Speech: The World’s First Woolbeing Budget – Forget Modelling our Wellbeing, Just Run Government Properly
David Seymour, ACT Leader
Little Neighbourhood Bar, Christchurch – Thursday, November 29, 2018
Greetings, it’s great to be in Christchurch again to visit the local crowd. Last time I was here I gave a speech at the Shilling Club at the University. It was a big success, so I thought I’d try it again, with a new speech though. Tonight, I’d like to talk a bit about something that is coming down the tracks in Wellington, that we need to be aware of and prepared to fight.
The Fatal Conceit of Politicians
One of the problems with politicians is conceit. You can see this when you come out of the terminal at Wellington airport. All these people from the taxi and private hire companies holding up the names of various members of Parliament. Here’s a simple rule of thumb for MPs: If you’re so poorly recognised that even taxi drivers in the capital city won’t recognise you, open your own taxi door.
The reason so many have their names held up is the sense of self-importance and power. New Zealand’s population and economy is roughly comparable with Louisiana’s, the 26th largest state of America. I don’t know if politicians in the Louisiana State House think they run the world, too, but they’re delusional if they do.
You see this conceit in Jacinda Ardern and Grant Robertson with their so called ‘Wellbeing Budget’. They have bought into the conceit of certain academics who believe it’s possible to plan our happiness. Centrally planning the production of goods and services failed wherever it was tried, so now they want to plan something even less tangible, how you feel!
Remember the history. Some guy called Marx said that history moved through stages and there would be a revolution leading to communism. There were revolutions, there was central planning, and it was a disaster. Planning economies without prices meant you couldn’t pay people market rates for work, so they had to be forced with a combination of propaganda and gulag justice. You could hardly let people vote if you’d just sent their relatives to Siberia, so there could be no democracy. You couldn’t have a free press reporting these things, so there was no free speech. I could go on, but the point is central planning had many grotesque outcomes.
More relevant to the current circumstances, it didn’t actually work. By the 1980s, the Soviet economy was producing goods worth less than the materials they were made out of. Eight out of ten Chinese were living on less than $2 U.S. dollars per day. It didn’t work because the central planners didn’t know much. They didn’t know what people really wanted. They didn’t know what skills they had. They didn’t know what materials were available. By the time the authorities gathered all of this information, market conditions had changed again.
The Knowledge Problem
I don’t believe that the Wellbeing Budget will lead to totalitarianism because the markets for goods and services will remain free and open. It will be ineffective at making us happier and healthier, though, for the same reason as centrally planning the economy failed. That reason is the knowledge problem. People in Parliament and government departments have no idea what makes people happy, just like people in the Politburo had no idea how many shoes to make (the joke is they couldn’t even make the right numbers of left and right shoes).
The central problem with the wellbeing approach is that it is about bureaucrats deciding what your best life is, even though everyone’s tastes are different. They will try to decide how many friends you should have versus how much time you should spend alone, how often you should exercise versus how often you should rest, how much Kiwi cultural content you should engage with to build your sense of identity as opposed to how much Netflix you should watch, whether you should eat, smoke, and drink because you enjoy the indulgence, or whether you should aim for a more puritanical lifestyle because that’s what will optimise your happiness. They’ll come up with measures of wellbeing, but they will be wellbeing according to a rather curious group of academics who have been comprehensively insulated from the outside world since they entered university at age 17.
That’s why I call it a woolbeing budget. This budget will contain more wool than a Cashel Street tourist shop. It will set targets and measurement for the good life, even if it’s not the life that any actual New Zealanders want.
Letting Government Off the Hook
The bigger problem with the woolbeing approach is that it lets government off the hook by measuring all our outcomes instead of the government’s outputs. Suddenly, it is the fault of all of us if we are not living the government-defined good life. If we do bad things, the government will regulate and correct us. If we don’t live up to a particular standard, the government may tax us and use our money to bring us up to standard. There won’t be much room to say, as Ronald Reagan did, that the government is actually hopeless, and that government is not the solution to the problem, the poor performance of government is the problem.
Bear in mind we pay 33 per cent, or one dollar in three, of our income to general government spending. The results we get are frankly mediocre. Let me give you some examples.
Justice delayed is justice denied, but here in Christchurch and in Dunedin, people have been spending days in the cells awaiting trials due to rolling strikes in the courts. Lawyers are finding they can’t make ends meet because they spend so much of their time waiting for court time they can’t put in any billable time. It is a monumental failing of government for the people involved, but because it’s a small number of people the issue has been largely ignored.
The Government should have done what Ronald Reagan did with air traffic controllers: send in the army. What is the point in having an army running around in the mountains when they could be ensuring the courts, one of the most important institutions in our society, continue to function and dispense justice?
Staying with corrections. Seventy per cent of those under 24 and fifty per cent of all prisoners are back inside within four years of release. We don’t send that many people to jail in New Zealand, but we have one of the highest incarceration rates. How is this possible? Well, we have one of the highest recidivism rates in the world, too. Think about that. The Government has people under total control costing over $100,000 per year for years at a time, and it still doesn’t manage to upskill, reform or rehabilitate half of them enough to keep them out of coming back to jail again.
We know the solution. ACT has proposed letting prisoners out early if they learn in prison. Less crime, less jail time, less taxpayer expense. That’s what we call a win-win-win.
There are suburbs in this country, parts of West Auckland, Porirua, are some of them, that are like a lung filled with school children. Every day they exhale thousands of kids because parents there think the local schools the Government provides are rubbish. We have one of the most unequal education systems in the world. Again, the taxpayer spends around $130,000 on a child’s education by the time they reach 15, and the OECD tells us that 17 per cent, or one out of every six doesn’t meet basic literacy standards. It’s a disaster.
Of course, we know the problem. It is state monopoly on education that is almost impossible for new competitors to enter. We know this because when we did let new entrants into the market, in the form of charter schools, they were quickly overwhelmed and had to hold ballots to select students.
Take transport. In the country’s largest city, people lose billions each year sitting in traffic. The motorway network planned and promised in the 1950s is only half built. There is no rail network to speak of. It is possible that more daily trips are taken on Lime scooters than trains. It is a catastrophe that occurs every day. It’s perfectly predictable but Government does nothing about it.
Of course, ACT knows the answer. We need to change the infrastructure funding formula so that councils get half the GST on construction they consent in their territory. That would give councils the funds to build proper infrastructure with an added bonus: they’d have an incentive to let people do things from time to time.
The failure to provide infrastructure is a related problem. Half of the price of an Auckland house consists of inflation in section prices over the past 20 years. Fundamentally, the government just gave up connecting people together with land and opportunity, so we’ve been bidding up what’s left in a destructive spiral for the past two decades. Christchurch, of course, shows that if you get infrastructure and planning right, a city can build its way back to housing affordability.
Then there’s the example of government as a regulator. Take just one example, this week Parliament said all food must be labelled with its country of origin, whether consumers demand it or not. Clearly, they do not, or at least aren’t prepared to actually pay for it at the price it costs. Now everyone involved in the food business will have an extra task that only some people wanted and weren’t prepared to pay for.
As a regulator, the Government never defined the problem. Nothing was stopping businesses labelling their country of origin as a competitive advantage. In fact, some already were, but consumers obviously didn’t care that much because they were still buying the unlabelled stuff. Anyone in business knows that every day they spend time complying with government regulations that solve no problem and add dubious value but are costly all the same. Mandatory country of origin labelling is only this week’s contribution.
We have a Government that is hopeless at running courts, prisons, schools, transport networks, land markets, and regulation. Undeterred by these failings, the conceited class of politicians will now skip over them and aim to plan our happiness despite knowing nothing about it. ACT’s position is very simple. The so-called Wellbeing Framework is the Woolbeing Framework. It is woolly, a sea of fluff. Government is not the solution to the problem; its various failings are the problem. Until government can fix its own performance issues it will never fix our happiness.