Free Press has seen the situation around Napier, it is bad. The horror of the east coast floods is still emerging, and the full implications won’t be known for some time.

THE HAPS

Free Press has seen the situation around Napier, it is bad. The horror of the east coast floods is still emerging, and the full implications won’t be known for some time. Our thoughts are with those still isolated, and still missing. David Seymour’s account of visiting the region is here.

AFTER THE STORM

We believe the cyclone will change politics and policy. The question is how. If good ideas flourish, New Zealand will eventually emerge wealthier and stronger. The alternative is another expansion of Government power that makes New Zealanders poorer than they would otherwise be.

This week Free Press takes a first look at some of the policy implications of the cyclone recovery.

It is time for effective climate policy that benefits New Zealanders. The Labour-Green Government has been busy putting billions into boondoggles, bans, and subsidies that do not work.

The current Government’s policies do not affect New Zealand’s emissions, and some increase it. The Parliamentary Commissioner for the Environment found banning oil and gas exploration was ineffective. Because New Zealand’s emissions are already capped, taxing some people’s utes to subsidise others’ Teslas simply moves emissions around. Driving New Zealand farmers out of business simply shifts production off shore where farms emit more carbon per kilogram of protein.

Meanwhile, billions of impoverished people are getting wealthier. There is no way of stopping them from burning fossil fuels when they need industrialisation to nourish their children. New Zealand needs to do its bit reducing emissions, then focus on adaptation.

The lesson of the floods should be a wholesale refocus on adaptation. Blocked and inadequate drains, burst stop banks, and low-lying electrical substations should be all the proof needed. We fear the Government will double down on the quasi-religious fervour that we have been punished, and offering up a few million cows is the path to salvation.

Inflation is too much money chasing after too few goods. New Zealanders are about to receive billions from the global reinsurance industry, while the rebuild will put massive demands on real resources. An insurance-funded rebuild could be enough to avoid recession, but it will also pour petrol on the inflationary fire.

Not everything can be insured, sometimes the Government is the insurer of last resort. Expect a loosening of fiscal policy, further exacerbating the problem. Is Grant Robertson prepared to sacrifice any more Labour boondoggles to ease the pressure? For example Labour’s Auckland light rail project has always been wasteful, but in this context it is wildly irresponsible.

Monetary policy will come under the same pressure. Will Adrian Orr and the Reserve Bank throttle back on fighting inflation by reducing or delaying previously signalled interest rate hikes? He has form for running the printing press when it helps the Government avoid hard choices. His recent return to orthodoxy is hurtful to Kiwi households, but abandoning it will hurt more in the long term.

One hard choice that the Government could make is to dump its war on immigration. Christchurch was rebuilt in part with the help of tradies from around the world. Will the Government finally see sense and recognise we are and always will be a nation of immigrants?

Imagine a Recovery Visa that allows any person from a visa-waiver country (who can already show up at the border and holiday for three months any time), to work for six months in the recovery area, with government issuing the visa and an IRD number within 24 hours.

Materials are a real constraint on recovery. Expect plasterboard shortages to reappear. Will the Government consider ACT’s Materials Equivalence Register, that requires councils to automatically accept foreign substitutes that are identified as sound? This is the kind of thinking the recovery will need.

Foreign investment is all but impossible, but it might be the only realistic way for many orchards to be recapitalised. In many places, not only the current fruit but the trees are destroyed by silt. New trees will take four years to bear fruit, who will provide the capital? ACT’s idea of exempting investors from democratic OECD countries could go a long way here.

Whether we like it or not the disaster will disrupt politics and policy. The disruption could go one of two ways. It could lead to more futile climate policies, more bureaucracy, more spending, more inflation, and poorer outcomes for everyone involved. The alternative is to trust people, remove barriers, set people free and watch the East Coast grow back stronger and wealthier than ever.

That is the debate that will happen at warp speed over the coming weeks. Getting better policy is hard enough in normal times, but in a disaster the stakes are higher. It’s critical that New Zealand emerges from this disaster with better policy, not worse.


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