Tag Archives: Stuart Nash

The housing problem isn’t a housing problem; it’s a regional development problem

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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).

Opportunity
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.

Downsouthing
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.

L

* 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.

Fortune-cookie strategy and the Labour leadership

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Since at least the mid-20th Century it has been fashionable in our culture to adopt postures derived from Asian martial manuals — most notably Sun Tzu’s The Art of War, and Miyamoto Musashi’s The Book of Five Rings — in diverse civilian contexts including business, and politics.* There is much to recommend in these texts, but too often they are poorly understood and are reduced to fortune-cookie wisdom, lazy magical thinking of the sort that’s only good enough to bamboozle those who are susceptible to such things. Sun Tzu in particular is a rich mine of sage-sounding aphorisms, and I have indulged in quoting him at times. But it is no get-wise-quick scheme; it’s like a cargo-cult.**

While I have no direct knowledge of the extent to which these ideas hold sway within the New Zealand Labour party, their present strategy bears considerable resemblance to this sort of magical thinking. I’ll cover two specific points brought to light by Claire Trevett’s recent article on the goings-on in the Office of the Leader of the Opposition.

Attitude of No Attitude

Attitude is the spirit of awaiting an attack. … I dislike the defensive spirit known as “attitude”. Therefore, in my Way, there is something called “Attitude-No Attitude”. (Musashi, The Wind Book)

This is the most obvious manifestation of magical thinking: that an official posture of David Shearer “staying above the fray” will necessarily confer a non-politician or statesmanlike aura upon him. Of course, such an attitude can have this effect, but whether or not it does in a given situation is not such a simple matter. Such a strategy could have worked for Shearer, given the right people and the right circumstances, but the right people and circumstances were not present. So the result has been a Labour-party-sized hole in the NZ opposition narrative for most of the past four months.

This hole is not entirely of Labour’s own creation — Shearer took the leadership just before the holidays, and the Ports of Auckland lockout took place within the blessed month between Christmas and Wellington Anniversary where most reasonable New Zealanders will hear nothing of politics. Engaging too strongly with the lockout issue risked alienating the very people Shearer was asking to give him a chance. But the period of inaction has lasted well beyond the silly season, and although some of the Labour caucus have been beavering away, people have not noticed. They have been waiting for the leader, and the leader has not been leading.

I can see the logic: “when we zig, people complain we should have zagged; when we zag, it turns out we should have zigged. Let’s hold steady, bide our time, and become at one with the Universe. At least that way we can guarantee there will be no blunders, and the wheels are bound to fall off this Tory bus sooner or later.” But attitude-no attitude is not merely a damage-mitigation strategy. It is effortlessness, not lassitude. It is creating opportunities to strike, not awaiting them. The opportunities have presented themselves — industrial relations, charter schools, Treasury figures, paid parental leave and the veto, others — and the only time Labour has gotten any traction is with regard to ACC (not of their making), and only then by getting sued by a Cabinet minister!

The past four months have been what another lot of military jargon would refer to as “target-rich”, and Labour largely refused to take advantage of it. Either a zig or a zag would have been preferable to an OM.

The Sovereign and the General

Sun Tzu said: In war, the general receives his commands from the sovereign, collects his army and concentrates his forces … There are roads which must not be followed, armies which must be not attacked, towns which must not be besieged, positions which must not be contested, commands of the sovereign which must not be obeyed. (Sun Tzu, Variation in Tactics)

The “above the fray” strategy noted in Trevett’s article suggests an attempt by Nash and Pagani to position David Shearer as a “Sovereign” — someone who issues orders that are interpreted and then executed by his “generals”, in cabinet and the staff (led by Nash and Pagani.***) Conversely, the strategy said to have been argued by Fran Mold seems to be to position Shearer more as a general, leading from the front.

Both can work, and both do work in the present NZ parliamentary context. But again, the problem with this framing is that it is simplistic — the leader of a Labour movement, as Shearer referred to the party upon attaining the leadership, cannot be above and aloof from the movement, he must be down in it; but he must not lose sight of the bigger picture. It is a near-impossible job and he must own it. He must determine the balance between the various roles that best suits his own strengths, and those of his cabinet and advisors. He cannot do all of it, but how it is distributed must be congruent.

This last — congruence — is crucial. Its absence is what makes a strategy cargo-cultish. To be strategically successful, whatever David Shearer does must be authentic to David Shearer and to the political narrative that he has cultivated; it must not be some get-popular-quick scheme thought up by clever bastards in expensive suits, it has to be his. That it has required such effort to maintain Shearer’s studied aloofness is a strong indication that it is not an authentic strategy, but a pose struck for dramatic effect, and therefore worthless. Bouncing from cloud to cloud, as good as the strategy of aping Key might have seemed on paper, has not rung true because David Shearer is not Teflon John.

One of the most important tasks of leadership — and Sun Tzu goes on and on about this as well, but I’ll spare you — is to surround oneself with good people, and people suited to their tasks. It is also crucial that a leader has the strength of will to maintain his own strategic direction, and this is doubly true of Shearer, who was elected leader on the claim that he was beholden to no-one. His performance at these tasks has been very poor. It may be that he was drawing from a shallow pool of talent, it may be that he was continuing the network of patronage, it may simply be that he thought John Pagani was the best guy for the job — but his team failed to match Shearer’s strategy of action to the narrative he has built around his leadership, and ultimately that’s his responsibility.

So what now? It’s beyond me. And so as not to provide further opportunities to take an inauthentic path, I’ll refrain from giving any sort of detailed advice, beyond “find your own damned way, choose good people, and avoid magical thinking”. I continue to note the irony that folks who, for years, have pooh-poohed the need for polish and presentation in politics now insist that Shearer’s inability to talk good is what’s holding him back, and even greater irony that staunch supporters of Phil Goff are now abandoning Shearer for having failed to accomplish in four months what Goff failed to accomplish in three years. I also can’t get too cut up about his alienating the old leftist revolutionary guard.

David Shearer now has an opportunity to refresh some of his underperforming staff, and that at least shows an awareness that Goff’s office did not show until much later in his term. It may yet be that he has to go; it may be that he really has no authentic vision, style or strategy, and even if he has them, if he can’t articulate them then it’s all moot. Things are not good, but there’s still plenty of time to roll him if that’s what’s needed. Patience, though not lassitude, remains a virtue.

L

* Machiavelli’s The Prince and Clausewitz’s On War are also popular, and justifiably so, though they lack that easy Orientalism of the former two.
** I have seen it persuasively argued that this sort of thing had a central part to play in both the boom and the bust of Wall Street in the 1980s.
*** While it is tempting to suggest that this was part of a Tuckeresque scheme to concentrate power with the senior staff, I think the truth is more depressingly mundane.

Team Shearer

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I have little useful to add to the voluminous discussion about who the Labour party will choose to succeed Phil Goff. I’m on the outside. This is Labour’s decision to make, and I don’t have a dog in the fight, except inasmuch as a good opposition and a strong Labour party is going to be crucial to Aotearoa. So I don’t know which way the caucus votes are headed, but like any other punter I have views, and I thought I’d sketch them out anyhow.

First of all it is positive that Goff and King have not stepped down immediately, forcing a bloodletting session 72 hours from the election. Two weeks is, I think, long enough to come to terms with the “new normal” and for a period of sober reflection (and not a little lobbying), but not long enough for reflection to turn to wallowing, or lobbying to degenerate into trench warfare. Leaving it to brew over summer, as some have suggested by arguing Goff should remain until next year, would be the worst of all possible options and I am most pleased they have not chosen this path.

As for the options: after some preliminary research the other day I declared for Team Shearer. I am still somewhat open to persuasion, and he lacked polish on Close Up this evening. But he seems to have unusual intellectual substance and personal gravitas. His relative newness to parliamentary politics is offset by extensive experience in other fields, particularly with the UN where tales of his exploits are fast becoming the stuff of urban legend. Most crucially, I understand he is the least institutionalised or factionalised of the potential leaders, the one with the greatest capacity to wrangle the “political wildebeest” that is the Labour Party, to use Patrick Gower’s excellent phrase. This last is, I believe, the most crucial ability. I said before the election that the next long-term Labour leader will be a Great Uniter, as Clark was (although possibly not in the same way Clark was; awe and fear aren’t the only ways to unite a party), and while there are not broad ideological schisms within the Labour party*, it is deeply dysfunctional in other ways and needs to be deeply reformed. This is a hard task, and it may be that no one leader can manage it, and it may take many years in any case, but it looks to me like Shearer’s external experience and outsider status make him the stronger candidate on this metric.

One other thing about Shearer: he seems to have strong support among non-Labourites, including Labour’s ideological opponents. In the Close Up spot he was reluctant to declare Labour a “left-wing party” which will make him unpopular (though I consider this just a statement of fact). I’ve seen some tinfoil-hattery around this — “if people like Farrar and Boag like him, it must be a trap” and so forth. This notion that “the right” has nothing better to do than wreck the Labour party, that every endorsement or kind word is an attempt to undermine, or the suspicion that the muckrakers must surely have some dirt on a favoured candidate borders on a pathology. Such reasoning leads to perverse outcomes, and adherents to this kind of fortress mentality make excuses for poor performance, and congratulate themselves for narrow wins and near losses, rather than challenge themselves to build a strong, disciplined unit capable of winning more robust contests in the future. An example of this in the recent election, where a small but crucial group of Labour supporters abandoned their party, campaigning and voting for New Zealand First in a last-ditch effort to produce an electoral result in their favour, without concern for the strategic effects this might have on the party’s brand and future fortunes. In spite of the lesson of 2008, they swapped sitting MPs Kelvin Davis, Carmel Sepuloni, Carol Beaumont, Rick Barker and Stuart Nash for Winston Peters and his merry band of lightweight cronies. Plenty of dirt there; it would have been a miserable term in government for Phil Goff if the numbers had broken slightly to the left, and (depending on the intransigence of Peters and the other minor parties) one from which the Labour Party may never have properly recovered.

Ironically, Labour has those defectors — about 3% of the electorate if the polls are to be believed — to thank for the opportunity now presented to it by the resounding defeat. If the result had held at around 30% (and NZ First been kept out by the threshold), temptation would have been to revert to the mindset post-2008 election that it had been close enough, that the left had been robbed by the electoral system and the evil media cabal, and that little change was really needed. With support at its worst since the Great Depression, no such delusions can persist, and there is, it would seem, a strong will for reform within the party.

I don’t think the other two likely Davids would make bad leaders either (concerns about Cunliffe that I expressed during the campaign notwithstanding). Cunliffe’s platform with Mahuta is strong, in particular because it will enable the party to reach out to Māori, which they desperately need to do to remain relevant. Parker reputedly has greater caucus support than Cunliffe, and he is also apparently standing with Robertson, who is also said to be standing for the leadership himself. All three Davids are talking about reform, and it will be harder for any of them to paper over the cracks or pretend that nothing is wrong, as Goff and King did. But whatever their will, it is not clear that Davids Cunliffe or Parker have the same conflict-resolution, negotiation and strategic development experience that Shearer does. And they are themselves a part of the problem, having been ministers (however excellent) under Clark, and supporting and sharing responsibility for the abysmal strategy and see-no-evil mentality evident within Labour since 2008.

But the party must do what is right for the party. It is important that the final decision remains with the caucus because as the past year has shown, no matter what the public and commentariat thinks no leader can be effective who is at odds with his team. Ideological congruence also matters; Shearer may be have the best skillset for the reform job, but he may legitimately be considered too centrist by the caucus.

I’ve always been clear that I want the NZ left to win, but I want them to have to work hard for it. I don’t want easy outs, excuses or complacency; I want Labour to be able to beat the toughest, because that’s what produces the smartest strategy and the strongest leaders, and the best contest of ideas. I am sure principled right-wingers hold similar views; they are just as sick as I am of a dysfunctional opposition obsessed with its own faction-wars and delusions of past glory, stuck in the intellectual ruts and lacking in strategic and institutional competence, even though it might make their electoral challenge easier. Good political parties don’t fear the contest of ideas; they embrace it. So my hope is that Labour does not concern itself overmuch with second-guessing the views of their ideological foes, or those on the periphery, but puts the candidates through a thorough triage process and then lets him get on with the job of putting their party back together. It’s not a trap, it’s a challenge.

L

* The lack of ideological diversity is a problem; a healthy political movement should always be in ferment. But it is not the most pressing problem facing the party at present.