Minister of Finance Nicola Willis announcing public service reform plans. Photo \/ Dean Purcell<\/p>\n
Hipkins didn\u2019t like being reminded of these cuts on Tuesday, snapping at reporters to get a calculator to work out why Labour\u2019s cuts were completely different to the coalition\u2019s (said calculator reveals Labour\u2019s cuts to be larger by $1.6b, a fact lost on the PSA union, which curiously urged public servants to get behind Labour\u2019s cuts and \u201chelp identify savings\u201d while bashing the coalition\u2019s effort as a \u201cwilful destruction of the public service<\/a>\u201d).<\/p>\n It was a clever tactic because Robertson and Hipkins probably knew National was planning to cut public service spending in order to make its tax plan add up. If Labour went ahead and did the cuts itself, National would have to cut extra deep, or sacrifice the prized \u201cfiscal neutrality\u201d of its tax plan.<\/p>\n The tactic worked; by the end of the week, National announced its tax plan, partly funded by cuts to baselines. Labour\u2019s cuts gummed up the plan, forcing National to double down at great cost. <\/p>\n Willis is returning the favour, forcing Labour to oppose the cuts, without fully committing to reversing them \u2013 if Labour did that, it would have to find a further $2.4b to match Willis\u2019 plan to redirect some of the spending at public services while reducing the deficit, money Labour doesn\u2019t have while it struggles to find $12.8b to fund its pay equity promise.<\/p>\n The 8700 estimated job reductions is significant too, but analysis has suggested it will be very difficult to achieve if vital frontline roles are protected\u200b\u200b\u200b. Count me a sceptic.<\/p>\n Bigger than the numbers is the how. Much as her colleagues Chris Bishop and Simon Watts have done with councils, Willis, instead of ordering mergers and restructures herself, has asked departments to put up their own ideas.<\/p>\n She isn\u2019t wrong that the organising principles of the public service feel a bit 1980s. We have a heavily devolved public sector with the \u201cdelivery\u201d parts, like hospitals, schools, and the NZ Transport Agency gradually moving closer to the people they deliver for, while the policy agencies, the bits of the service advising ministers, are perhaps growing a little detached. <\/p>\n In the short term, the most significant changes will probably be the merger of functions like human resources, legal, and payroll. In the long term, it\u2019s not unreasonable to expect something bigger. <\/p>\n Minister for Regulation David Seymour\u2019s publication of a map of New Zealand regulators largely flew under the radar this week<\/a>, but it hinted at what larger reform might look like.<\/p>\n It identified 267 different regulators (95 in central Government, 79 in local government, and 57 statutory bodies, committees, or tribunals). This Balkanised regulatory landscape means that who regulates what and who enforces those regulations is often unclear. <\/p>\n Seymour used the recent spike in stray dog attacks to illustrate his point: 11 statutes regulate dogs in New Zealand, stretching across five different regulators. In practice, this means regulators are often unclear about which part of the dog system they\u2019re responsible for, which, in the worst case, can mean blame being shunted from one regulator to another to the point where the rules become meaningless.<\/p>\n The Government seems destined to streamline this system (and, given Act\u2019s libertarian ideology, it\u2019s likely to bin a few regulations wholesale along the way). If you\u2019re a small independent regulator, or even a body with an obscure statutory function to regulate, expect to see some consolidation. You may even find yourself wrapped into one of the mega-ministries the Government has become so fond of.<\/p>\n Reform on its own is a good idea. Most of the problems the Government has identified with the public service really are problems. But announcing a headline reduction target and seeking to achieve it with such massive reforms without having a clear idea of what these reforms are to entail seems unnecessarily risky and careless.<\/p>\n The Government has made a virtue of its allergy to deliberation and working groups, but if it is as serious about fundamental public service reform as it claims to be, then a working group or even a Royal Commission (there have been two Royal Commissions on public service reform \u2013 the last was 70 years ago) is probably a better way to go about it.<\/p>\n There was one final reform to go: on Thursday morning, Housing Minister Bishop announced what could be the largest reform to social housing since the 1990s<\/a>. The reforms, if the Government holds its nerve, would see state houses more directly targeted at those in the greatest need, with less worthy cases pushed into the private market.<\/p>\n That sanitised precis disguises the fact that for thousands of poor and vulnerable people, state housing is about to become more expensive, and some tenants may move to fixed-term tenancies, which may require them to vacate their homes.<\/p>\n Bishop is an apostle of the \u201cabundance\u201d movement, sweeping both the right and left sides of politics. Abundance types believe in liberalising reforms to incentivise the building of an abundance of rental accommodation, leading to renters having a choice of high-quality accommodation at low cost.<\/p>\n In this world, low-income households requiring affordable housing could find it on the private market because of an abundance of supply.<\/p>\n We\u2019re probably closer to that world than at any time in the past decade or more. Rents are falling by some measures, and we\u2019re beginning to see competition to attract good tenants. It suggests we\u2019re heading in the right direction, but we are a long, long way from getting there. A report from consultant Property Knowledge in conjunction with property managers Property Brokers, published at the end of last year, reckoned that renters pay, on average, 40% of their income in rent.<\/p>\n For the reforms to succeed, New Zealand needs to fundamentally change, but perhaps not in the way people think. The Government and opposition are retreating to predictable ideological positions on state housing, with the opposition favouring stable tenancies, while neglecting cost, while the coalition argues the opposite. Those positions are so embedded in the ideologies of the respective sides that it\u2019s unlikely either side will score a conclusive victory.<\/p>\n What will need to change is not attitudes to state housing, but the attitudes to private housing, in particular rentals. The only way the reforms will succeed is if there is actually a thriving, competitive and affordable private rental market for state housing tenants to go into. If that doesn\u2019t exist, the reforms will be little more than what the opposition alleges them to be: a way of rinsing state house tenants for extra cash before turfing them out.<\/p>\n Neither side seems ready for this. Labour, desperate for cash to make its floundering fiscal plan stack up, is contemplating draconian tax changes for rental properties that officials argued would reduce supply and might put upward pressure on rents<\/a>. The changes would mean even loss-making rentals would be liable for big tax bills, forcing landlords to hike rents or sell. That increases the supply of homes for purchase, good news for those in the market to buy, but bad news for an ex-state house tenant looking for a place to rent.<\/p>\nDavid Seymour unveiled a map of New Zealand’s many regulators. Photo \/ Alyse Wright <\/p>\n
Minister Chris Bishop explaining reforms to public housing. Photo \/ Mark Mitchell<\/p>\n