Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

The tragedy across the Tasman

Tom Switzer

27 October 2017 | Ideas@TheCentre

TS Winston peters jacinda ardern 2The tragedy of New Zealand’s election outcome is not just that a stable and successful nine-year government has lost power, despite scoring more than 8% more votes than the Labour opposition. If NZ had Britain’s first-past-the-vote electoral system or Australia’s preferential voting system instead of its quirky German-style mixed-member proportional representation system, the conservatives would have won a landslide victory.

The real tragedy is that the centre-right National Party lost power, despite presiding over dramatically improved living standards. As a result, Wellington is now run by a 37-year-old former president of the International Union of Socialist Youth, who’s in cahoots with the left-wing Greens party and the populist New Zealand First Party.

Labour Prime Minister Jacinda Ardern claims market capitalism has failed NZ. The record suggests otherwise. For the best part of a decade, prime ministers John Key and Bill English had passed a productivity-enhancing reform agenda: the GST-tax switch, which lifted the GST rate to 15% in exchange for cuts to top income and company tax rates; partial privatisation of electricity assets and the iconic Air New Zealand; comprehensive welfare reform; and workplace reforms that made it easier for small business to hire and fire.

NZ had also emerged from the global financial storm of 2008-09 without resorting to the type of big-spending and debt-ridden ‘stimulus’ policies that characterised the responses of other western nations. Instead, Key and English believed in the market mantra that improving productivity is the best way to grow a nation out of recession.

The result: the budget went into surplus, the trans-Tasman wage disparity closed sharply, unemployment fell to 5 per cent, and growth averaged a healthy 3-4 per cent in recent years.

It is not clear how an unwieldy three-party coalition will govern in Wellington. But its interventionist agenda of higher taxes, free university education and labour-market re-regulation will undermine NZ’s prosperity of recent years.

Tom Switzer is a senior research fellow at the Centre for Independent Studies and presenter at ABC’s Radio National. His panel discussion on the NZ election outcome was aired shortly after Winston Peters’ announcement on October 19.

Half cheer for PC on health

Jeremy Sammut

27 October 2017 | Ideas@TheCentre

JS cheer potter 1The new Productivity Commission report, Shifting the Dial, hit at least three things spot-on about achieving health reform in Australia.

The first is that the current system is not focused on patients and delivering the best health outcomes at the least cost.

The second is the health system is provider-driven and basically operates as a rigid payment mechanism underwriting existing providers’ incomes and models of care — thereby stymieing innovation.

The third is that achieving change depends on governments and policymakers uniting with ordinary consumers and taxpayers to push for politically contentious changes that will provoke fierce opposition from vested interests.

The Productivity Commission is also right to argue that one of the chief structural problems and inefficiencies is the inadequate chronic disease care delivered outside hospitals, which leads to significant numbers of potentially avoidable hospital admissions at high cost to government budgets.

But this is largely telling us what we already know: innumerable inquiries, reports, and reviews have identified chronic care gaps and the failure to keep people well and out of hospital as the primary health reform issue.

But what solutions are proposed to address this perennial challenge and achieve meaningful change?

The Productivity Commission suggests that 2% to 3% of public hospital budgets should be quarantined to create a special fund that state and federal health bureaucracies can access to test and trial chronic care and other preventive health initiatives in local regions.

However, there have been endless number of similar chronic disease programs and trials that have not seeded lasting change. The obvious reason for this is that trials are just trials.

What health care provider is going to get serious about reinventing their existing profitable business model, when the government ‘investment’ in so-called innovation amounts to a few hundred million dollars out of a Medicare system that currently consumes approximately $75 billion of taxpayer’s money each year?

Overcoming the lack of follow-through that plagues the history of health trials — even ones that deliver ‘promising results’ — is just one of the arguments in favour of the bolder approach to health reform and solving the chronic care puzzle as set out in the CIS Health Innovation Program’s ‘Health Innovation Communities’ proposal.

What’s in a (neoliberal) name?

Sue Windybank

27 October 2017 | Ideas@TheCentre

sw Liberalism freedom 2Media commentators both here and overseas have been falling over themselves recently in a race to administer the last rites to ‘neoliberalism’. Yet the term has become utterly devoid of meaning — a catch-all bogeyman for every apparent or real ill in society and the world.

It may come as a surprise, then, that London classical liberal think tank the Adam Smith Institute has decided to ‘own’ the pejorative label and to wear it with pride.

In the Spring issue of Policy, the think tank’s executive director Sam Bowman explains why. In a nutshell, he finds the term a useful differentiation from fellow travellers such as libertarians — as do an emerging and growing group of younger people who are “uncomfortable with libertarianism’s dogmatic image”, as he puts it, and who “enjoy the naughtiness of re-appropriating a political swear word.”

While I can’t see CIS ever changing its self-designation as a classical liberal organisation, the checklist of nine common beliefs that Sam thinks neoliberals have in common — see the article’s box ‘How to Spot a Neoliberal’ — is a useful exercise in thinking about first principles.

The list is not exclusive to ‘neoliberalism’, nor is it exhaustive — a ‘neoliberal’ in New Zealand has added ‘rule of law’ to the list. And while there’s room for disagreement — for instance, on ‘consequentialism’ (point 2) or on how to do redistribution (point 9) — I think everyone would agree that point 7 captures something fundamental about the classical liberal mindset:

We are optimistic about the future, and think the world is getting better’

‘And, really, it is: pro-market ideas have taken hold, raising living standards by an extraordinary amount for a huge number of people.’

One positive indicator — cited in the article — is that globally, extreme poverty has fallen from 44% of the world’s population in 1981 to 9.6% today. It’s worth reflecting on this for a moment. Poverty was once considered a natural condition. Now we believe we can and should fix it.

And a further reflection: If partly free markets can lift hundreds of millions of people out of poverty, imagine what freer markets could achieve.