Climate Change Minister James Shaw and Transport Minister Michael Wood reveal details of a rebate scheme for buyers of new and used electric and hybrid vehicles. Video / Dean Purcell
Opinion
OPINION
Climate Change Commission chairman Rod Carr has recommended a government action plan to address environmental challenges we all seek to solve.
The plan goes far beyond using the Emissions Trading Scheme to put a price on carbon, but also promotes command-and-control regulations, as well as subsidies on electric cars. A plan implemented now, with no time to waste, to avoid painful future adjustments.
To support his case, Carr argues that inaction on climate change could have similar consequences as the failure to come up with a "transition plan" in the 1970s, which would have avoided the shock therapy of New Zealand's 1984 economic reforms.
"In the 1980s we left it to the last possible moment, forcing abrupt change when all other options had run out", he says. Invoking that particular historical episode to symbolise the importance of embracing pre-emptive plans is beyond belief.
If one wants to find examples of imminent crises caused by woefully incompetent public planning, why not instead point to our single harbour crossing in Auckland? Or the Government's insistence on keeping the retirement age at 65 years old in the face of a sharp trend increase in numbers of elderly people?
Why not point out how our ageing population is placing unsustainable pressures on our healthcare system? Next to nothing has been done to plan for this well-known demographic phenomenon.
Why not point to Auckland's and Wellington's ailing infrastructure?
But no. The Climate Commission chairman winds the clock back 50 years, turning fire on the 1970s National Party Government of Prime Minister Sir Robert Muldoon.
The story is that the economic crisis in the 1980s was caused by the command-and-control regulations and subsidies implemented by that Government as a response to the first oil shock and loss of access of farm products to the UK in 1972-73. Hang on.
So his view is that command-and-control regulations and subsidies brought the country to its knees back then but now should be used to deal with climate change? This economic history lesson doesn't add up.
It gets worse. The high inflation and unemployment experienced in NZ in the 1980s were not due to local factors and not due to the presence or absence of pre-emptive plans. Nearly every country in the world, regardless of policies, suffered similar increases in unemployment and inflation at that time.
The primary cause was the second oil shock in 1979, which saw a doubling in energy prices. Even in the US, whose economy was far more liberalised prior to our market reforms, unemployment hit over 10 per cent and inflation 14 per cent, similar to here.
Thousands of books and articles explain how unexpected supply-side shocks cause these kinds of effects. More recently, the economic fall-out from another adverse global shock, the pandemic, which has affected labour supply around the world, was also impossible to avoid. The best that can be done, to the extent such shocks become long-lasting, is for businesses to develop technologies lessening their effects.
A sustainable way out of the pandemic is not coming from governments. It is coming from companies inventing vaccines, like Pfizer.
Last year the media presented our response to the pandemic as an example of a victory for big government. That was true. However, the wage subsidy and lockdowns were temporary and unsustainable.
This year is an example of a victory for private enterprise and a failure of big government.
Behind the smokescreen of Wellington's ballooning media management and PR teams, our public sector is on course to take longer to distribute the vaccine - over which it has given itself monopoly rights - than Pfizer took to invent it.
Robert MacCulloch. Photo / Supplied
But back to the future. In the 70s and early 80s, when people increasingly worried that high oil prices were here to stay, National and Labour actually did make, and already had made, plans to avoid long-term oil dependence. Hydro schemes at Ōhau, Tekapo and Tokaanu were commissioned throughout those times.
In 1976 the "Think Big" projects were launched, one of which was the Clutha Dam.
So how can one blithely argue that the period before 1984 was a time when things were left to the last possible moment? When our politicians were not making big decisions to plan for the future?
Wasn't that also the time when much of our nation's infrastructure was built? When Sir Dove-Myer Robinson built Auckland's motorway network? A network that has barely changed in the past 50 years. Didn't those politicians and mayors back then place a greater emphasis on enacting plans that would hopefully serve us decades ahead compared to the present myopic lot?
New Zealand also discovered the downsides arising from the Government trying to plan by picking winners and through the use of command-and-control rules.
Some Think Big projects served us well. Many were disasters. The forecasts back then that oil prices would stay high turned out wrong. They subsequently slumped.
Given the lack of urgency relating to pension and healthcare reform to cope with the ageing population, and with fixing our ailing infrastructure, what explains the current political focus on climate change?
One is unable to avoid the conclusion that the Government genuinely doesn't care about the environment. The lack of concern given to other pressing long-term threats reveals that neither National nor Labour are remotely interested in strategic planning, at least beyond the three-year electoral cycle.
Instead, our two main political parties have simply jumped on the environment bandwagon because they see votes and power, right here, right now, attached to visibly promoting that one issue.
• Robert MacCulloch is the Matthew S. Abel Professor of Macroeconomics at University of Auckland.
