Crises that profoundly test a small developed state like New Zealand have required huge growth in state strength and policy power. But was it the change we needed?
In April 2020 few knew how deep the COVID crisis would go. Would it liquidate our jobs, our future, indeed would it kill or maim us by the tens of thousands?
The response by the state was as we have not seen since 1939. Government in New Zealand spent more on business support than nearly any other developed country as a proportion of GDP. Through Stage 4 and 3 lockdown much of New Zealand’s entire wage bill was sustained by the state. The Reserve Bank bought tens of billions of bonds. Unemployment remains low and wage pressures are strong.
The government has not wasted the time in its structural responses. It has used the last three years on a massive policy programme of re-centralisation in major agencies.
Health has been pulled from the regions into the centre and the old policy-provider split out of the 1980s almost completely dissolved. Democratic input into the system has been erased, public measure accountability other than to the Minister has been stopped. It is a system now screaming with discontent whether you work there or need medical help.
State radio and television has been pushed together. It will evolve into a media power strong enough within New Zealand to contest the MediaWorks – NZME duopoly. Who knows how it will be regulated or be held to account by. Who knows what its quality measures are.
All polytechs and industry training organisations are being merged into a single national umbrella. Results are still pending on how this is going to shake out since the person hired to lead it is on leave for the entire year of its formation.
Kainga Ora HNZ is now a massive development machine of a scale that significantly alters the direction and density of Auckland. It has a big enough market presence to tilt labour and construction supply chains alike.
Water, wastewater and stormwater is being removed by force from local government and reaggregated into four new entities without democratic oversight. The entire industry is also being re-regulated for both price and quality.
Other areas with massive strength aggregation include biosecurity, security intelligence, energy, transport and climate mitigation.
Also on the table is legislation for government appointments to control Fonterra’s commodity price committee. With over 80% of our dairy production, Fonterra remains by a long way our single most important exporter.
That’s a whole lot of new state control across many areas of New Zealand, public and private.
So much domestic policy in such a small country.
But was any of this policy power what we needed?
We remain one of the most unequal populations in the developed world. Our wages are uncompetitive. Our salaries are worse than average.
Compared to 2019 our country is less internationally connected, less economically diverse, more vulnerable to China, and made sick by real estate.
We remain a low-wage, low-productivity, low security, low export country. World beating companies have not arisen. We didn’t transition into the high value weightless economy we needed to.
Due to the extent of our wealth concentration, our functional duopolies, monopsonies and monopolies, we are now one of the least diverse and most concentrated capitalist societies in the developed world.
There was and is no economic transition plan.
All attempts at improvement have been in minor sub-therapeutic doses.
After all that massive policy drives over three years of sustained crisis, we have the same rich people accumulating, the same shrinking middle begging for ever greater subsidy, and a rapidly growing vulnerable and older majority mostly living off welfare and needing proportionally more of health, disability, and pensions.
Strikingly none of the domestic reforms have clear promised outcomes.
The most important policy work that could have been done – the one that makes for a strong economy that develops a prosperous small state capable of supporting great social outcomes – simply didn’t happen.
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