Gordon Campbell on Paula Rebstock and her new welfare reform platform

Clearly, the government now thinks the public mood in this recessionary climate is so hostile to beneficiaries that it can afford to indulge its own worst impulses towards them. There are so many outrageous aspects to the appointment of Paula Rebstock and a raft of like-minded business and insurance types to a brand new quango to oversee welfare reform, it’s hard to know quite where to start. Evidently, in these hard times we can still afford to spend $1.1 million to service a board of bureaucrats to oversee the upcoming welfare changes – which is a job we already pay Social Development Minister Paula Minister over $200,000 a year plus perks, to do. Plus her advisers, plus her department and its well paid chief executive. Isn’t this their job, to oversee the policy outcomes that they initiate? What are we paying them for? Evidently, when it has the right ideological flavour, duplication and waste are OK with this government.

Secondly, despite being hired to oversee a reform process that will impact heavily on the most vulnerable people in society, not even one of the appointees possesses any actual working experience with the welfare sector. All they have is business expertise in other parts of the economy, including the insurance industry that informs Rebstock’s publicly stated personal vision for the path that welfare reform should go down. So in terms of hands on experience, Rebstock and Co will be bringing a collective working ignorance of the existing welfare system, and an apparent bias about its future direction. Hey, but since the people on the receiving end are only beneficiaries, this kind of social experiment is acceptable, right?

Which takes us to the final list of objections. By bringing in people who have only business and insurance expertise, Bennett is signalling that it is only business outcomes that matter. That’s how the US welfare reform process (that she seems hellbent on replicating here) has managed to get the welfare rolls down, even in the midst of a recession – because the business methods deployed don’t care about anything except business outputs. The wellbeing of the families involved – or of their children – is barely relevant to delivering a product to market in the cheapest possible fashion. Whether the measures in place happen to alleviate poverty for instance, is all but irrelevant to the business model. So we’re really talking about structural change here. The reforms are about instituting in New Zealand a hitherto alien investment approach to welfare, and replacing the sense of a welfare system geared to social need.

Sure, there is a place for efficiency and business expertise in welfare – but only if these are pursued in tandem with goals like poverty reduction, or if used to support those with disabilities, or to assist beneficiaries who are simultaneously seeking work and raising a young family, on their own. There is nothing about the composition of this board to suggest that social and economic goals will be combined, and plenty to suggest they will be separated out into silos. Nothing surprising I suppose, in seeing a National government revert to welfare bashing. The only difference this time is that the enforcers will be packing business degrees.

Mitt Romney, Jerk

Interesting post by Michael Tomasky this week on the likeability chasm between Barack Obama and Mitt Romney at this point in the presidential election cycle. Obama leads Romney by 60 to 31 on Gallup’s polling this week on the candidates’ “likeability” factor. Romney is not disliked simply because he’s rich – as Tomasky says, Americans like Bill Gates and they liked Steve Jobs. But the big difference, as he points out ….is that Gates doesn’t comb his hair much, and Jobs famously wore sneakers. In other words, they didn’t flaunt. They didn’t have an elevator for their cars or if they did, they didn’t crow about it. They didn’t say they liked firing people, or that they thought corporations were people. And they didn’t advise people who wanted to get ahead to just go ahead and borrow $25,000 from their parents and start a business of their own.

Mitt Romney has done all those things. So it’s not that he’s rich that’s the problem, but that he’s a rich jerk. Now, you might say that politicians don’t need to be likeable, and sometimes they do need to make decisions that won’t make them popular. To get to that position though, they first need to be elected. In presidential contests, likeability seems to matter. As Tomasky says, Michael Dukakis and Bob Dole both suffered from their respective woodenness and crustiness, Ronald Reagan and Bill Clinton were liked by large swathes of the voting public, and Jimmy Carter virtually smiled his way into the White House in 1976. George W. Bush, for all his supposed likeability in Middle America, was something of an outlier on this point. He was ahead by around 10 points on likeability going into his 2000 contest with Al Gore, but in the end, he had to rely on a partisan Supreme Court to hand him the Presidency. Initially in the 2004 race, Bush trailed the supposedly effete candidate John Kerry on likeability, and even though Bush eventually won on election day quite handily, the two candidates were almost equal pegging on the likeability issue throughout the campaign.

I also liked Tomasky’s conclusion :

No human being is one dimensional. I’m sure there are plenty of people in the world for whom Mitt has performed kindnesses. I expect we’ll be getting to know every single one of them in these next few months, too, in heavily filtered television ads in which the men wear proletarian flannel and the women’s St. John blazers are kept safely in the closet. All I can say is they’d better be more likeable than their candidate—for his sake. In the meantime, there’s something very reassuring about this country reposing in those numbers, that the black guy with the weird name who’s been called everything under the sun is twice as likeable as the rich white guy. This is the America that drives the wingers crazy, but that the rest of us—the majority—live in, and love.

ENDS

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Gordon Campbell on the rise in prescription charges

It would be nice to think that the basis for yesterday’s decision to raise prescription charges wasn’t just “ We haven’t lifted them for 20 years” and/or that it didn’t sound like much of a price rise if like Health Minister Tony Ryall or Prime Minister John Key, you were earning over $200,000 a year. In reality, the $2 part charge rise should be considered within the wider context of whether the cost of access to health care – from getting to and from a doctor, to paying for the visit, to paying the prescription charges at the pharmacy is now putting primary healthcare beyond the reach of many on low incomes. It is a climate that risks creating choices between people paying for food or paying for medecine, or choosing between getting one’s own prescriptions or getting those needed by other family members.

In that situation, yesterday’s price hikes are probably better considered as the straw that could well break the camel’s back. A extra burden to the vulnerable, and wrong in principle. Besides the impact of the cost rise per se, the change seems entirely out of whack with any rational health policy based on increasing the access to primary health care. One of the ironies of yesterday’s announcement was that the $40 million expected to be saved by this move would – apparently – be diverted to paying for the treatment of a range of conditions, such as our Third World rates of rheumatic fever among children. Duh. Perhaps if families at risk could afford to get access to a GP and to suitable medicines in time, some of the costs of treating such conditions would be prevented.

Hone Harawira’s claim that yesterday’s changes were “ callous” is entirely apt – and that callousness was epitomised by Health Minister Tony Ryall’s jaunty recommendation on RNZ’s Checkpoint programme last night that if people did have problems in meeting the new prescription charges, they should just get along to WINZ and ask for support. Right. To WINZ. Always a sympathetic ear, always willing to help. The government has a different sort of trade-off in mind:

Health Minister Tony Ryall said the $5 cost would be applied to the first 20 items of medicine per family each year, so no family would pay more than $100 a year for their prescription costs. The current maximum for prescription costs was $60 a year. The revenue gained from the price rise would be used to increase the number of elective operations and scans and to improve cancer services.

Not sure what elective operations Ryall has in mind, but the prescription charge increase will provide part of a funding boost of $97 million over the next four years for improvements in cancer treatment.

Most of that is to provide more elective surgery and better and faster services for cancer patients, including dedicated nurses to coordinate care.
Mr Ryall says it will ensure that cancer treatment is as fast in New Zealand as anywhere in the world.

These are, once again, invidious choices. The government seems intent on taking more money from those on low incomes in order to ensure that cancer treatment “is as fast in New Zealand as anywhere in the world.” I’m sure there is a need to improve cancer treatment in New Zealand. (Every aspect of the health system needs more money.) But hiking prescription charges to help pay for elective surgery, for more scans and colonoscopies and for 40-50 more specialist nurses dedicated to the care of cancer patients looks like Ryall is merely robbing Peter to pay Paul.

More user charges are, apparently, on the way in next week’s Budget. As Key says, a zero Budget doesn’t mean no change at all. It means some things will receive more money, some will receive less. And besides, as we saw with the GST/tax cut trade-off, government assurances that such changes would be fiscally neutral have proved to be worthless in the past. The wealth transfers that are due to be announced in next week’s Budget, one suspects, will be very much like yesterday’s effort. More will be required from those on the bottom, in order to shore up services to those further up the income ladder.

Austerity Sucks ( Jobs, Retail Spending etc)

It’s been a bad fortnight for the geniuses who think that cutting jobs and government spending in the midst of a recession is a really, really good idea. The anti-austerity revolts by voters in France, Greece were bad enough – but can austerity survive the defection of the Wall St Journal?

One reason the unemployment rate may have remained persistently high: The sharp cuts in state and local government spending in the wake of the 2008 financial crisis, and the layoffs those cuts wrought.

The Labor Department’s establishment survey of employers — the jobs count that it bases its payroll figures on — shows that the government has been steadily shedding workers since the crisis struck, with 586,000 fewer jobs than in December 2008. Friday’s employment report showed the cuts continued in April, with 15,000 government jobs lost.

But the survey of households that the unemployment rate is based on suggests the government job cuts have been much, much worse…

Reason being, the WSJ points out, there has been a flow-on effect from the loss of government jobs to those in the private sector who formerly relied on government contracts, and the economic activity that they generate :

The unemployment rate would be far lower if it hadn’t been for those cuts….: If there were more government jobs now, for example, it’s likely that not as many people would have left the labor force, and so the actual unemployment rate would be north of 7.1%.

And just in case you’re wondering where the latest round of Germany – inspired austerity mania is taking Europe, read this and be very, very afraid.

ENDS

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Gordon Campbell on banks passing on their own costs of reform

The global financial system seems to be once again (sort of) in crisis mode. Greece is heading for fresh elections and to (maybe) an eventual exit from the euro, France’s new leader is trying to add some face-saving growth policies to the package of austerity measures co-authored by his predecessor and by Germany’s Angela Merkel, and the Irish public seems understandably confused about its May 23rd referendum vote on the latest version of euro fiscal governance – which the Germans have already postponed enacting anyway, no matter what the Irish finally decide to do. Europe is, in other words, in its usual state of being somewhere between meltdown and muddling on through.

New Zealand meanwhile seems to be doing little more than crossing its fingers, and putting its head on its knees. Last week, Reserve Bank governor Alan Bollard told Parliament’s finance and expenditure committee that banks here should “brace for crisis”: because of those danged Europeans and their wilful ways:

“Their banks haven’t raised more capital and their governments haven’t, in many cases, done reforms.” Therefore the European problems had not been solved, Bollard said…..That would lead to ongoing pressure on bank stocks, bond yields “and more importantly for us, we do have to be alert of the issue of global funding markets going back to the sort of freeze that we saw a few months ago”. New Zealand banks were potentially exposed to European long term secured funding….

That being the case, why is the Reserve Bank letting the banks drag their feet on the implementation here of the Basel III banking reforms that were supposed to be the safety mechanisms devised after the last global financial crisis and (b) if the reason for delay is that our banks are so financially strong that we needn’t worry all that much, then why are bank economists such as ANZ’s Cameron Bagrie saying that the banks should just pass the costs of compliance with the Basel III banking reforms onto the public? Because that’s what Bagrie told RNZ earlier this week:

A previous approach, Basel II, allowed banks to invest in some risky securities, including sovereign debt, as though they were risk-free, a practice since seen as a factor in the global financial meltdown. Now banks look set to be asked to maintain higher levels of equity capital, with an added buffer, and a minimum limit for equity as a proportion of total assets.

Mr Bagrie says the costs involved need to be passed on to borrowers if returns to bank shareholders are to be maintained.

That’s outrageous, given the profits that the Aussie-owned banks are plundering from New Zealand, and given the costs to the taxpayer of bailing out the economy in the wake of the last international round of bank-fuelled greed. Surely, the banks themselves should be paying the costs of putting their own house in order. Not that the RB, for all of Bollard’s vowed advice to brace for crises in Europe, is requiring them to do much, any time soon.

The Reserve Bank has pushed out its timelines for the introduction of two key new regulatory initiatives – the Basel III global capital adequacy standards and banks’ pre-positioning for its Open Bank Resolution (OBR) policy after consultation…. On banks’ pre-positioning for its OBR policy, the Reserve Bank now says all registered banks with retail funding of more than NZ$1 billion, which ranges from the country’s newest bank The Co-operative Bank all the way up to the biggest bank ANZ New Zealand, must have OBR functionality in place by June 30, 2013. Previously the start date had been the end of 2012.

What the OBR policy does is to enable investors to get access to their money out in the event of a bank failure or an insolvency, or in the event of the putting in place of statutory managers.

The key feature of the policy is that creditors – including depositors – are able to access a portion of their funds immediately after the bank fails and is placed in statutory management. The bank can quickly reopen with the unfrozen or accessible portion of funds guaranteed by the government to avert a further run by creditors. The idea is creditors’ additional funds can be unfrozen at later dates as the final losses are determined.

Sounds like a good idea. Sounds like something that, given the current mood of global uncertainty, might be a good thing to rush into place – and not, as planned, to delay the OBR implementation. Delay really means that the RB and the government – are gambling that if anything goes pear-shaped in the meantime, the taxpayer will be there to pick up the tab:

The Reserve Bank’s move to get banks to pre-position for its Open Bank Resolution (OBR) policy means there is now less expectation the government would use taxpayers’ money to bail out one of the country’s major banks if it got into strife and more pressure for the Australian parent bank to cough up to stabilise its New Zealand subsidiary, says international credit ratings agency Moody’s Investors Service.

Marina Ip, the Sydney-based assistant vice president of Moody’s financial institutions group and sub-sovereign group, told interest.co.nz that the OBR policy, or living wills, meant that instead of the government being the one expected to bail out a bank if it gets into trouble, the OBR policy “clearly outlines” an alternative step that could be taken in the event of a bank failure whereby shareholders and debt holders – working up through subordinated to secured and senior debt holders – would pick up the tab.

As interest.co.nz’s columnist Gareth Vaughn has also indicated, the RB appears to have listened to the lobbying of the NZ Bankers Association which didn’t really feel there any justification for the OBR policy or for the Basel III banking reforms.

In a letter available here on the RBNZ website, the RBNZ explained why it will be (a) delaying and (b) only partially implementing the Basel III requirements.

The two most notable departures from the Basel standard and from the Australian Prudential Regulation Authority’ s requirements are:

Our intention [is] not to impose a minimum “one-size-fits-all” leverage ratio.
Earlier implementation of the conservation and countercyclical buffer.

Love that move away from a ‘one size fits all’ requirement on capital adequacy. Every bank, it seems, will be able to make their own case for varying in compliance. So, despite the New Zealand banking system’s vulnerability to the state of global financial markets, the pace and the content of banking reform in this country is being driven very much by the wishes of the banks who – if you can believe Cameron Bagrie – are planning on passing the related costs of compliance with international best practice onto you, their customers. Have a nice day.

ENDS

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Gordon Campbell on the politics of austerity

Later this month, New Zealand will be subjected to its second austerity Budget in a row. Zero budgeting is being presented as the only path of virtue. This is despite the fact that – elsewhere in the real world – it has been a very bad week indeed for the politics of austerity. Voters in France and Greece have just delivered a strongly negative verdict, based on experience, on the economic policies to which they have been subjected. They’ve decided that you can’t continue to cut jobs and slash government spending and assume this will somehow, magically make firms and individuals willing and able to spend more, consume more, and invest more. When you’re in a recessionary hole, eliminating jobs and cutting back on spending just tends to prolong and deepen the recession.

Yet amusingly, Prime Minister John Key has treated the election outcomes in Greece and France as an endorsement of his government’s policies, rather than as a rejection of them. The way he saw it, France and Greece just didn’t want to give up the good times. As he told Newstalk ZB earlier this week : “If you don’t take the hard calls up front, and you allow them to accumulate, then it becomes harder and harder and harder because people just don’t want change….In the case of France, I think they’ve had some real luxuries for a long period of time. Ultimately they don’t want to let those good things go,” he said. “It’s the same thing with places like Greece. They’ve built up massive amounts of debt. Now they’re being forced by the IMF and others to go through an austerity package they don’t want.” No hint that voters were not exactly clinging to the good times – but were refusing to be made the fall guys in the bad times being visited on them by the same bankers, politicians and elites who were responsible for the recession in Europe, and elsewhere. The people clinging to the good times are yesteryear’s advocates of de-regulation, who are now the prophets of austerity for everyone else.

New Zealand, Key claimed, was “a million miles away from that…[And] that’s why the government’s having a zero budget this year, it’s why we had a zero budget last year, it’s why we’ve spent very little new extra money in the four years we’ve been in office,” Key said. Right. In fact, austerity has been very selectively applied in New Zealand. At the outset of those four years in office, Key and his government embarked on a patently unaffordable tax cutting programme that benefitted the relatively affluent few, while – as usual – failing to deliver the economic growth that the tax cutting ideologues always promise, yet never deliver. Since then, we have been subjected to a random package of asset sales, public service job cuts, diversions (convention centres, Hobbit deals etc) and hope that a prosperous China or Ausrtralia will float our boats, too. Menwhile, thanks largely to the policies of austerity – and the tax cut for GST trade-off, bound to fail in a recession – the tax take keeps on undershooting.

The main advantage that the New Zealand currently possesses in the post -2008 global environment—i.e., our relatively low levels of government debt—is one which the government inherited, and for which it can take no credit. While the then-government was using the mid 2000s boom to reduce government debt, National was clamouring for it to be dished out in tax cuts. We can only thank our lucky stars that National didn’t win the 2005 election – because this would have almost certainly sent us into the global recession having just squandered our current best asset. That track record does make National an unconvincing advocate of austerity, though. But no matter, because time is running out for the economics, and politics of austerity.

Is zero budgeting working for anyone? It isn’t for virtuous Ireland, as Paul Krugman pointed out earlier this week:

Consider the case of Ireland, which has been a good soldier in this crisis, imposing ever-harsher austerity in an attempt to win back the favor of the bond markets. According to the prevailing orthodoxy, this should work. In fact, the will to believe is so strong that members of Europe’s policy elite keep proclaiming that Irish austerity has indeed worked, that the Irish economy has begun to recover. But it hasn’t. And although you’d never know it from much of the press coverage, Irish borrowing costs remain much higher than those of Spain or Italy, let alone Germany. So what are the alternatives?

The route of salvation, Krugman maintains, is to restore cost-competitiveness and boost exports, mainly via the devaluationary option that is currently inhibited by the euro:

As a counterpoint to Ireland’s sad story, consider the case of Iceland, which was ground zero for the financial crisis but was able to respond by devaluing its currency, the krona (and also had the courage to let its banks fail and default on their debts). Sure enough, Iceland is experiencing the recovery Ireland was supposed to have, but hasn’t.

But surely hasn’t austerity and thrift worked for Europe’s big kahuna, Germany? Not really. Its dominant position was not achieved by Teutonic thrift but via expansionary policies, both at home and amongst its neighbours. Krugman, again:

Talk to German opinion leaders about the euro crisis, and they like to point out that their own economy was in the doldrums in the early years of the last decade but managed to recover. What they don’t like to acknowledge is that this recovery was driven by the emergence of a huge German trade surplus vis-à-vis other European countries — in particular, vis-à-vis the nations now in crisis — which were booming, and experiencing above-normal inflation, thanks to low interest rates….So Germany’s experience isn’t, as the Germans imagine, an argument for unilateral austerity in Southern Europe; it’s an argument for much more expansionary policies elsewhere, and in particular for the European Central Bank to drop its obsession with inflation and focus on growth. The Germans, needless to say, don’t like this conclusion, nor does the leadership of the central bank. They will cling to their fantasies of prosperity through pain, and will insist that continuing with their failed strategy is the only responsible thing to do.

Likewise, we continue to cling to the same failed strategies. Our government battens down the hatches, cuts jobs, slashes spending, sells public assets to our mates, and hopes and prays for prosperity among our trading neighbours…while maintaining, largely for ideological reasons, a floating exchange rate that is removing the possibility of the devaluation that would actually throw a lifeline to our exporters.

ENDS

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Gordon Campbell on free contraception for the beneficiary poor

If one can be grateful for small mercies, at least young women on benefits will not be forced into (a) having compulsory contraceptive implants fitted into their arms or( b) having IUDs installed as a pre-condition for receiving state support for their children – as was originally mooted by the Welfare Working Group on social welfare reform. Instead, such measures will only be an option, according to Social Welfare Minister Paula Bennett – and will not (presumably) be put forward by front line staff as an option that beneficiaries cannot refuse.

Bennett was at pains yesterday to present this mooted $1 million contraceptive package as being a voluntary form of assistance, rather than a tool of social engineering. Cost, she said, can be a barrier to effective contraception for some. (Despite Pharmac’s subsidies for some forms of contraception that is still the case, given the cost of going to the doctor.) Yet by making fully subsidized long term implants and IUDs available for free only to beneficiary mothers and their teenage daughters, the policy still carries a stench of eugenics about it. If cost really is the rationale, then these family planning methods should be being made available for free to all women on low incomes, whatever their occupational status. Otherwise, the state is making a distinction between the virtuous working poor and the poor on benefits, who are being regarded as irresponsible and/or morally degenerate. From October, this contraceptive assistance will be offered to all women on benefits, and their daughters aged 16 to 19.

That’s outrageous. Think about it. Most women are on the DPB due to marital or relationship breakdown, leaving them – usually – with the prime custodial care of the children from those relationships. In response, Bennett is offering to pay to insert IUDs or contraceptive implants in those women and in their teenage daughters. That is pretty insulting. From October, the state intends to treat all such women – most of whom are on a benefit not by choice but through divorce and relationship breakups – as if they and their children are sexually irresponsible. In this respect at least, the government’s view of beneficiaries seems to belong to the 19th century. It’s all a bit like the world of Nancy in Oliver Twist:

When such as I, who have no certain roof but the coffin-lid, and no friend in sickness or death but the hospital nurse, set our rotten hearts on any man, and let him fill the place that has been a blank through all our wretched lives, who can hope to cure us? Pity us, lady—pity us for having only one feeling of the woman left and for having that turned, by a heavy judgment, from a comfort and a pride into a new means of violence and suffering.

Is Paula Bennett being just as keen to offer women on the DPB financial help say, to retrain and/or carry out university study? Not so much. In the recent past, she has cut the same Training Incentive Allowance for solo parents that she personally benefited from whilst she was on a benefit – and she may now be reconsidering the wisdom of that move.

Given the potential for WINZ staff to cross the borderline and pressure beneficiaries into compliance, Bennett should be stressing that frontline staff will be given explicit instructions on this point of the voluntary nature of contraception – and that any pressure would be regarded as intolerable, and would have career repercussions for staff found to have abused their powers in this area. As Green Party Co-Leader Metiria Turei said on RNZ this morning, the state has no role in telling women what contraception they should and/or must use, simply because such women are temporarily in need of financial support from the state.

Also, as has been said many times before, the spectre of teen mothers is one that is easily overblown. Of all women on the DPB there is a higher percentage of women in the 55-64 age group than those aged 18-19 years of age. Those teen mothers may stay on the DPB relatively longer, but the stereotype – the ‘breeding for a career’ teen mother –is a tiny element within a small sub-group within a subset of the beneficiary numbers. The approach is largely to be a punitive one, regardless:

The reforms include a requirement for those who have another child while on a benefit to look for work when that baby is 1, rather than wait until he or she is 5.

Is this approach likely to stop the second child, or subsequent children, being born? Or is it merely likely to put the care of the first child at risk? I think we already know the answer to that one.

Welfare reform

The issue of contraception tended to over-shadow the other announcements yesterday on the first stage of the government’s welfare reform. The measures announced will cost $287.5 million overall over four years – the full package will cost $520 million – and are expected to save $1 billion over the same period – although Bennett has made it clear that the savings estimates are a ‘best guess’ figure only. That is putting it mildly. Over recent decades, the swings of the business cycle has been the main determinant of how many people go on the welfare rolls – and by comparison the eligibility rules for getting benefits, or the mindset of the recipients are virtually irrelevant. So, since the economy is expected to slowly improve over the next four years, it will be this enhanced economic activity – and not welfare reform – that will be the reason why the beneficiary numbers will decline.

The rough breakdown is as follows:

The first phase of the changes is expected to cost $287.5 million over four years. It includes $148 million to be spent on budgeting and parenting courses, with youth beneficiaries, aged 16 to 17, getting incentives of up to $30 per week for taking the courses. It also provides up to $64 million going to private providers of youth services.

In any welfare-to-work process, the provision of quality, affordable childcare is an essential ingredient. Within that $287.5 million, some $80 million has been earmarked for childcare and early childhood assistance. At the receiving end, this will take the form of a $6 an hour childcare subsidy – which Bennett presented as being a rate, when taken alongside other existing forms of childcare subsidy, as adequate to meet the cost of childcare for beneficiaries being required to work full or part time. This is very arguable – especially when there will be no inflation adjustment in early childhood provisions.

Assistance payments would provide young parents with up to $6 an hour for 50 hours a week for their children to attend approved early childhood education services. That’s on top of funding for the 1155 extra early-childhood education places needed to meet the needs of parents returning to work or study.

However, Prime Minister John Key said although there would not be cuts to early childhood provisions for working parents, there would be minor changes. “Those changes could result, at the margins, in some people getting not necessarily less funding over time but not necessarily more as the general inflation rate increases.

In answer to a further question from Scoop, Bennett gave assurances that the reforms would not result in the children of beneficiaries being pushed into the kind of low quality childcare that has typified much of the welfare to work process in the United States. Time will tell whether Bennett’s confidence is well placed on that score.

ENDS

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Gordon Campbell on the government’s self-defeating plans for universities

Steven Joyce happens to hold a set of portfolios central to the country’s economic planning and future direction. Joyce is the Minister of Economic Development, the Tertiary Education Minister and the Minister of Science and Technology. Theoretically, this should allow him to co-ordinate the government’s efforts in those three vital areas. Yet in his recent announcements on student loans, Joyce’s left hand did not appear to know what his right hand was doing. Last week, Joyce made it clear that the government is planning to push students into careers into science and technology – and away from arts and commerce studies – even while it is systematically underfunding the Crown Research Institute and university facilities that will be expected to employ them once they have finished their studies.

Already, funding pressures mean that those organisations are not hiring. In effect, Joyce is pushing people into a realm of academic studies where – once they have graduated – the majority would have to look overseas for their job prospects, and even the mid-career opportunities are so scarce in New Zealand that few are ever likely to come back. If there’s a rational plan here, it’s hard to see what it is.

As mentioned last week, Joyce’s changes to the student loan scheme will require students to lift the annual repayments on their student loans from ten to twelve cents in the dollar, This obligation will cut in on students on very low incomes, some of them earning as little as $19,000 annually. In addition, student allowances will be scrapped for those doing post-graduate work, at the point where four years of study have been completed.

Science, technology, engineering and mathematics have been earmarked to receive the “up to $60-70 million” estimated to result from these measures. Yet, as was quickly pointed out, the scrapping of post-graduate student allowances will also impact on those studying medicine, dentistry and veterinary medicine, besides the arts and commerce students singled out by Joyce. Given the country’s GP shortage, that seemed an inexplicable move – and according to Green Party MP Holly Walker, the change will be sending an overall signal that only the wealthy can expect to afford to pursue any form of post-graduate studies in future.

The government’s message is consistent on this point. It will be using the upcoming Budget to shift funding to favour degrees in science, technology, engineering and maths, and the Tertiary Education Commission has also called on tertiary institutions to increase the number of graduates in these fields. The TEC report, however, does not provide any evidence to support the need for more graduates in this field. Nor has Joyce so far. The need to provide that sort of supportive evidence is pretty clear, given the government’s prior track record of embarking on workforce planning on the basis of little more than hearsay and populist rhetoric. The result has seen too many skilled people competing for too few jobs, as demonstrated by the ill-fated $19 million exercise launched in 2009 to train more teachers to work in low decile schools and by this highly relevant example of scientists struggling to find work.

In a few weeks time, the Budget will give more information as to how the government plans to proceed with the social engineering that Joyce appears to have in mind, via the nation’s universities. Currently undergraduate student fees at universities average slightly less than $5000 for a full time load of arts study and a bit less than $6000 for a full time load of science study. Presumably, to make university studies in science more attractive than similar level courses in humanities the government will need to shift the subsidies by about $1000 per student per year to change that price differential. So will arts, commerce etc students be penalised to make up the shortfall? Presumably, the Budget will reveal whether this is to be the case. No new funding, after all, is going to be made available – so something has to give.

To repeat: there is no evidence that New Zealand can employ – and needs to employ – many more graduates in science and technology. Here is the immediate skills shortage list from Immigration NZ:
http://www.immigration.govt.nz/NR/rdonlyres/89185A40-27D3-41F4-84BE-30129920411D/0/Immediateskillshortagelist5December.pdf

And here is a document from the Department of Labour outlining the likely areas of growth in employment opportunities over the next few years:
http://dol.govt.nz/publications/research/growth-employment-opportunities/growth-employment-opportunities_06.asp#_ftn1

What these documents indicate is that yes, there are some shortages and opportunities in science and engineering (not so much in maths and technology) but there are many more opportunities in the service industries – in retail, construction and agriculture, for instance. Many of those “science” jobs require trades certificates, not degrees.

Anecdotally, that rings true. There is some evidence of science and technology jobs for people emerging from polytechnics, particularly for those with trade certificates. However, very few jobs exist for those with post-graduate degrees in science. The problem being, most science and technology jobs are based in either Crown Research Institutes or in universities – both of which are facing funding pressure from government and which therefore, are not hiring. On the face of it, Joyce is talking about shifting the focus of university course funding and fostering careers into areas where – with his other hand – he is limiting the funding required to sustain those careers. It might be different if New Zealand had a tradition of private sector research and development, but it doesn’t. In fact, one of the first acts of the incoming government in 2008 was to scrap the tax incentives that were meant to lift our levels of private sector r&d up closer to the international norm. This chronic failure of the New Zealand private sector to invest in r&d helps to explain why there is so much pressure from government on public sector institutions, for them to do private sector research. To that extent, CRIs and universities are being turned into providers of corporate welfare.

The government knows all this. Last year, 560 scientists signed an open letter to government decrying the dearth of career openings in New Zealand (and the minimal state support) for post-graduates in science. As things stand –if Joyce has his way – people will be being educated for jobs that do not exist while others will have their funding cut because they are studying subjects that the government has chosen to sacrifice, in order to increase the numbers of science and maths graduates that it has no capacity to employ.

In sum, it is hard to see how Joyce’s plans will do anything other than hasten the brain drain overseas. Politically, such plans also provide young voters with a festering source of resentment, and an excellent reason to vote against the government to which Joyce belongs. For a return of only “up to $60-70 million” at most, it hardly seems worth the trouble.

ENDS

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Gordon Campbell on Steven Joyce’s student loans debacle

Gordon Campbell on Steven Joyce’s student loans debacle

By Gordon Campbell

Of all the ways of trying to save “up to” $60-70 million – and that’s only if he’s very, very lucky – Tertiary Education Minister Steven Joyce has made a real hash of it. Joyce has decided to change the student loan scheme in a fashion that will (a) effectively impose an extra tax on people earning as little as $19,000 (b) cut off student allowances to those students doing post-graduate work or studying medecine, at a pojnt where they have already done four years of study, which will (c) accelerate the brain drain overseas (d) deter people from tertiary study altogether and (e) give young voters an excellent new reason for not voting for National at the next election. All in order, allegedly, to raise funds to “plough back” into academic research and to boost teaching standards (yeah right) at the nation’s tertiary institutions. Science and engineering have been earmarked to receive the funds raised or saved) by these new measures – but as has already been pointed out, the changes will impact negatively on those studying medicine, dentistry, veterinary medicine, and on post-graduate programmes in arts, law, and commerce. Read the rest of this entry »

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Gordon Campbell on John Banks’ unpleasant options

Article – Gordon Campbell

Banksie-Dotcom Link Under Fire – Parliament.co.nz

A bunker mentality is becoming evident in the Act Party’s response to its current crisis – as in Berlin bunker, 1945. A reluctant admission of just how bad things are is finally seeping in, but that’s still inseparable from a high level of self-pity, self-righteousness and persecution complex. How has it come to this? Were my alleged sins really that bad? Why me ? And even now – shouldn’t people be more worried about what’s been going on at ACC, or with half a dozen other examples of government mis-management than with the fine print of the losing candidate’s expenditure return for the Auckland mayoralty, 18 months ago ? Read the rest of this entry »

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Gordon Campbell on Key. Ethics and Banks

Article – Gordon Campbell

Disclosure rules exist in local body legislation for the public’s benefit, not the benefit of politicians. Yet the explicit message from yesterday’s press post-Cabinet conference was that Prime Minister John Key is willing to condone unethical behaviour, so long as it doesn’t reach the threshold of being provably illegal in a court of law. Key faced repeated questioning about the standards he expected from his Ministers, and especially over what he felt about the grey area where behaviour is unethical, but does not breach the black and white letter of the law. Well..it turns out that unethical behaviour is fine by Key, and only illegal behaviour is not. That was made very clear in this exchange :

Campbell: Disclosure rules exist so that people will know where donations come from and how much they were. In this case, the law is lax enough to allow that to be shielded under anonymity…that’s why I’m raising the spirit of the law. If you found that a Minister had colluded to thwart the spirit of the law, would you feel that was perhaps, a hanging offence?

Key : No.

The press conference video is here.

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Gordon Campbell on the John Banks vs Kim Dotcom saga

Article – Gordon Campbell

Click for original version.

Cartoon by Martin Doyle

Is it too soon to start talking about the curse of the Act Party leadership? The toll at the top is becoming quite alarming….Rodney Hide, Don Brash, and now John Banks is in trouble. To the point where Banks’ current line of defence about the source of certain unidentified large donations to his 2010 Auckland mayoralty bid is starting to sound very reminiscent of Sergeant ( “ I know nothing – NOTHING”) Schulz from the old Hogans Heroes TV show. Maintaining a defence of plausible deniability may serve to keep you out of a courtroom, but it doesn’t do much for the credibility of you and your party in the court of public opinion.

The point of having disclosure rules about political donations is that the public can thereby be made aware of whether politicians are beholden to certain people or organisations whose interests may figure in their future decisions. If those financial linkages are out in the open, the transparency will (hopefully) deter favouritism and other corrupt practices. Read the rest of this entry »

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