John Robertson: It's time for more reform

Legislation in the past has introduced principles to guide the sustainable management of our natural and physical resources. File photo / NZ Herald

From the mid 1980's to the mid 1990's New Zealand governments drove enormous economic and state sector reform. We saw the opening up of markets, the removal of farm subsidies, a shift from an income to a goods and services tax, and the deregulation of the labour market.

While New Zealanders remain split over the wisdom of some of these reforms, we must surely applaud the inroads made this period to lift public sector accountability and performance, and to address matters around the sustainable management of resources.

Some of the legislation passed in that period brought efficiency into a lethargic public sector. The State-Owned Enterprises Act (1986) for example organised certain government departments into a corporate model, lowering the cost of delivering public services, and setting clear objectives and accountability.

We tackled matters of resource sustainability. The Fisheries Amendment Act (1986) and the Fisheries Act (1996) improved the quota system for managing fish stocks, enhancing transparency and sustainability. The Resource Management Act (1991) introduced principles to guide the sustainable management of our natural and physical resources.

Monetary and fiscal policy matters were addressed to improve economic management. The Reserve Bank Act (1989) delivered a framework to deal to inflation by managing monetary policy within policy targets, but otherwise independently of Government. The Fiscal Responsibility Act (1994) lifted accountability and introduced principles of responsible fiscal management to fiscal policy.

In the twenty years that have followed, Parliament has been less reformist, and Government's key adviser, Treasury, much more subdued. Yet as Herald Columnist Fran O'Sullivan pointed out last week, we need some "high class policy" to emerge from government if we are to manage the many local and international risks that surround our nation today.

Economic crisis, inflation, and a growing awareness of the need to manage our resources more efficiently and sustainably were the catalysts for improving accountability and transparency in the 1980's. Parliament acted.

Economic crisis is with us again, this time fuelled by mounting debt, both nationally and internationally. But alongside these economic issues stand issues of environmental degredation and climate change, worries over social issues, and challenges regarding matters cultural. Central and local government refer to these as the four "well-beings" - economic, environmental, social and cultural. They are embedded in legislation. Indeed the Local Government Act (2002) notes the promotion of them " ... in the present and for the future" as one of just two purposes of local government.

It is time in the public sector to tighten up both the definitions and the measurement of these well-being objectives. They are worthy purposes. Now we need to monitor progress towards fulfilling them. Lifting such accountability will improve public policy. Parliament needs to act again.

To be useful, indicators of well-being need to be robust, simple to express, removed from political interference and comparable across nations.

GDP, the measure most often applied to measure our economic well-being, does not pass the robustness test in today's world. GDP measures the market value of the production of goods, but does not deduct from this the market value of assets destroyed or natural resources depleted. Thus New Zealand's GDP will be increased by the reconstruction efforts in Christchurch, yet no accounting for billions of dollars of destruction to infrastructure will be recognised. Our GDP will be increased by the clean-up work arising from the pollution caused by Rena. Even road accidents increase GDP.

We have struggled to develop a comprehensive measure of social well-being. We use a multitude of statistics - like mental illness, life expectancy, and prisoner numbers. But there is an increasing body of knowledge suggesting that the best indicator of social well-being may be simply the extent of inequality within a society.

The measurement of well-being should be conducted independently of the political process. The creation of an independent statutory authority of statistics provides assurance of this, a move that countries like Australia have made, but New Zealand has not.

Finally, we need to benchmark ourselves against others. To enable one nation to measure its progress against others requires international cooperation. The OECD has sponsored initiatives to develop a measurement framework, the most recent being led by Nobel laureates - the Stiglitz-Sen-Fitoussi report on well-being and sustainability measures.

It is time again to lift New Zealand's public sector accountability. Our policy makers speak of their commitment to progressing the four well-beings. These words need to be matched by the measurement and reporting of all four in an objective, independent and comparable way.

Perhaps New Zealand's Treasury might once again rise to the challenge to deliver these reforms.

* John Robertson, a former MP for Papakura and former Mayor of Papakura, is a Board member of Regional Facilities Auckland and Chairman of e-retailer, Fishpond Limited.