SEZs as policy trial areas

A decade ago, I coauthored a report looking at how greater localism and subsidiarity could be achieved in a very centralised country where local councils have variable capabilities. 

We settled on policy trial areas. 

The basic gist was as follows. 

First, a community would pitch a policy trial area - a special economic zone - with different policy or regulatory settings more suitable for local conditions. The idea would come from the local community. Some national-level policies are really unsuitable to some local conditions. 

That community would work with Treasury to come up with indicators ahead of time. How could we tell if the trial were working? What side-effects might we need to watch as well? 

Successful trials would often mean higher tax revenue for central government, lower dependence, or both. share the gains with the originating community as a 'policy discovery' payment. Then let it extend to other communities asking to take it up. Failed trials would fail at small-scale. 

Central government would rule out any proposals that could not, in principle, be extended to other similar communities if the trial were successful. So tax concession areas would be right out. Different consenting processes could be fine; a successful trial could extend to similar consents in other places. 

I have not read the proposal for Marsden Point. 

But I do not recognise our proposal in Bryce Edwards' critique of what's been proposed at Marden Point. 

Edwards writes:

A lobbyist’s paradise

The economist Michael Reddell saw the obvious problem the moment Jones first floated the idea. If there were any substance to the SEZ concept, Reddell wrote, the policy seemed “likely to be a lobbyist’s paradise, and perhaps that of political party donors & recipients”. He recalled that the New Zealand Initiative had pitched something very similar a decade ago.

Reddell’s lobbyist point is the one that NZ First does not want to engage with. The moment you start designating discretionary zones with bespoke tax treatment and accelerated consenting, you create exactly the kind of high-value, low-transparency politics in which the lines between commercial interest and political access become blurred.

Who decides which company qualifies as being inside the zone? Who decides what activities “achieve the aims of the zone”? Who appoints the panel? On what criteria? Under what review process? These are not pedantic questions. They are the central governance questions, and they are conspicuously absent from anything Peters or Jones have said in public. NZ First, of all parties, used to have something to say about that sort of arrangement.

To answer Edwards' questions within the framework that my shop proposed:

1. Nobody decides which companies qualify as being inside the zone. The zone applies to activities within the zone's boundaries. If the company's activities are inside the zone, then those activities would qualify. 

2. Nobody would be deciding on activities, except when the zone is struck. A proposal to, for example, trial a different version of the minimum wage for piece-rate employers in the zone would apply to all piece-rate employers in the zone. There'd be no assessment of aims.

3. We didn't have panels, so appointments and criteria weren't questions. 

4. We did have review - against the indicators that the community had set with Treasury. Central govt doing the assessment. 

Maybe Edwards' column is better in the half that's on the other side of the paywall.