Archive for ‘May, 2014’

I have noted with growing despair the xenophobia which is becoming a political commonplace this election cycle. On the left it’s about house prices.* But this post is not about racism; it’s about development.

The national median house price is $415,000, a figure skewed substantially upwards by the extraordinary cost of housing in Auckland. But you can buy a three bedroom house in Taumarunui for $26,000, or for $67,000 in Tokoroa. These are extreme examples, but for considerably less than half the median price you can buy a charming colonial villa in Tapanui ($149,500). For a little more than half the median you can buy a newly-renovated house on an acre in central Gisborne ($225,000). Similar houses are available for not very much more money in larger regional centres like Dunedin and New Plymouth, and that’s without considering many apartments, townhouses and more modest types of dwelling.

There are houses out there: there just aren’t jobs to go with them.

The chart above shows income and employment growth by region, and this is why the houses are so cheap. The growth is just not there. (From the Ministry of Business, Innovation and Employment Regional Economic Activity Report 2013).

It’s not just jobs, though; there’s more to life than work. People need confidence in their opportunities in a new place before they will, as Jolisa Gracewood says, buy shares in that community by owning or renting a house there and settling down. They need schools and hospitals and civic institutions and a sense of belonging, they need certainty about their community’s future, and their future within it.

The community likewise needs needs certainty in its new arrivals. A gold rush or an oil boom might provide jobs and cash, but it doesn’t provide certainty for either group. Certainty — and opportunity — comes from deep and sustained development. The fly-in/fly-out mining towns in Australia are a good example, and while that industry has been instrumental in maintaining Australia’s robust economy, its direct value to the regions has been limited — trickling down, lifting all boats — without the adoption of targeted development initiatives such as Royalties for Regions, which seek to return a share of the proceeds of industry to local communities.

As Eric Crampton said about the census income growth figures, increases in average wages across much of the South Island have been coupled with decreases in population, as people on low incomes move in search of better-paying work. Rob Salmond agreed, saying:

The regions with the supposedly highest median income growth also had some of the worst records in population growth, while the areas whose populations grew the fastest had relatively little change in median incomes.

Returning to the MBIE chart above, notice the regions in the top-right quadrant: the West Coast, Waikato and Taranaki. These are distinguished by two characteristic sectors: dairy, and mining, each of which provides a relatively small number of well-paid jobs within a narrow sector, skewing up the income levels but not necessarily changing the overall development picture very much. As crucial as the dairy industry, in particular, is and will continue to be to New Zealand’s economy, a complete solution to development it sure ain’t. Which is why you can buy an enormous Moorish-inspired villa for $220,000 in the middle of gas and dairy country.

Diversification and specialisation
The object of a regional development policy must be to promote structural change, to create industries and communities that are sustainable in their own right — neither transient nor exhaustible, and which attract people whose commitment is likewise neither transient nor exhaustible. These jobs need to go beyond the traditional churn industries like tourism, hospitality and service; though, of course, these jobs will be needed, they should be incidental to development, not its purpose. They need to be high-value and export-led — unlike, for example, our timber industry, and our wool industry. One of our key advantages here is our reputation for being clean and green — demand for premium food, the safety and quality of which can be assured, and including organic and sustainably-produced, is likely to grow strongly and we seem ill-prepared to meet this opportunity, as just one example. Another example is the potential of Māori business, which is as yet terribly underutilised.

In New Zealand we talk a lot about the roles of government in distributing wealth, and in ensuring public access to health, education and other scarce resources. These levers are well-recognised and there is at least a moderate degree of bipartisan agreement on their use. This is not the case with regional and economic development strategies, where there are deep practical and ideological divisions between the parties. I can see why the noninterventionist technocratic right parties like ACT and National are reluctant to consider — or even recognise the viability of — the sort of robust, hands-on regional development strategy that will sustainable economic and community growth in regional areas and persuade the frustrated and overcommitted residents of our major cities to risk a change. It will require considerably more input than building roads, granting mining permits and water rights to permit the extraction of value directly from the land. It will require a lot more than public-private partnerships and white-elephant monorails through virgin rainforest. It very likely will require PPPs, roads, and mining rights, though, meaning the left will have to reconsider some of its positions as well. It will require thorough investment in infrastructure, especially transport infrastructure, and purposeful community-building, possibly funded by a deeper cut from mineral royalties, a localised share of revenues from key industries, or loans from the government. It will probably require considerable autonomy devolved to the communities affected, and the strengthening — rather than the weakening, as is currently happening — of local government. It needs to be a little bit New Deal and a little bit Think Big.

Diversity is resilience, and our economy is very narrowly based. That must change. Different regions have their own strengths — environmental and historical, in terms of personnel and capability — and this represents an opportunity to improve the national economy holistically, by strengthening each of its component parts, rather than by building one economic muscle until it threatens to throw everything else out of balance. In many cases these nascent strengths will need considerable augmentation, and some will need to be developed almost from scratch. That requires significant and sustained investment in research and development — contributions to which the National government cut during the time when it was most crucial; when talent needed to be incentivised to stay here, and when industry needed to prepare to take advantage of the recovery, when it arrived. Public-sector research agencies can be beneficial in quite unpredictable ways, and when it comes to blue-sky research, patience can pay off enormously. If you’re reading this over Wi-Fi, you can thank the Australian government’s scientific agency, the CSIRO.

People and places
One obvious and direct means by which the government can influence regional development is by decentralising — by relocating government departments or agencies to regional centres. At a minimum, governments could decline opportunities to actively dismantle regional industries — such as Invermay — for the sake of short-term cost savings or change for its own sake.

It is clear that having a critical mass of mobile public servants all located within a kilometre of each other can increase efficiency and cross-pollination in government and business. Some significant new businesses — such as Xero and Vend — clearly benefit from strong cohabitation and the development of their own start-up cultures. On the other hand, in the past decade telecommuting has become plausible for a large proportion of people whose work is predominantly reading, writing and talking on the phone, and the major reasons it is not more widely used are to do with middle-managers wishing to retain some measure of direct control over their staff, which they label “team culture”.

There are costs and benefits to decentralisation, but it is hard to shake the sense that government, and the public service, are growing increasingly remote from the people whose interests they ostensibly serve. The gap between the experience of living in Auckland or Wellington and living in the rest of the country is vast already, and is likely to grow. Over the long term, as regional development improves, mobility will increase, as the economic and cultural risk of moving to or from a major centre will decrease, and this seems likely to yield an even greater cross-pollination benefit than that sacrificed by decentralisation.

Political laziness from the left
The reason the housing markets in Auckland and Wellington are refusing to cool is because people — both internal and external migrants — want to live where there is opportunity, and Auckland and Wellington is where the opportunity is. Blaming foreigners for the continually-rising house prices in Auckland is counterproductive. It’s lazy populism for the opposition to monger fear on these grounds, and it’s clear why the government is perfectly willing to let them do so: first because it cuts against the left’s political brand, and second, because it frees them from responsibility for what has proven a poor regional growth strategy during their time in government.

Labour and the Greens have taken strong and well-articulated positions in favour of regional development and smart growth but they’ve also gifted the government an opportunity to reframe what is essentially an economic development debate as being about housing and migration, when the former is a symptom and the latter is all but irrelevant. As a consequence the whole discussion gets sucked into an unwinnable partisan slagging-match. This isn’t so much a failure of policy, but a failure of political emphasis. It should be relatively easy to correct: they mainly need to stop complaining about the yellow peril, and start talking about the future of a country where wealth and innovation is spread beyond its main centres.

Although I disagreed with his dismissive attitude towards the marriage equality debate, it seems likely that the once and future member for Napier, Stuart Nash, will be an important member of the Labour caucus in future. Late last year he argued persuasively that the regions are crucial not only for the economic wellbeing of the country, but for the wellbeing of that party, and so for the wider left. As he says:

If any party only holds seats in Akld, Wgtn, Chch and Dunedin, then they don’t have a particularly wide mandate to govern because they haven’t got MPs in caucus putting forward the views of the vast majority of geographic NZ.

To an extent it is understandable that this hasn’t happened yet. Development is hard. It takes a long time and a lot of money, and in a political context where governments change no less often than once per decade, it requires an uncommon degree of accord between increasingly diverse political movements. With the Greens now forming a substantial and apparently-permanent adjunct to Labour on the left, and the emergence of new climate-sceptic and anti-environmentalist sentiments within National and its allies, this is a big ask. But it needs to be done nonetheless. The regions aren’t going to develop themselves; they haven’t got the wealth or the people to do so, because it’s all tied up in tastefully-renovated villas on the North Shore and in Thorndon.

This is not an entirely theoretical discussion for me. All going to plan, at some point later this year my family and I will move from the Kāpiti Coast to Dunedin. My wife is going to the University of Otago to work on the postgrad study she’s been wanting to do for 10 years. We’d have done it years ago if we could — every time we’ve been to Dunedin, we’ve said we’d move there in a heartbeat if only there was work. Mostly what’s changed now is that I can bring my work with me.

The reason we live out here is because out here is where we could afford to buy a house on one modest Wellington income. The idea was always to move into town at some point, but that has gotten more distant, not closer, over the past five years with Wellington’s housing market proving largely impervious to the recession. So off we go.

We anticipate significant benefits. My wife will be able to do something meaningful with her life other than raise our kids full-time or working as a rest home carer, worthy though both those tasks are. Commuting into Wellington would cost dozens of hours and hundreds of dollars a week, and at some point both of us would inevitably end up far from our young kids when they needed us. But not least among the advantages is the regional arbitrage of continuing to bring in something like a modest Wellington income while living in a place where houses are, very conservatively, $100,000 cheaper.

But there’s the thing: unless you’re privileged enough to work in a field where you can telecommute (and bosses who’ll let you), or unless you work in a literal field, moving from Auckland or Wellington to pretty much anywhere else in the country is a big risk. (In Christchurch, the case is much more complex.) You can move, but for many people, the opportunity is just not there, and the risk of giving up what you have is very great.

The government that raises those opportunities will find favour with those who want to move, those in the regions whose economies and communities are boosted by new growth, and those in the main centres who wish to stay, or must stay, who will have richer opportunities for doing do.


* On the right it’s more about asylum seekers (National) and internal threats to the colourblind state (ACT). The only party that seems clean of this is United Future, for which Peter Dunne should be congratulated.

Should NZ renounce lethal drones?

datePosted on 17:32, May 25th, 2014 by Pablo

The Diplosphere event on lethal drones held in Wellington last week was a good opportunity to hear different views on the subject. The majority consensus was that legal, moral and practical questions delegitimate their use, although one defended them and I noted, among other things, that they are just one aspect of the increased robotization of modern battlefields, are only efficient against soft targets and are seen as cost effective when compared to manned aircraft.

At the end of my remarks I proposed that we debate the idea that New Zealand unilaterally renounce the use of lethal drones in any circumstance, foreign and domestic. I noted that the NZDF and other security agencies would oppose such a move, as would our security allies. I posited that if implemented, such a stance would be akin to the non-nuclear declaration of 1985 and would reaffirm New Zealand’s independent and autonomous foreign policy.

Alternatively, New Zealand could propose to make the South Pacific a lethal drone-free zone, similar to the regional nuclear free zone declared by the 1985 Treaty of Rarotonga. I noted again that countries like Australia and Chile would oppose the move (both have drone fleets and do not discount using them in anger), but that many of the Pacific Island states would likely welcome the idea.

Either declaration would in no way impact negatively on the use of non-lethal drones, whose utility is obvious. It would also leave open to interpretation whether NZ based intelligence could be used in drawing up targeting lists for foreign lethal drone strikes, a subject currently in the public eye as a result of claims that the GCSB does exactly that in places like Yemen. The PM says he is comfortable with the intelligence-sharing arrangement as well as the legitimacy of drone strikes, and added that similar intelligence was provided for ISAF drone strikes in Afghanistan (where the US and the UK deploy lethal drones on behalf of ISAF).

His confidence notwithstanding, many Kiwis are opposed to any cooperation with lethal drone programs, so the debate could be expanded to include indirect NZ involvement with them.

I think this is a debate well worth having. I realize that the security community will want to keep all options open and be very opposed to ceding any tactical advantage in future conflicts, and that extending the ban to indirect cooperation would have a negative influence on NZ’s diplomatic and military-intelligence relations with its security partners.

I am cognizant that it may be a hard thing to actually do given the balance of political power currently extant in NZ and the hurdles needed to implement it should the proposition be accepted. One of the other panelists dismissed the idea of unilateral renunciation as simply impractical and said that the proper forum in which to advance it was the UN (cue Tui ad here).

Some may say that is silly to debate something that does not exist. New Zealand does not deploy lethal drones. However, UAVs are already present in NZ skies, both in civilian and military applications. This includes geological surveys and volcanic research, on the civilian side, and battlefield (tactical) surveillance in the guise of the NZDF Kahui Hawk now deployed by the army. The military continues its research and development of UAV prototypes (early R&D worked off of Israeli models), and agencies as varied as the Police, Customs and the Navy have expressed interest in their possibilities. Since non-lethal UAV platforms can be modified into lethal platforms at relatively low cost, it seems prudent to have the debate before rather than after their entry into service.

I am aware that the revulsion voiced by many against the lethal use of unmanned aerial vehicles might as well be shared with all manned combat aircraft since the effects of their deployment ultimately are the same–they deal in death from the sky. Given that commonality, the preferential concern with one and not the other appears more emotional than rational, perhaps responding to idealized notions of chivalry in war. That is another reason why the subject should be debated at length.

Such a debate, say, in the build up to a referendum on the matter, would allow proponents and opponents to lay out their best arguments for and against, and permit the public to judge the merits of each via the ballot box. That will remove any ambiguity about how Kiwis feel about this particular mode of killing.

UPDATE: Idiot Savant at No Right Turn has kindly supported the proposition. Lets hope that others will join the campaign.


National Lite

datePosted on 17:29, May 15th, 2014 by Lew

It’s been almost a year since I wrote anything here. Things have been complicated. Anyway, this will — I hope, and circumstances permitting — begin a return to participation. All thanks due to Pablo for holding things together.

Answer: Nobody. That’s the problem.

Today was budget day. The carnage in Australia with Joe Hockey’s first budget two days ago was worse than even the Abbott government’s enemies had predicted, with deep cuts to education, welfare, superannuation, science funding and many other fields, including the imposition of a $7 surcharge for GP visits. The contrast here could not be more stark: a return to surplus not immediately thrust into lowering taxes, modest cuts in some areas, increased entitlements in others, particularly in support for young families, and notably the extension of free GP visits to children under 13 years of age.

I’m no big-city economist so I’ll stick mainly to the political aspects. But it basically looks like Bill English’s sixth budget — somewhat like the preceding five, but to a greater extent — does a little good and almost no evil, and that basically ruins the opposition’s game plan, which relies on Bill English and John Key being terrible ogres that eat babies, rather than supporting their parents with leave entitlements. When the man touted as the Labour party’s most left-wing leader in a generation is reduced to complaining that John Key has stolen his party’s policy — as if that is supposed to be a bad thing — things are pretty dire. The opposition’s increasing desperation over the past six years, continuously prognosticating doom over the horizon, simply looks ridiculous when the doom never arrives. The government has snookered the New Zealand left by simply doing what it said it would do, and as Pablo argued persuasively at the start of the year, that makes clear how lacking the New Zealand left is in its strategic vision. They — Labour especially — are relying on the government to do their heavy ideological lifting, and when the government declines to be explicitly evil, the opposition is left with nothing to say.

When your enemies move to occupy your ideological ground, it is an opportunity to extend that ground, replacing what they claim from you with more advantageous ground deeper within your ideological territory. The trouble for Labour is that National has moved towards them, and Labour are still trying to fight them for the same ground rather than staking out more ground of their own. Six years after the “Labour lite” campaign that saw them ousted in the first place, they haven’t learned. Today’s budget has been tagged Labour lite by commentators including Bryce Edwards and Labour’s own Rob Salmond.

Due to assiduous work by National, and a conspicuous lack of it by Labour, “Labour lite” is now more or less indistinguishable from “Labour”, and Labour has offered no sort of “Labour heavy”; full-cream Labour, deep-red Labour, or whatever other metaphor you like. Because of this lack of difference, the electoral decision comes down to competence: of these two groups of mendacious grey technocrats, which is the least likely to inadvertently screw things up, or intentionally, as Jan Logie puts it, f&%k people over? That’s an easy answer: Labour demonstrates its lack of general competence every single day. If it’s not clear by now that they’re simply not as good at being the Nats as the Nats are, when will it ever be?

It’s too late, now, to change this ahead of the election. The die is cast. Labour has — again — decided to rely on political meta-strategy like syllogising failures of judgement or conduct by individual MPs out to the wider government, and it might have worked had they any sort of foundation to build upon. But they don’t. Far from full-cream Labour, Labour itself is Labour lite. Light-blue, even; 98% Ideology-free. If they’re going to play the National-lite game, they at least need to get good at it.


Something to do in Wellington.

datePosted on 11:50, May 8th, 2014 by Pablo

On May 20, 2014 from 6PM-7:30PM Diplosphere is hosting a panel discussion titled “Drone Strikes: Are They in New Zealand’s Interest?” The event will be hosted by Dr. Kennedy Graham MP-Green Party and will take place at the Theatrette, Parliament Buildings, Wellington. The hosts ask that people register for the event, which they can do by contacting Maty Nikkhou-O’Brien at the following email address:

The panel Chair is Dr. Roderick Alley of Victoria University, who has just published a thorough examination of drone warfare. The panelists are Professor Richard Jackson of the National Centre for Peace and Conflict Studies at the University of Otago, investigative journalist Nicky Hager and myself.

It should be an interesting discussion. I will try to place the emergence of drone warfare in context before debating its legality and utility.

Analysis Link: Democratic intelligence oversight.

datePosted on 16:09, May 3rd, 2014 by Pablo

The Snowden revelations have brought to the fore the issue of oversight and accountability on the part of intelligence agencies in democracies. In this analytic brief I outline ideal type principles and practicalities of democratic intelligence oversight. The idea is to offer a conceptual basis for understanding how democratic intelligence oversight should work with an eye to promoting practical reforms to that end.

Another National double standard.

datePosted on 15:16, May 1st, 2014 by Pablo

Maurice Williamson is forced to resign as Minister because he made a phone call to the police asking them to be undertake a thorough review and be “on solid ground” when investigating a domestic violence incident involving a wealthy Chinese friend of his who invested a lot of money in New Zealand (the same Chinese fellow granted citizenship over the objections of immigration authorities, and who donated more than NZ$ 20 thousand to National in 2012).

Judith Collins retains her ministerial portfolios in spite of revelations that she interceded with Chinese officials on behalf of her husband’s export company while on an official visit to China that had nothing to do with exports or trade.

What is similar and what is different about the two cases? They are similar in that they both involve Chinese nationals with economic ties to the National party or entities linked to it. They are similar in that the ministerial interventions were in violation of the cabinet manual regarding conflicts of interest. They also represent obvious forms of political influence peddling.

How are they different? Collins is a a key player on National’s front bench, whereas Williamson is on the outers with National’s heavy hitters. Thus he is expendable while she is not.

Comparatively speaking, Williamson’s crime was arguably less than that of Collins. He made a call on behalf of a constituent urging Police diligence when investigating the charges against his friend, then left the matter at that. The fact that rather than tell the minister to buzz off the cops bent over backwards to satisfy him that they were on “solid ground” before prosecuting is a police issue, not a Williamson issue (the Police decided to prosecute in any event, with Mr. Liu eventually pleading guilty to two charges of domestic violence).

Collins used taxpayer funded official travel to take time out of her official schedule to divert and meet with Chinese business associates of her husband over dinner in the presence of an unnamed Chinese government official at a time when her husband’s business interests in China were being hindered by official reviews of New Zealand based export contracts. Although she had no real business being there, she brought an aide with her, adding to the impression that her presence at that dinner had the stamp of official approval.

Of the two, which is more obviously a conflict of interest and which has the clear stench of corruption wafting over it? Of the two, which one would be viewed more dimly by the likes of Transparency International (the anti-corruption agency that habitually lists NZ amongst the least corrupt countries to do business in)?

Hypocrisy much in the handling of the two cases by the Prime Minister? You be the judge, by I think that there is.