Are Civil Servants Disposable?
Trevor Mallard may not be everyone’s cup of tea. Even his friends might concede that he occasionally betrays a lack of judgment. But, in his criticism of Deputy Police Commissioner Mike Bush when the senior policeman appeared before a Select Committee, he was entirely justified.
Trevor Mallard has a long experience of public life and his awareness of its basic principles is reliable. He recognised, as did many observers, that the eulogy delivered by Mike Bush on the occasion of former Detective Inspector Bruce Hutton’s funeral – containing as it did an assertion that a police officer who had been found by a Royal Commission of Inquiry to have planted evidence in a murder trial had an unsullied reputation for integrity – could not be allowed to pass without challenge.
The excuses offered for this remarkable statement – that Mike Bush was quoting words from another source or that it was a private occasion – do not stand up. There is no way that it could be seen as other than a public rejection, by the police as an organisation, of the finding of the Royal Commission or, alternatively, as a statement that the finding was of no consequence. Either way, the message is clear – the police loyalty is to their own rather than to acceptable standards of policing.
One might have thought that the Minister of Police would recognise the danger to the police if that perception gained ground with the public. But her riposte to the effect that Trevor Mallard’s challenge was an instance of “bullying” failed lamentably to take this on board. Is the Minister really saying that a Member of Parliament should not be allowed to point out that public confidence in the police can only suffer if the police are seen to refuse to recognise that such a serious breach of acceptable standards has been committed? Is the Minister really happy to leave the matter as it stands – and as represented by Mike Bush’s assertion?
However inappropriate it may be in this instance, it is of course commendable in principle that the Minister should defend her public servants; but her response is in marked contrast to the attitude increasingly taken by ministers in this government. It is now common practice, when things go wrong, for ministers – not to defend their officials, but to blame them – as a means of avoiding any responsibility themselves.
The most recent and egregious example is the fallout from the Novopay debacle. A process that has created huge damage to an important public sector undertaking – our schools – was monitored and eventually signed off by three ministers; when they put their signatures to the sign-off, they in effect accepted responsibility for what they had decided.
We are now told that they did not know what they were signing because they had been provided with inaccurate information by their officials. The consequence is that the senior officials involved have been hung out to dry; two have departed (the second under threat of an investigation) and the pressure is mounting against the third.
The ministers, however, sail on unchallenged and unaffected. It was not, it seems, anything to do with them. In this, they are following an unfortunate precedent set – amongst others – by Murray McCully.
Just over a year ago, it may be recalled, the Ministry of Foreign Affairs and Trade was to undergo a huge shake-up. The numbers of posts and of diplomats were to be slashed; appointments of ambassadors were to be made following advertisements for applicants.
When these plans were eventually abandoned, or at least substantially curtailed, the Minister declared that they were nothing to do with him. According to Murray McCully, MFAT’s Chief Executive, John Allen, was to blame and should carry the can. The Minister was, he assured Morning Report in March last year, merely “the purchaser of services” from the ministry.
This novel doctrine is, of course, in marked contrast to the keenness of his ministerial colleague to make common cause with the public servants who work for her in the police. It also raises an interesting difference in approach from that taken by another minister – the Attorney General, Chris Finlayson.
The Attorney General, we learn, is upset by a Supreme Court decision that advice from a civil servant to a minister is not protected by parliamentary privilege – indeed, he is so upset that he intends to legislate so as to make it clear that a civil servant and a minister are joined at the hip and must both be protected.
The Herald takes the same view. That view could be argued to represent a significant extension of parliamentary privilege (as the Supreme Court decided). But, in any case, if civil servants are so integral a part of parliamentary process that they and their ministers are in effect one and the same, shouldn’t they be less easily thrown to the wolves when it suits the government?
Bryan Gould
13 June 2013
This article was published in the NZ Herald on 17 June.
What Happened to the Money?
Larry Elliott is right to ask in Tuesday’s Guardian why 16.5 billion of quantitative easing made available by the Bank of England to the commercial banks through the funding for lending scheme has failed to show up in increased lending to the small and medium-sized businesses which desperately need a boost to their available funding. He is also right to dismiss the lame excuses offered by both the Bank of England and the commercial banks to explain why such lending has actually fallen rather risen since the same time last year.
We are, of course, all paying the price, in a slower recovery from recession, higher unemployment, less investment and more business failures, for the fact that this resource, rather than being used, languishes in the banks’ coffers – so we all have an interest in why it has happened. The bad news is that the reasons for it are part of a much wider and longer-term picture.
The excuses trotted out include the age-old claim by British banks that the comparatively low level of their lending to business does not evidence any reluctance to do so, but merely a shortage of demand – or, to put it another way, a shortage of suitable projects on which to lend. But no sense of this can be made unless we know not only how much is available to lend but also – and more importantly – the terms on which the banks are offering to lend.
And that is precisely, of course, what we are not allowed to know. The banks are always very coy about the terms they offer. But, in the absence of information made available by the banks, we are entitled to make some assumptions on the basis of what is known of the long-term attitude of the British banking system to lending to industry.
The information that is available shows that, by comparison with other and more successful economies, our banks lend over a shorter term – the repayment period, in other words, is shorter. This means that the annual repayment costs of bank loans for British firms over the life of the loan are much higher, the adverse impact on cash-flow is therefore more severe, and the need to make an immediate return on investment (and a quick boost to profitability) is much greater.
My colleague, George Tait Edwards, has shown that annual repayment costs that are two, three or even five times lower are a large part of the reason for the greater amount and ease of bank borrowing enjoyed by businesses in, for example, Germany and Japan, and in the new powerhouses of China, Korea and Taiwan – and that is, of course, why they are able to buy and make a profit from our failing assets.
This is the fons et origo of the much-lamented British disease of short-termism. For many British firms, short-term cash-flow or liquidity is at least as important as longer-term profitability, because it is literally a matter of life and death. It is a factor that both inhibits the willingness to borrow (and therefore the access to essential investment capital) in the first place, and – if the loan is made – greatly increases the chances that it will not and cannot be repaid in accordance with the loan period and terms insisted upon by the banks.
If, as is all too likely, a business borrowing on these terms runs into difficulties before the return on the investment funded by the borrowing becomes available, the news gets worse. British banks, unlike their overseas counterparts, show little interest in the survival of their customers. Their sole concern is to recover the loan and interest payments due to them over the short period specified in the loan arrangement. If that means receivership or liquidation – even if the business had a good chance of survival were the investment plans funded by the loan allowed to proceed – so be it. The banks can console themselves not only with the return of the loan and other payments due to them sooner than if the business had been allowed to survive but also with the money to be made from the disposal of the assets (sometimes to foreign buyers) and the receivership process.
Many people are vaguely aware of these factors but our lack of interest in what makes competitor economies more successful than ours – indeed, our conviction that we have nothing to learn from them – blinds us to these truths. It is time we opened our minds and demanded better from our banking system. And shouldn’t these decisions in any case be taken in the public interest and not those of self-interested bankers?
Bryan Gould
4 June 2013
Who’s Extreme?
Whatever one may think of John Key, he can at least do his sums. He knows that anything less than 49% of the vote at the next election is likely to mean that he loses office, and that a Labour-led government will take over.
It is presumably fear of that outcome that has led him recently to sharpen his attacks on his political opponents. The contest, we are told, is between a cuddly-sounding “centre-right” and a threatening “far left”. A Labour and Greens alliance is a “devil beast”. We’ll soon be back to Cossack dancers, though North Korea rather than the Soviet Union seems to be the bogeyman of choice used these days to frighten voters.
It is always regrettable, and bad for democracy, when low-grade abuse takes over from reasoned argument. And it is even less defensible when the targets for such abuse are able to locate their political whakapapa in the democratic tradition which they, perhaps more than any others, did so much to build.
As it happens, though, we have now been presented with a rather more convincing example of extremism close to home. The paper leaked by a National party insider and reported in Saturday’s Herald reveals the determined efforts being made by a small group of zealots to foist upon this country policies that are supported only by a tiny percentage of the population – that is, the proportion that would normally vote for Act.
The dream of these “fiscal conservatives” (who would find an enthusiastic welcome in the wilder Tea Party reaches of American politics) is to move elected governments out of the way so that the voters don’t matter and the country can be run by big business. To this end, they are, according to the leaked paper, working to place their supporters as National candidates in winnable seats, to target control of local authorities, to get their supporters promoted into top public sector jobs, to dominate media coverage, to build up a war-chest of “business money”, and to secure influential positions in strategic organisations – and all without revealing to their National party colleagues that they are engaged in a conspiracy against their own party.
This might seem far-fetched, but we have been here before. As Nikky Hager revealed in The Hollow Men, Don Brash and his secret backers were engaged in just such a conspiracy, and they nearly pulled it off. We nearly elected as Prime Minister in 2005 a man who had concealed his true intentions from the voters and who would have done enormous damage to this country, both economically and socially, and not least to race relations. If Don Brash had won, even many National voters would have woken up to ask “what have we done?”
Nor should we comfort ourselves with the belief that it couldn’t happen again. The tiny number of “fiscal conservatives” in this country exercise a disproportionate influence in business organisations, especially in some of our major industries. And the senior ranks of today’s National party are not immune; we are told in the leaked paper that even one or two very senior members of the present Cabinet may well be sympathetic to “cleaning out” the “wet wing” of the party and to ensuring that a National government will do whatever is required of it by big-business donors.
If John Key is anxious about extremism, than that is where he should turn his attention. But at least he himself can be acquitted of wanting to foist these unrepresentative views on an unsuspecting public?
It is certainly true that he is no ideological conspirator – he doesn’t have to be. He presents as essentially a pragmatist who goes with the flow.
But pragmatists still make judgments according to the beliefs they hold; they may swim with the tide, but it is the one they always choose. And the tide he chooses is not very different from the one chosen by his own extremists; the record shows that it is one that leads inexorably to a John Key government conducted in the interests of big business.
New Zealand voters, like the Americans, may have lost sight of what is extreme and what is not. Eduardo Porter of the New York Times reports that, while polls show that Americans believe that their political ideology has changed little in recent decades, what it means to be “conservative” or “liberal” (as the Americans use it, now a term of abuse in many circles) has changed considerably.
Porter drew attention to the success achieved by extreme right-wingers in moving the whole spectrum to the right. In surveys 25 years ago, for example, 71 percent of Americans
believed it was the government’s job to take care of those who couldn¹t care for themselves, a percentage that has now fallen to 59%.
So, while we must salute the public-spiritedness of the National party leaker who presumably recognised the danger of extreme views to both his party and the country, the danger is far from over. Without our realising it, a government whose priority is to support big business interests is still coming our way.
Bryan Gould
1 June 2013
The Tories Don’t Know Best
When Harold Wilson’s incoming Labour government prepared itself in 1964 to make good the damage done by “thirteen wasted years” of Tory government, its fate was sealed even as it took office. Fearful of fulfilling a Tory stereotype, the decision was immediately taken to resist a long overdue devaluation of the pound. There followed three years of struggle before yielding to the inevitable; the 1967 devaluation was represented as a defeat, and led inexorably to the loss of the 1970 election.
Labour and the left have always been reluctant to challenge the economic orthodoxy promoted by their opponents and, as a result, have implicitly conceded that the Tories know best – a judgment not surprisingly endorsed, in the absence of arguments to the contrary, by public opinion.
We are at it again. Labour is again advised by its friends that, if we are to win the next election, we must demonstrate that we are ready to perpetuate Tory mistakes by taking the “tough” decisions – for which read imposing yet more cuts and austerity. Anything less, we are assured, will show that we are not ready for government.
So, the search is on to identify the cuts that will show that we too are ready to inflict more pain. But to undertake that search is to disable ourselves from making an effective critique of a Tory economic failure that we seem implicitly to endorse, and to condemn an incoming Labour government to implementing a policy forced upon us by our defeated opponents.
Surely though, as the country’s problems deepen, the decisive action that the voters crave may not be “tough” action that piles on yet more misery, but a clear break from the nostrums that have dominated policy for more than thirty years. Labour’s best chance lies in changing the rules of the game and looking at our problems through a lens that rejects the priorities imposed by a discredited neo-liberal orthodoxy.
We don’t need to look far for the broad outlines and central themes of a clear alternative. The first requirement is to ask the right questions so that our real problems are accurately identified. For example, why do we not seek the growth that, by definition, is essential if we are to escape recession, reduce the government deficit and restore full employment? Because we dare not. And why is that? Because we know that a dash for growth, in light of the parlous state and long-term lack of competitiveness of our productive sector, would immediately be stymied by rising inflation and a worsening trade deficit.
Retrenchment can only compound these problems. If we are to escape the dilemma, it is essential that we address the real obstacles to a growth strategy – the need to rebuild our productive base, in the face of a massive loss of competitiveness and an apparent shortage of liquidity and capital for investment.
In the last three decades, while the rest of the world – China, India, Korea, Brazil, and many others – have become more efficient and competitive as manufacturing economies, we have literally paid no attention to our own declining competitiveness. We have thereby turned our backs on manufacturing, and its unmatched ability to create jobs, stimulate innovation, produce an immediate return on investment and encourage new skills; we decided instead to stake our future on the fool’s gold produced by a financial services industry that – even at best – produced benefits for only a tiny minority.
But, it may be asked, even if we were now to pay attention to improving competitiveness and to understand the vital role of the exchange rate in that undertaking, won’t rebuilding our manufacturing industry cost us money we don’t have? No. As Keynes said, “there are no intrinsic reasons for a scarcity of capital”. There is no shortage of money; it is simply going to the wrong places. The creation of credit by the banks – by far the most important (and virtually unrestrained) element in the growth of the money supply – goes mainly to house purchase; the “quantitative easing” by the Bank of England has gone straight into the banks’ balance sheets. These major sources of new money are cost-free but are not devoted to productive purposes.
We have allowed self-interested bankers to persuade us, in the name of monetarism, that growth in the money supply is a dangerous phenomenon that must always be restricted for fear of inflation; but more successful economies have understood that credit creation directed to productive investment in accordance with an agreed industrial strategy – as the Chinese and Japanese are currently doing – will not be inflationary when it stimulates increased output.
A focus on competitiveness and on ensuring an ample supply of investment capital for productive purposes means that our successful competitors can make full use of their productive capacity. We, on the other hand, are happy to tolerate a high rate of unemployment, with all that means for lost productive capacity and social dislocation.
A Labour commitment to make full employment the central goal of policy – a goal for which responsibility could not be shuffled off on to unaccountable bankers but would be the issue by which a Labour government wished to be judged – would be welcomed as a decisive break with the neo-liberal era. Full employment, after all, is the hallmark of a properly functioning economy; there is nothing economically efficient about keeping people out of work.
The fainthearted should be reassured. This approach to economic policy is tried and tested; it has been successfully deployed by other more successful economies over a long period. It is just that we have been too arrogant to notice.
Bryan Gould
29 May 2013
This article was published in Comment Is Free, The Guardian, on 30 May
New Zealand’s Elective Dictatorship
It was the Tory MP and peer, Quintin Hogg, later Lord Hailsham, who coined the phrase “elective dictatorship” to describe a government that – once elected – proceeds to ignore the wishes of the voters who elected it and to do whatever it wishes.
His point was that there is much more to democracy than the casting of a vote once every few years. In a properly functioning democracy, government is held to account – not least in parliament – and its decisions debated and often contested on a day-to-day basis. A government claiming legitimacy for its actions and decisions will ensure that this is so.
I was reminded of this important point when Nanaia Mahuta’s complaint about the inadequacy of facilities in our parliament for mothers with small babies was summarily dismissed by Rodney Hide in the Herald on Sunday. There was no problem, Hide asserted, because MPs did not need to be present in the debating chamber; they were required in parliament, not – it seems – to listen to, let alone participate in, the debate, but merely to act as lobby fodder.
As long as they cast their votes at the appointed time, it didn’t matter if they knew what had been said in the debate or even if they knew what the debate was about.
This offers a remarkable insight into how the current government and its allies view parliament and the democratic process. The notion that the elected members are there to exercise supervision and restraint over the executive – that the government needs to make and win reasoned arguments before making decisions – is obviously foreign to them.
Perhaps we should not be surprised. John Key’s government has given ample evidence of the contempt in which it holds parliament. Its majority in that parliament is, after all, the product of a disreputable deal with John Banks and its determination to preserve that arrangement is evidenced by its summary rejection of the public’s demonstrated wish to see – in the interests of democracy – reforms of our MMP voting system.
The government’s focus is clearly on preserving its majority, whatever the cost to effective democracy. And so little value is placed on parliamentary debate that the resort to “urgency” in passing legislation is now commonplace and has led to increasingly badly drafted law.
It is increasingly clear that – whatever the principles of our constitution may say – the government is unwilling to tolerate interference, not just from parliament, but from any quarter. It has now taken to ignoring the advice it receives even from its own departments, as in the cases of the Crown Minerals Amendment Act and the decision allowing mining on the Denniston plateau.
It has quite deliberately restricted the rights of citizens to go to law to contest government decisions, as in the shameful case of those who might wish to litigate the low level of remuneration paid to family carers. It has refused to publish the legal advice it has received on contentious issues like the criminalisation of protest against oil drilling on the high seas.
John Key has repeatedly made the argument that a policy on asset sales that is manifestly opposed, on strong grounds, by a majority of New Zealanders should nevertheless proceed because he and his party won the 2011 election. This is as stark an instance of an “elective dictatorship” as one could wish (or not wish) to see.
That argument has now been taken to even less defensible lengths on the issue of the Auckland convention centre. Not only are we told that the general election outcome means that the Prime Minister is free to strike whatever deal he wants to make with his big business cronies (in a secret process, in this instance, roundly criticised even by his parliamentary ally, Peter Dunne), but the Sky City boss then has the gall to jump on that bandwagon and to tell the public that the PM’s mandate means that they have no right to be heard.
It is now clear that the only people who have any chance of influencing the Prime Minister in his otherwise unbridled use of power are the leaders of powerful business interests. Warner Brothers can extract tax concessions and law changes without breaking sweat; petroleum and mining companies can have protesters outlawed and environmental concerns set aside; Sky City can have gambling protections relaxed and a licence to print money extended till 2048 – and parliament is threatened that any successor government would incur heavy penalties if it tries to change that arrangement.
A government that understands and values democracy would ensure that it was responsive at all times to the opinions of the voters. This is not to say that a government, including this one, cannot have its own way. But the strength of our democracy rest on assuring people of all views that they have at least been heard.
Our forefathers fought hard for our democracy. Whatever view we take of the government’s political stance, we betray that legacy if we fail to protest at the cavalier way in which democracy is now treated.
Bryan Gould
26 May 2013.