-off” theory.

    Neoliberalization has not been very effective in revitalizing global capital accumulation, but it has succeeded remarkably well in restoring, or in some instances (as in Russia and China) creating, the power of an economic elite. The theoretical utopianism of neoliberal argument has, I conclude, primarily worked as a system of justification and legitimation for whatever needed to be done to achieve this goal.

    New Right governments may talk small government, and the “hands off” kind of philosophy, but, as with our current government, they will also be very hands on in protecting the power of the elites, and undermining those who are less well off and less powerful.

    In using the “hands on” rhetoric, Shearer is attacking the New Right’s spin, but not necessarily challenging the power of the elites. Sure Shearer and Key will be hands on in different ways, but he test is, who does it benefit and how? Shearer’s flagship housing policy, for instance, foregrounds a kind of PPP, and leaves state housing in limbo. Auckland’s supercity, is ultra hands on by the unelected CCOs.

    I have seen no statements by Shearer showing that he will move away from his notion of the “undeserving beneficiary”, or that he will restore social security to the way it was originally meant. Sure there will be more state run provisions than under Key’s agenda, but how far will he go to restore our state assets to public ownership?

    • handle 3.1

      “In using the “hands on” rhetoric, Shearer is attacking the New Right’s spin”

      How does echoing the term amount to challenging it?

    • Draco T Bastard 3.2

      …but how far will he go to restore our state assets to public ownership?

      He won’t. He really is as much a capitalist as John Key, he’s just slightly nicer about it.

  4. Draco T Bastard 4

    A hands-off government prefers market-based solutions to problems to those imposed by the state. State-imposed solutions require active interventions and active management by government, and these often require more regulation and more spending.

    Just because the economists say that a free-market requires less regulation doesn’t mean that it actually requires less regulation. IMO, a free-market actually requires more regulation and more government as everything needs to be properly costed which this government and the business community are actively trying to prevent.

  5. Gruntie 5

    The new car WOF policy is another example of hands off govt. no more Nanny State from Keysie and Co. while they are at it , why don’t they stop subsidising cancer screening – let the owner be responsible for maintenance of their breasts, bowels and prostates –

  6. Gruntie 6

    The new car WOF policy is another example of hands off govt. no more Nanny State from Keysie and Co. while they are at it , why don’t they stop subsidising cancer screening – let the owner be responsible for maintenance of their breasts, bowels and prostates

  7. ak 7

    Remembering of course, that the Nasties rode to power in 08 on the back of nothing more thatn a prolonged campaign of heavily orchestrated misogynist hatemongering and agreeing with everthing that Labour had done.

    It was overwhelmingly Nanny State and Labour Lite, pounded from every talkback and MSM pore at every opportunity with reckless, manic abandon.

    Remember, e.g, the Herald red front page, the fact that the entire NATZ caucus was whipped into voting “anti-smack” with utter media impunity, and that Trev got total MSM blame for his and Tau’s wee slap-a-doodle (at which points the polls turned south for Labour and stayed there).

    As Brownlee noted in The Hollow Men emails, “the work was done” with the media months ahead.

    So yes, the “anti-Nanny State” propagandists are naturally going to be “hands off”.

    There’s actually nothing but hatemongering and the transfer of wealth upwards to put their hands on.

    Although some say wee Johnny has his hand on it every time he speaks.

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