Building our own sandpit
Economic transformation - part III
To develop a progressive agenda for an economy fit for purpose for a 21st century Aotearoa we must set the starting point for debate and argument. I refer to that starting point as a our sandpit. In particular, we need to build our own sandpit for debate and argument, rather than continue being forced to play in the sandpit of those that prioritise the status quo.
The status quo is not our starting point
Economic transformation requires changes in mindsets, behaviours, and, ultimately, models of analysis. It requires changes in perspectives. Previous notes1 have explored the context of how we got here and identified the challenges to be confronted.
But, without propelling to centre-stage changes in mindsets and behaviours, we will remain in an academic debate underpinned by the status quo as the starting point. And that is precisely where the adherents of the status quo want to start any discussion about transformation. Accepting the status quo as a starting point ensures existing structures remain embedded and also gives a head start to existing mindsets and behaviours.
Any discussion of a progressive agenda from such a starting point is destined for failure, as has been evidenced by the debate over several decades. Further, with such a starting point, any suggested transformation must leap the high bar of not disadvantaging those already in a position of advantage. As a result, we continue debating the minutiae of policy designed to deliver – at best – a transition to a less worse situation.
In a nutshell, the status quo sandpit continues to drive economic kōrero into the debt, tax, inflation, deficits, interest rates, revenues, spending, and costs cul-de-sacs. This is where status quo proponents want us to play and this is where they are the most comfortable.
But we need to be confident in building our own sandpit for the starting point rather than continue being forced to play in their sandpit.
Our starting point begins with a sandpit that has four segments. Each of these segments describe areas where change (in behaviour and mindsets) must be encouraged and where existing models are no longer sacrosanct. The segments overlap as, almost by definition, economic transformation must embrace systemic change. If not, we fall into a standard silo approach to economics and retreat to second-best marginal or technical transitions where, again, the protection of the status quo remains the priority.
The four connected segments of the sandpit are
our economic understanding
Te Tiriti o Waitangi
our time horizon
our government’s job
This sandpit provides the foundation for the design of a progressive agenda to both support and promote the required economic transformation. In essence, these are the things we must debate (and argue) about – not the inane back-and-forth over debt, inflation, deficits, spending, and costs.
Our economic understanding
Our sandpit embraces a mature and sophisticated understanding of the economy, beyond that of financial market commentators. Our sandpit recognises the critical dependence (NOT independence) of economics and the economy on the society and communities it serves.
We highlight that economics
does not refer to a ‘living being’; in particular, the economy is an inanimate construct with rules of engagement and behaviour that are designed by people and their communities
is not the property of the ‘business’ community, and that their interests may not be clearly aligned to the interests of those who the economy must serve
should not be beholden to narrow vested interests and/or power brokers to write the rules of engagement
goes beyond finance and are about people and place, rather than just dollars and cents. In particular, economics
is not solely about sales and revenues, nor is it restricted to market transactions
centres on resources, whenua, opportunities, enterprise, whānau, family, whakapapa, knowledge, mātauranga, and inheritance and legacy
explicitly recognises and values non-market activities; including, for example, home and family caring activities, not-for-profit enterprises, collective endeavours, and voluntary and other non-market organisations.
assesses and designs the ideal rules within which an economy functions; these rules – or guardrails – to be truly ideal need to align to the values and the objectives of the people and communities it serves
presents a rationing mechanism to manage ‘trade-offs’ where conflicting demands or resource constraints are present. However, in managing trade-offs
there will necessarily be losers and winners
using the market rationing mechanism of price, the division between winners and losers will be the respective ability to pay the market price
using other (non-market) rationing mechanisms – (e.g. coupon books, queueing) the division between winners and losers will rest on some other characteristic (e.g. age, abilities, power and influence)
the division between winners and losers should have regard to the rights, responsibilities and obligations of the community as well as those individuals
decisions – including the choice of rationing mechanism adopted – should be guided by the value set of the people and their community alongside the agreed objectives of the economy.
is not separate from the social sphere, and indeed is subservient to (or seen as the vehicle for) our social/community aspirations
where economic rules/activity do not contribute towards our community aspirations then those rules/activity need to be challenged and/or changed.
Te Tiriti o Waitangi
Our sandpit embraces Te Tiriti as the agreement between Māori and the Crown, subsequent to He Whakaputanga, denoting the mutual obligations and responsibilities of each party.
In 21st century Aotearoa, these obligations and responsibilities to each other are central to the social inclusion and cohesion that underpins the social contract allowing community, individual, pastoral, economic, and productive activity to prosper. In particular
Te Tiriti is a positive enabling document that remains the foundation platform for the development of the communities and people of Aotearoa – Tangata Whenua and Tangata Tiriti – together making up a diverse, self-assured, confident and connected nation situated in the South Pacific
Māori did not, and will not, cede sovereignty to the Crown. Tino rangatiratanga means Māori have rights to decide upon their own futures. Further, the Crown has obligations to ensure Māori unqualified exercise of decisions relating to their lands and treasures2
a partnership metaphor is only useful where it reflects and requires a genuine willingness for all in Aotearoa to ‘cross the bridge’ and learn from each other. Noting that Tangata Whenua venture across this bridge daily, it is up to Tangata Tiriti to similarly show a willingness and ability to become comfortable in Te Ao Māori and in Te Ao Pākehā. Partnership is not a ‘nice to have’, but is set to become a core characteristic of 21st century Aotearoa
in pursuit of learning from each other, differing concepts of rights, responsibilities, and obligations need to be recognised and considered. In particular
property and ownership rights can go beyond a right to use or utilise, but may also extend to trusteeship obligations and so prioritise a responsibility to manage for the collective (rather than the individual); and/or for future (rather than the current) generations
rights can be exercised and responsibilities can be discharged viewed through transactional and/or relationship lenses. Such lens have inherent within them power structures and imbalances that should be recognised
noting that the Crown saw future immigration as one driver for its Te Tiriti responsibilities3, the place and status of recent immigrants to Aotearoa needs to be reset and confirmed. In particular
our obligations to manaaki new arrivals to our place extends to ensuring a receptive and well-resourced community for their settlement
as we transition from an Anglocentric view of the world, our position as a nation situated in the South Pacific requires a reconsideration of our obligations in terms of migrant settlement to our Pacific whanaunga.
Our time horizon
Our sandpit embraces the desire to leave a positive legacy for future generations to build further. This requires tilting decisions favouring short-term pay-offs towards truly long-term nation-building investments that actively hears the voices of future generations. Without explicit or strategic interventions, the voices at decision-making tables will reflect those of the present generation.
As noted by the then Secretary to The New Zealand Treasury in 2022, we acknowledge we are at an historical inflexion point.
For the first time in recent history, there is a possibility that the next generation won’t be better off4.
This acknowledgement underpins our rationale to ensure the voices of future generations are present at any, and all, decision-making tables.
Further, our time horizon also recognises value inherited from our forebears. We embrace the knowledge and experiences accumulated from previous generations, including the mana and esteem embodied in our tīpuna and ancestors.
A short-term time horizon views a “cost of living crisis” narrowly, through the eyes of the status quo that has weathered rising costs over the past 3 to 4 years. A longer-term time horizon would point to the cost of living crisis that many in Aotearoa have been enduring for the past 3 to 4 decades. And that crisis has consequences that are being embedded across generations.
The chosen time horizon is critical for all policy analysis, advice, and investment decisions. The impatience for immediate pay-offs, or quick fixes, deters (or embeds a bias against) more systemic and strategic shifts (or interventions).
Economic, social, and political power and decisions will always reside in the present. Consequently, it is crucial that we design our sandpit to explicitly ensure a time horizon that pro-actively and positively values the longer term, referring to both the past and the future.
Our government’s job
Our sandpit embraces a pro-active role for government, and its accountability to people and their communities. In this context, government includes all levels of authority – central, regional, and local; councils, boards and agencies; officials, officers, and advisors. In our sandpit we see government as a positive player in our lives and communities. In particular
we see government as an active player in shaping the market mechanisms – and other rationing devices – to deliver outputs and services consistent with the objectives of the people and communities it serves
a pro-active government involves direction setting, including nation-building investment decisions shaping the structure of future economic activity
considerable care should be adopted to ensure that the use of cost-benefit assessments and/or regulatory impact statements, which are best used for marginal or incremental interventions or policy decisions or advice
cost-benefit assessments and/or regulatory impact statements should not be used, either by design or default, as vehicles promoting the status quo through embedding an artificial high bar for strategic, system-shift, or nation-building programmes or investments
we do not seek to arbitrarily minimise, constrain, or segment its role; but encourage its governance function ensures an integrated, cohesive set of measures are implemented in line with the agreed direction and objectives of the people and communities it serves
our government’s job is not restricted to reacting to market failures and/or marginal interventions
we see fiscal policy venturing beyond ‘prudent management’ of the government’s financial debt
we see monetary policy as a policy instrument that is too critical to be ‘contracted out’ to an agency tasked, in isolation, to achieve a single (or dual) specified target
our government’s job is to ensure that market-based interventions do not de facto take preference over approaches that are more aligned to achieving the objectives of the people and communities it serves
we understand that market-based interventions or structures are inappropriate for some of the challenges that the 21st century Aotearoa must confront
demands for both individually-consumed and collectively-consumed goods and services are equally valued; and that other (non-market) structures, interventions, and/or rationing mechanisms are likely to be more appropriate for the delivery of public (and/or collectively-consumed) goods and services
similarly, demands for investments in collective assets to underpin future prosperity may also require non-market structures, interventions and/or rationing mechanisms for government to deliver
we understand these demands need to be appropriately resourced through public funds
our government’s job is to ensure that sufficient public funds are collected in an equitable manner consistent with the values and objectives of the people and communities it serves. And, to be clear, artificial divisions – as reflected in the use of emotive terminology like ‘taxpayer’ dollars – implying there are some in our community more deserving than others are inconsistent with the notion of public/collective goods and services or public/collective assets
equitable assessment, advice and decision-making requires the voices with little power or influence to be echoed and heard at the decision-making table; consequently, our government needs to proactively ensure that
those actively tasked to speak ‘truth to power’ are not only heard, but are appropriately resourced
those tasked to provide ‘free and frank advice’ are not disincentivised to do so by unwritten rules that prioritise the maintenance of the confidence of the Minister or other relationships reflecting power imbalances
an advocate echoing the voices of future generations is present and heard at decision-making tables.
The sandpit for the future
Clearly, there is considerable overlap across the four segments of the sandpit. This reflects the related and systemic nature of the numerous challenges, and so the related and systemic nature of the starting point for the economic transformation to be promoted and progressed.
These related segments reflect the core changes in behaviour and mindsets that are to be actively pursued. We must be openly aware that economic transformation will push many (if not most) of us outside our own comfort zones.
If we truly wish to build and promote a progressive agenda for economic transformation, we must stop playing in the sandpit that gives the home-ground advantage to the status quo – for that is where they want us to play. Instead, we must first build (or articulate and be comfortable in) our own sandpit – and then invite others to our home turf.
Unapologetically harnessing and reinforcing an appetite for change will consequently inform an exciting forward progressive agenda – with our sandpit critically established as the starting point – for a 21st century Aotearoa.
See earlier posts We were sold a lemon and Our wero - where BAU comes unstuck.
From Te Tiriti o Waitangi Preamble “… also because there are many of her subjects already living on this land and others yet to come”.
Treasury’s Wellbeing Report Te Tai Waiora - Wellbeing in Aotearoa New Zealand 2022