2019: the prospects for fairness and openness

The 2019 political year is now well and truly up and running. So what progress might we see on two key areas of interest for me, and I think for most New Zealanders as well – economic equality, and more deeply open and participatory government? In brief, I think the current government has better ambitions than the previous one – but is in many cases trying to achieve those ambitions using the same old methods.

Economic equality and fairness

The passing of the Child Poverty Reduction Act, with cross-party support, was a milestone. And the Families Package is a first step in that direction, potentially lifting tens of thousands of children out of poverty. So far, so good.

The problem here is that the act’s targets are very ambitious – essentially halving poverty in the next decade – and to keep on track will require the government to do far more than it has currently contemplated. But for the moment it is hamstrung by its Budget Responsibility Rules, which severely limit spending. If the government is to ensure not just that incomes for the poorest increase but also that they increase more quickly than those in the middle, as it must to reduce relative poverty, it is going to have to either relax the rules (assuming it gets a second term) or find significant new sources of revenue.

This leads naturally to another big issue in this space: the Tax Working Group’s report, due to be released next week. Following its interim report last year, the group is likely to recommend some kind of capital gains tax, albeit it appears not to be united.

When it comes to reducing inequality, however, the OECD has made it clear that tax on capital gains by itself is insufficient, unless accompanied by direct taxes on wealth and inheritances or gifts. A capital gains tax will also raise limited revenue, at least in the short term. My view, then, as set out in this Stuff opinion piece, is that a capital gains tax is better than nothing, but not as good as what we need.

Much more could be said about inequality. Housing, for instance, has dominated debate, especially KiwiBuild. The only point I would make on the latter is that it is surely too early to judge a program that is really only a few months old, after decades of failed housing policies and pent-up problems. And don’t forget that the government is also building new state housing, and is probably doing so about as quickly as constraints in the construction market – the supply of competent builders, for instance – will allow.

One last point is worth highlighting: the need to reduce some economic inequality at source, in other words the disparity in salaries that exists before government swings into action with its taxes and benefits. A report on Fair Pay Agreements – which would effectively allow workers in one part of an industry with good terms and conditions to spread them across the rest of that sector – has been published.

The government has also taken steps to slightly strengthen collective bargaining for workers. These steps, plus the agreements – if implemented, and made compulsory – could increase the average worker’s share of company profits, and reduce inequality. But they will almost certainly fall short of a significant restoration of bargaining power – an area where some serious policy thinking is needed.

Liquid government

In my new book Government for the Public Good, I use the phrase ‘liquid government’ to denote a more open, more fluid and more deeply participatory way of running the country. It’s about not just publishing more information, although that is important, but about creating more opportunities for people to come together and, through high-quality public debate, directly shape policy and the kinds of services they receive.

The government has, famously, committed itself to being the most open and transparent ever. And there have been some promising moves in this direction. All Cabinet papers will now be released within 30 days unless there is good reason not to – something that puts us miles ahead of most countries. Summaries of ministerial diaries will shortly be released, responding to years of demand for such a move.

We are also part of the Open Government Partnership (OGP), an international initiative that does pretty much what it says on the tin, though its definition of openness is pleasingly broad and incorporates the kind of participation that I also stress. The government’s latest OGP action plan is longer, more detailed and more ambitious than previous ones – something which of course I welcome.

I think there is significant room to go further, though. The initiatives aimed at increasing participation, for instance, focus on things like holding more public events at parliament, strengthening the youth parliament, and improving the teaching of citizenship in schools. No one sensible would disagree with any of these moves. But they still leave an enormous amount of room for more genuinely participatory schemes.

I’m thinking here of the forums in which citizens’ considered discussions on important issues directly influence policy – citizens’ assemblies, processes in which local councils give up a proportion of their infrastructure spending to a public vote, genuinely democratic national policy conventions, deep and rapid online consultations, and so on. We could also be copying cutting-edge countries by creating platforms for people to directly propose laws to go before parliament.

This is what I mean when I say that the government is still often using the same old methods, methods better suited to the twentieth century than the twenty-first, even if its ambitions are greater. There are exceptions: I understand that the education policy review meetings were deep, considered and deliberative. But too often policy is being formulated by bodies like the Tax Working Group – which, with no slight intended on its members, is still an old-fashioned, top-down process that falls well short of the demands of genuinely deliberative and citizen-led policy-making.

The other outstanding question is, of course, the Official Information Act, which – it is widely accepted – needs a serious upgrade. The OGP action plan holds out the prospect of a complete review of the act, something I think is needed; some changes around the edges will not be sufficient. The action plan also continues to stress the need to shift a proactive release of information, as with Cabinet papers.

In summary, there is much to cheer in both these key areas of interest. But the Prime Minister’s recent comments that this has to be the government’s year for delivering holds particularly true when it comes to fairness and openness. Expectations have been raised; now they need to be met.

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