Good luck to Simon Bridges, but regardless of whether he's good, bad or average, the new National Party leader seems largely irrelevant to the political landscape in 2018. Photo / Mark Mitchell
Good luck to Simon Bridges, but regardless of whether he's good, bad or average, the new National Party leader seems largely irrelevant to the political landscape in 2018. Photo / Mark Mitchell
Opinion by Liam Dann
Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.
Good luck to Simon Bridges, but regardless of whether he's good, bad or average, the new National Party leader seems largely irrelevant to the political landscape in 2018.
The meaningful battles - the ones that define this Government - won't involve the Opposition at all.
They will be fought between ministers and senior bureaucrats, behind closed doors.
Whether the new team of Bridges and Paula Bennett can score political points is irrelevant, for now at least.
Did I say battles? Robust debate might be a better description.
Compared to the childish shouting and name calling that goes on in Parliament, the discussions between ministers and senior officials are likely to be both civil and extremely pointy headed.
The results of those discussions have the potential to deeply shape New Zealand's future.
Nobody is sure yet whether this Government will be one that brings structural change or whether it simply brings a kinder face to the steady-as-she-goes policies of the last 20 years.
It is possible the leadership isn't quite sure yet either.
So far Jacinda Ardern, Grant Robertson and even Winston Peters, have presented a pragmatic and relatively conservative face of change.
That's smart. They have understood the risks around derailing economic growth by spooking business and bursting the confidence bubble.
But we are hearing two distinct philosophical tones in the rhetoric of the new Government.
Can you really rewrite economic fundamentals that have underpinned policy for decades and still adhere to a self-imposed rules around fiscal responsibility?
One is pragmatic and fiscally responsible, the other is questioning the very foundations of modern economic management - reforming monetary policy and broadening the foundations on which the national Budget is written.
Finance Minister Robertson has already indicated that although the Budget this May will be quite traditional, next year though he expects Treasury to build "well-being" measures into the fiscal framework.
Can you really rewrite economic fundamentals that have underpinned policy for decades and still adhere to a self-imposed rules around fiscal responsibility?
Economists on both ends of the political spectrum are struggling to see how these two approaches are not contradictory.
Which approach will dominate remains something of a mystery - even to senior officials, who will themselves seek to shape and refine policy.
Certainly, those who do want to see bold structural change view this year as an important period - perhaps a once-in-a-generation opportunity.
Good luck to Simon Bridges, but regardless of whether he's good, bad or average, the new National Party leader seems largely irrelevant to the political landscape in 2018. Photo / Mark Mitchell
The big changes to economic management that Labour alludes to are not new.
In fact, they are well developed by institutions like Treasury, which produced the Living Standard Framework in 2011, drawing on fresh thinking within global institutions like the OECD.
The work breaks down measurement of economic progress into "four capitals".
These include Financial capital (basically the stuff we already measure with GDP) and Natural capital (which attempts to quantify the value of natural environment and the costs of its degradation).
Then there is Social capital (including cultural value and where Treasury includes the Crown Māori relationship) and Human capital, which encompasses everything from skills, education, employment and mental health.
These are all-important indicators of well-being but questions remain about whether they add value to economic decision making. Clarity and simplicity have long been considered key to making effective policy choices.
It's fair to say the report never got much traction with the likes of John Key, Bill English and Steven Joyce.
For that matter, it's likely many of the economic thinkers within Treasury, the Reserve Bank other key ministries are wary of adding additional complexity to policy frameworks.
Treasury's own conclusion to the 2011 report was that the: "framework is intended to be used as an input to the policy process, rather than an analytical, prioritisation or decision-making tool in itself".
"Its main value is in the way it encourages a broad understanding of living standards."
In other words, to quote The Castle's fictional lawyer Dennis Denuto, "It's the vibe of the thing, your Honour."
But since 2011 the case for a more radical approach to economic management has grown stronger – in part because puzzles like rising inequality and low wage growth in developed economies remain unsolved.
Once radical ideas have been gaining traction places like the IMF, OECD and The World Bank.
Even the corporate world has begun to focus more seriously on the "triple bottom line" of financial, environmental and social responsibility.
ESG (environmental, social governance) accounting is being written into financial reporting rules at stock exchanges around the world - including the NZX.
But let's not kid ourselves this change has been fundamental - shareholders still demand profits.
There is plenty of feel-good window dressing going on in the corporate world.
So the new Government faces a stark choice. It can carry on in the hope increased social spending and a handful of policy changes can rebalance the economic system.
