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  • rmacculloch

A Comment on the Slanging Match between former PM Sir John Key and Minister Hipkins

Former PM Sir John Key wrote an opinion piece in the Herald today slamming the government's approach to the pandemic. Minister Hipkins replied that Key's views amounted to an "insult to New Zealanders". Yet to the extent there have been problems in dealing with the virus, both are equally culpable. Here's why.

The quarantine arrangements, which Key labelled a "national embarrassment", have indeed been organized too slowly and in too limited numbers. Just like our vaccination program. Key says our government & health officials should be acting "rapidly", with "urgency" and "creativity" to keep up with the challenges of the virus. He compared the crisis to Apollo 13 in 1970 in which NASA & the astronauts had to move super fast to avert catastrophe after the explosion.

But here's my beef with Key's attempt to make Labour look bad. What he's saying can be boiled down to an argument that the Kiwi approach is inefficient. Slow paced. In more technical economic jargon, it's the same as saying our productivity is low. And things do happen slowly here. Output per hour worked is low by OECD standards. Kiwi workers take longer to get things done than the average worker in other comparable countries.

And how much did productivity go up during Key's nine years as PM? Close to zero, on average! GDP growth was driven by more immigrants, more tourists & more construction. And construction happened on the back of the explosion in property prices, caused by the painfully slow pace of house building throughout those years. Some of us tried to pull Key up on this issue, which is our true "national embarrassment". We were rebuffed. Once at the NZ Initiative when I urged him to adhere to more stringent cost-benefit analyses to avoid imposing overly burdensome health & safety rules, he rounded on me & made me look bad in front of the assembled audience of "business leaders". His government went ahead and introduced those regulations and Kiwi productivity was the worse for it.

In summary, Key's attack on the government is an attack on his own record in the sense he did little to improve the speed & efficiency, that is, the productivity with which this nation works. Labour has continued that legacy. So, to the extent there's a botch-up, it's this: both major parties have shown little interest in solving our productivity problem & that's the main reason why we're unable to quickly react & adapt to shocks like the pandemic, aside from lockdowns. Our politicians are now trying to divide us by playing off those of us who support elimination against those who do not. However, regardless of which strategy you prefer, moving fast & efficiently is necessary for both to work. And neither Labour nor National have established the appropriate institutions in the country to enable us to do so.



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