I find it difficult to ignore the role of stupidity in human affairs

Adam Thierer points to his favourite Ronald Coase quote:

my favorite Ronald Coase quote: "I find it difficult to ignore the role of stupidity in human affairs."https://t.co/VkrTfmmppu pic.twitter.com/UjHgK2Eu75

— Adam Thierer (@AdamThierer) February 18, 2026

With that in mind, a couple of things have been bugging me. 

Item the first. 

The government of New Zealand is exercised about supermarkets and supermarket competition. It simultaneously wants supermarkets to pay higher prices to their suppliers while reducing costs to consumers. It has established an entire regulatory agency whose job is to force supermarkets to pay more for inputs while reducing prices on outputs. At the same time another part of the Commerce Commission is trying to prevent Foodstuffs North Island from merging with Foodstuffs South Island on a very dubious theory of harm: the back-end efficiency benefits of merging two supermarket cooperatives that operate on different islands would be less than the harm to competition in the supplier market, which ComCom claims would wind up having longer term harm to consumers. 

It is not coherent.

But it gets worse.

One coherent part of the government's approach is a desire to make it easier to import food products. It would help reduce costs to consumers directly, and indirectly by easing a barrier to entry. I support that initiative. 

New Zealand has signed onto FSANZ, a joint approach to food product regulation with Australia.

FSANZ has proposed making bespoke Australia-NZ 'food-star' healthy food ratings compulsory. They are currently voluntary. 

Let's think this through. 

A store wanting to sell grocery products from outside of Australia-NZ would have two options for each product.

It could put the product up for FSANZ assessment and put a sticker on each and every packet before putting it on the shelf.

Or it could ask suppliers to provide production runs specific to the requirements of the New Zealand market. 

The former would have fairly high per-unit cost: a sticker has to get added to every product. 

The latter would also be expensive. It would mean limited production runs at higher cost that also limit flexibility to shift product across different markets in response to changing circumstances. 

It would disproportionately burden stores that stock foreign-sourced products - like the Asian grocers that provide fringe competition to the main supermarket chains. 

And it would increase the cost of entry for any overseas supermarket that wanted to bring its supply chain with it. 

One part of government wants to improve competition in supermarkets and bring costs down; another part of government wants to push up the cost of groceries while impeding competition.

Item the Second

Earlier this week, I received an email. 

I'd put $200 in there mainly to test their trading interface. I love prediction markets. I missed them. New Zealand had been truly world-leading in this area, then FMA/DIA/Justice/Simon Bridges killed the sector here. 

My submission to the CFTC on Kalshi from 2022 is here. I'd there concluded:

What experience we had with iPredict suggests CFTC really doesn't have anything substantial to worry about in allowing contracts on political events. If anything, they heightened voter engagement. The CE of iPredict even featured on the nightly news during the election, giving the latest on election market prices. And for that brief period, whenever blowhard partisans insisted that some outcome was going to happen, people could just point to the iPredict price on the event and ask them why they thought that price was wrong, and whether they'd actually put their money where their mouth was. It was a remarkable era. iPredict inflation forecasts (they also had markets on inflation going out several years - it was so very good) wound up being noted in our Reserve Bank's Monetary Policy Statements. I desperately miss it. I envy the opportunities Americans could have if CFTC takes a sensible approach to regulation.

And now they've taken Kalshi from me too. 

Newsroom has the detail on what happened, along with some pretty misleading nonsense from the Department of Internal Affairs.

Before we hit the Newsroom / DIA stuff, here's the defensible case. Or, well, defensible given the constraints.

The government auctioned off a monopoly to run sports betting in New Zealand. It is consequently obliged to protect that monopoly on behalf of the licensee. Remember that cartels and monopolies are only bad if they aren't government-authorised. In that case they are wonderful things. 

Kalshi is a CFTC-regulated exchange. It trades event contracts in the same way that iPredict did. It runs AML/KYC; I had to go through it to trade there. It's safe. It's fine. But some of its contracts are on sporting events, which in the US are treated as futures derivatives rather than sports betting. That provides Kalshi with a few advantages that Matt Levine has had an awful lot of fun discussing. 

And, at the same time, New Zealand Members of Parliament have become very exercised about online gambling full-stop. Their proposed solution is not very good. They want to license online gambling operators, which can be okay, but they also want to set tight limits on the number of operators. That's neither here nor there in this context, but it's part of the moral panic in the general area. 

Now. If you were the regulator charged with defending the monopoly provided to the sports betting licensee and if you viewed Kalshi's sports contracts as sports betting, the obvious thing to do would be to ask them to segment their markets such that NZ-based traders could not trade on the sports contracts but could trade on other contracts. 

It is entirely possible that Kalshi would prefer to close off access than so-segment its markets. But that would be a defensible position for DIA given its role as monopoly-enforcer for the company to which the New Zealand government auctioned the right to run sports betting. 

Instead we get this:

Polymarket, Kalshi and similar prediction markets are illegal under New Zealand’s gambling laws, the nation’s gambling regulator has decided.

Polymarket and Kalshi are online markets where users can place bets on future outcomes, ranging from New Zealand provincial cricket results to what phrases Donald Trump will use next month.

Whether the Reserve Bank of New Zealand will increase, decrease or hold the official cash rate when it meets on Wednesday has had over $127,000 placed on it.

...

Department of Internal Affairs gambling director Vicki Scott tells Newsroom it believes they are illegal gambling platforms.

“We consider platforms such as Kalshi and Polymarket to be gambling under New Zealand law,” Scott says.

“Since they aren’t authorised operators, they are prohibited from offering their gambling products to people in this country.”

“To the extent these platforms are taking bets from New Zealand customers, they are breaching the law here and can expect to hear from us.”

The event contracts on things like the OCR are very obviously financial derivatives. iPredict offered them as an exempt futures exchange in NZ a decade ago. DIA always hated iPredict and viewed it as treading on their turf - maybe they want the whole stock exchange to come under their authority as a gambling operation. 

This is not the 'online casino gambling' that is subject to the NZ gambling licensing regime. It's a CFTC-regulated futures exchange. 

And this part seems particularly off:

While these websites are still technically accessible, Scott says using unlicensed sites is risky because there are no guarantees to ensure they pay out as promised or take action to minimise gambling harm.

Does DIA have any credible reason to believe that Kalshi and Polymarket welch on bets? 

In a better world, DIA would have asked Kalshi to exclude Kiwis from its sports contracts (which I think is stupid, but that stupidity is imposed by Parliament) and if Kalshi either could not or would not, they would have put out a statement blocking Kalshi on that basis without insinuating that they're dodgy online casinos. 

Item the Third

Sam Bowman writes in the Washington Post:

By some measures, teenagers’ mental health does seem to have gotten worse over the past 10 years, and this does coincide with widespread adoption of smartphones. But that is where any clear correlation between the two ends. Multiple studies have either shown that smartphone and social media use among teens has minimal effects on their mental health or none at all. As a 2024 review published by an American Psychological Association journal put it: “There is no evidence that time spent on social media is correlated with adolescent mental health problems.”

You can also catch The Studies Show on the topic. If there are effects, they are very small.

Overseas jurisdictions implementing social media age limits are, predictably, now looking to regulate access to VPNs as complement. 

And so the government of New Zealand is rushing to have legislation on it through before the election. As it is going through as a member's bill rather than a government bill, there won't be much accompanying assessment. The Prime Minister is 'deeply supportive'. 

Sigh.

There was another good line in that old Coase piece, quoting Axel Oxentierna, a 17th Century Swedish Chancellor. "You do not know, my son, with how little wisdom the world is governed."

Surely a case for outcome-based contracting

Outcome-based contracting would have solved this:

A stop smoking provider says the decision to cut its contract on the basis it has refused to hand out vaping kits as part of its cessation programme was not a part of the contract when it was signed.

Takiri Mai te Ata Trust regional manager Catherine Manning said the Wellington-based trust received an email this week stating it had to either start supplying the vape kits or have its contract terminated, despite signing a new contract earlier that year.

Vape kits are effective in stopping smoking - and more effective than patches.  

If a stop-smoking provider didn't want to distribute vape kits, flipping that provider to outcome-based payments could make sense. If whatever they've come up with is as effective as vaping, then they'd be paid for that outcome. And if they were just handing out ineffective patches to no reduction in smoking rates, they'd wind up having to close down the service. 

Outcome monitoring's a good idea regardless. But outcome-based payments can help the state be agnostic across methods. 

The state of the books

StatsNZ has put up its year-end accounts for the government, split out across functional areas. 

Their data goes back to 2009 in the main table; I'm sure earlier data's available somewhere in Infoshare.

But sticking with the Excel sheet they've provided, we can lob in June-year population statistics and June quarter consumer price index values to get per capita real measures on operating expenditures net of finance cost and on spend in different functional areas. 

Here's per capita real central government operating expenditure net of interest expenses. Netting out interest expenditures is helpful if you want a handle on core government operating expenditure. Government can decide to take on less debt; it cannot decide to stop making its interest payments. 

You may have heard a lot of stories about austerity. Consider that both the government and the opposition may want to convey the impression that it has happened, despite it very much not having happened. 

Throughout the 2010s (barring #eqnz), per capita real operating expenditure net of interest expenses ranged from $17,143 to $18,653 - with 2019's jump to $18,653 being well out of line with the prior track. Labour substantially increased spending under its wellbeing focus - as was its prerogative. 

Per capita real operating expenditure net of finance cost has been above $21,000 since then; the provisional figure for 2025 is $21,648.

Here's the breakdown by functional categories. Let's start with the bigger-ticket items. 

The largest-spend category here by far is social protection: benefits and superannuation. 

Spending on those has risen over the period and is now close to the peak that they hit during the GFC and Christchurch Earthquake. There was always going to be a slow rise in these with an aging population in the absence of reform to NZ Superannuation. 

Health is next. It peaked during Covid. Vaccines cost money. Again, an aging population will get you an increasing track on this one - but we were averaging about $3700 per capita before Covid and we're now around $4600. 

Education had a large Covid spike, then retrenchment to a new level a bit above the old per capita level. 

But remember that this is per capita, not per capita under the age of 25. And the proportion of under-25s has been dropping at the same time as the proportion of over-65s has been increasing. 

Any giant shedding of government staff will show up in General Public Services.

The austerity really stands out in this picture. Can't you see it too? 

'Economic affairs' spiked with the wage subsidy scheme but has maintained a substantial ratchet. 

The category's spend, pre-Covid, peaked in 2019 at just over $1,200 per capita. Now it's just over $1,700 per capita. 

Public order and safety has plateaued just over $1,200 per capita. The increase began under the Ardern government. National has maintained their increase in resourcing to police. 

Housing and Community Amenities jumped from close to nil to just over $400 per capita under the prior Labour government, and has stayed there under National.

Defence has been more frugal - but remember that this is just operating expenditures, not capital expenditures. That's around $400 per capita throughout. Minor decline in real per capita operational expenditures since 2009. 

Recreation, culture, and religion rose and has retrenched somewhat. I wonder what the heck is in the 'religion' category. But the apparently arts and culture hating National-led coalition is spending more in this category, in per capita real dollars, than Ardern ever did pre-Covid. 

Environmental protection has been maintained at a slightly higher level than pre-Covid. Under the Key government environmental protection was around $160 per capita; pre-Covid Ardern had it around $175. Just look at that slash and burn from the environment-haters. It's right there. Can't you see it? That little downward tick in 2025?

We continue to be in substantial structural deficit. 

Increasing revenue to match spending is always an option, but one that would entrench the increased spending in just about every category since Covid - and still leave a demographic problem to be dealt with as superannuation entitlements keep rising along with health spending. 

And I've not included the costs of financing an increasing government debt. 

Alas, it was not to be

It would have been just one bad part of an overarching very silly policy. Exempting it from the policy regime I suppose makes the policy a bit more tractable. But it also makes it a lot less potentially funny.

New Zealand's government supports the creation of cultural content by paying for it through various grants. TV stations and streaming services can then run it, or not, as they want. 

Canada does things the dumber way. I'm sure they also have direct subsidies. But they also have Canadian Content regulations that prescribe the proportion of each day's broadcasting that must be Canadian content.

It was bad enough in the linear TV era. The ridiculousness of it all had the excellent SCTV pad out the extra couple of minutes of the Canadian version of the show (fewer ads than on the US side) with a very explicitly Canadian segment: the most over-the-top CanCon possible. Bob and Dough MacKenzie - the hosers.

The first segment including them had a lengthy scroll after the segment explaining how the segment meets official Canadian guidelines for what counts as Canadian content and was almost as funny as the MacKenzie brothers.

That was fifty years ago now - or thereabouts.

Times change. 

A decade ago, Canada decided that its regulatory reach extended to the entire internet if the internet could be viewed from Canada. If you wanted to stream to Canada, you'd have to meet CanCon rules. Quite how to make that work when people choose what they want to watch and plenty of potential platforms might not really care what Canada things about anything - well, they've been taking a while figuring out how to apply the principles. 

And they've finally decided that, despite or perhaps because of the uniquely Canadian content that might be created, to great hilarity, to meet the rules, the CanCon rules will not apply to pornography streamed in Canada. 

This has long been one of the more onerous demands of the CRTC, given the relative dearth of erotic media that would meet their terms as “Canadian content.”

Article content

Under the CRTC’s definition of the term, it’s not enough to have a Canadian performer or a Canadian setting.

Article content

Rather, it’s determined via an elaborate “points” system that, among other things, requires the producer and at least one of the lead performers to be able to prove Canadian citizenship.

Article content

At least three quarters of the financing must also come from “Canadians or Canadian companies.”

Article content

In extreme cases, this means that a video of a Canadian couple having sex in Canada and directed by another Canadian would not qualify as Canadian content if only 74 per cent of the financing was provably Canadian.

Whenever one despairs about policy in New Zealand, Canada and the UK provide superb reminders that the rest of the world generally remains even worse. 

Meanwhile, Australia's looking to impose Australian-content mandates on streaming services. 

The federal government has put laws requiring streaming services to produce Australian content back on the table after postponing them due to concerns about how they would interact with Australia's trade agreement with the United States.

The government has confirmed it will introduce legislation this week to mandate that any streaming services with more than 1 million Australian subscribers must produce Australian drama, children's, documentary, arts or educational programs.

I wonder whether there are enough subscribers to any single platform for Australia to run into Canada's difficulties here. It would be very funny if there were. 

Seamus and I were wrong

Back in 2012, Seamus Hogan and I were ...mildly sceptical... of proposals to build a giant convention centre in Christchurch.

Seamus wrote:

The convention centre: Eric has written on this, but I can't resist adding my voice. This is why the stadium doesn't upset me so much. The stupidity pales into insignificance compared to the silliness of building a purpose built facility from scratch that is able to host up to three conferences simultaneously. (Aside: from my limited experience with organising conferences, if you have choice over location and date, you choose somewhere where you will be the only conference operating at the time.) The conference centre should be small close to hotels and the performing arts centre so that larger affairs could spill out to those areas.

The bit I'd written on it, in a post titled "What am I missing?", was after one of our regular lunchtime chats in the econ department lunch room. So it owes a fair bit to that discussion with Seamus: 

The Press reports that the Christchurch Convention Centre was insured for $30m but that like-for-like replacement would cost $60m. Whatever external benefits come from holding conferences in town are mostly internalised by the local hotel and restaurant industry; solutions letting the convention centre build internalize those external benefits helps ensure an efficiently sized convention centre. Here's one way of doing it, conditional on Council wanting a convention centre.

1. Council buys options on a few appropriate sites around town.
2. Council gets in touch with the big hotels to tell them that Council's going to build a much smaller convention centre for $30 million, but that they want to site it so it can be linked by skywalks* to adjacent blocks if the hotels want to be linked to it. If the hospitality industry really wants a bigger convention centre, they can come back with a proposal where the hotels fund an expanded facility. But even with a smaller convention centre, they can still host big conventions by holding plenary sessions in the big convention centre facilities and having breakout sessions in the different connected hotels' conference rooms. 
3. Figure out the set of sites on which you have options that best suits the set of hotel partners. The hotels buy the options off Council for their parts of the build.
4. Exercise the options and get on with it. Make sure there's room on the site to put a few restaurants; put restaurant provision up to competitive bidding so that any rents from conventioneers get capitalized into the purchase price and help fund the place, internalizing the external benefit. 

Now I know what I was missing: the true chutzpah of Christchurch. 

Christchurch, I am in awe. 

We were totally right that the thing would be a white elephant that couldn't cover its costs. We were worried about them spending $60m on a new one; the one they got cost $475 million and lost $3.4 million last year. Its visitor numbers hare dropping too. 

But just look at this.

The ownership question is more tangled than it first appears.

An early, “in principle” version of the 2019 Global Settlement between Christchurch City Council and the Crown talked about the council being best placed to own Te Pae and provide strategic direction for the city’s venues.

But that language did not survive into the final agreement signed later that year.

So the city was cagey about being willing to take ownership while making sure that it didn't sign anything saying that it would. 

Good move that. Then:

The Te Pae clause now simply records that the convention centre would be delivered, and that “the parties may continue to engage on future ownership of Te Pae as appropriate”.

The Christchurch City Council said it had already looked hard at taking the asset on, and decided against it.

“After due diligence the council decided not to pursue ownership,” head of facilities and property Bruce Rendall said.

Infrastructure Minister Chris Bishop, one of the shareholding ministers in CID, said the Government was “open to proposals for Christchurch City Council ownership of Te Pae in the future”.

Emphasis added. I'm reminded of Bart Simpson announcing that he would resign, undefeated, from the world of video boxing. 

So. Option for the Crown at this point would be to threaten to mothball the thing rather than continue to subsidise it. I don't think they can force Council to own it. 

And Christchurch always has the option to offer to agree to take on ownership in exchange for concessions on other margins where central and local government negotiate about things. 

Even evil genius needs recognition. 

As a bit of fun, I asked my advisor to imagine it were a consultancy like Cameron Partners asked to prepare a report on the likely sale value of the thing if it were offered to market. 

As a going concern without ongoing subsidy, the Crown could expect to have to pay someone about $90 million to take it, assuming that the venue could be scrapped in 30 years for its land value. 

If instead the owner could demolish and put up something else instead (while paying break fees with the operator), the site might be worth $55 million.

Both $-90 million and $55 million are considerably less than the $352m asserted book value of the building, which is considerably less than the $475m build cost. 

A huge up-front and ongoing waste of course. But consider the evil genius here too. That's worth something. 

The conversation with my advisor is here, for those keen on that sort of thing. The opening snippet:

In straight commercial terms, Te Pae as a convention centre is not worth anything like its $360m book value to a private buyer. On realistic assumptions:

• Highest bid is likely to come from a “scrap + redevelopment” buyer, not a buyer keeping it as a convention centre.

• A plausible order‑of‑magnitude sale price for the site in that scenario is around NZ$50–70m net of demolition and contract break‑costs.

• As a going concern with no ongoing subsidy, the facility’s value to a private buyer is zero or negative (you’d effectively need to pay someone to take it).

• To get a positive price for Te Pae as a going concern, you’re looking at an ongoing subsidy of roughly NZ$8–10m per year over decades, assuming current trading patterns.

Speech-gating and privacy tradeoffs

A friend asked about my zealotry on age-gating social media and why internet anonymity/pseudonymity should be protected. 

I sent this through by email, figured I'd share it here too, very lightly edited. 

I agree that people are more likely to be jerks when anonymous. 

Potential for anonymity is simultaneously important protection when society or governments are too censorious, or could become so, or when someone in one country worries about consequences for family who live in a censorious country. 

If Twitter had a magic tech that could undo VPNs and put a note under each tweet specifying the real country of origin of any tweet, that wouldn’t bother me any. Or if another social network decided to only allow real name accounts, and people wanted to chat there, that’s perfectly fine with me too. 

Government requirements on these platforms seem like a different matter entirely.

The UK’s rules require that every site whose content could possibly be viewed as harmful to children now require adults to prove that they are not children. One very predictable consequence: Discord was hacked, and 70,000 had their government-issued IDs stolen. 

But even without hacks, requirements to provide your ID if you want to look at sensitive content can chill speech and access to information. “Oh, you want to read that article about the STD you think you might have? Just show us your ID. And trust that we won’t tell anybody what you were looking at.” Or, “Oh, I see you’re interested in a very niche form of pornography. Please give me your ID.” “Oh, I see you’re interested in academic journal articles about the heritability of different traits. Papers please.” 

Freedom of speech includes the freedom to read. I would consider it a violation of freedom of speech if a librarian came up and demanded to take a record of my ID if I were minding my own business and peacefully reading subversive books. 

Did any of the proponents of the UK legislation think that ‘just protecting children’ would mean adults would have to give Wikipedia their ID to read some of their articles, or to every dodgy porn site? Probably not. They’re not good at thinking about tech or consequences or how companies protect themselves against substantial potential liability. 

But that’s where the UK now is. As consequence, VPN downloads have massively increased in the UK so people can pretend they’re not in the UK. And the UK government is investigating whether it’s possible to ban VPNs. 

And as consequence, I’ve gotten a multi-year subscription to a good VPN, because the obvious way for governments to ban VPNs is to ban domestically issued credit cards from processing payments to them. And New Zealand seems determined to be every bit as stupid as the UK. I understand that Select Committee has asked for advice about the feasibility of banning VPNs as part of their inquiry into ‘just protecting the children’. Great stuff. 

Australia’s version will require social media platforms to keep under-16s from having accounts. There are triaging efforts they can take, but a pile of users who are over the age limit will wind up having to prove that they are over the age limit. 

The system can then either err on the side of letting youths on accidentally (and suffer penalties for doing so), impose substantial burdens on adult users to avoid letting youths on accidentally (frequent age re-verification to make sure that a youth hasn’t faked being over the age limit with the help of a confederate), or end the potential for anonymous/pseudonymous accounts by requiring real ID. 

If I were a Chinese student studying in Australia and had set up a pseudonymous Twitter account for fear that my family in China would be punished for what I might say in Australia – and to maintain the option to go back to China if I wanted to – I would end my account rather than provide ID. Because IDs can be hacked, and the Chinese government is good at that. Sure, they could probably figure out who owned an account if they tried really hard absent that. But having a giant database that just hands over all the IDs you need to check? Risky. 

There are ways of doing it that are privacy preserving. But it would be very easy for a fifteen year old, with the cooperation of a seventeen year old friend, to get an account under those methods. And when that becomes obvious, those for whom potential harms to children trump everything else in the world will call it a ‘loophole’, demand the loophole be closed, and the potential for pseudonymity disappears. 

The same problem applies to what I’d put up as potential least-bad solution in my submission on this stuff. Government could require that platforms age-restrict at the app-store level such that parental authorisation is required through Family Link or the Apple equivalent. 

It would be far from foolproof: not everyone has an age in their phone account (Google or Apple); people could buy cheap phones and not disclose true age. And it would have some harms too: the State would be enforcing the right of a Gloriavale mum to block her son from important aspects of contact with the outside world. Which is a bit odd when a 15 year old can get an abortion without parental notification or consent; doctors are forbidden from telling the parents if the child so-requests. We have very odd and inconsistent rules about what things kids can and cannot do without parental consent. 

My solution would also have obvious holes. So I urged that, if parliament picked up that option, it do so very deliberately with recognition of that lots of kids would work around the rule and that that was the least bad alternative – that nobody frame it as being other than very second-best, and that nobody pretend afterwards that kids getting around it was a reason to revise the rules. 

It still sucks though and is far more risky than I’m comfortable with. 

I guess one bottom line: shouldn't we let the rest of the world have a few attempts at this before jumping into anything we might regret? 

Other bits of context:

• Justice Harvey on continued government efforts to exert control over internet content
• My submission on this stuff
• Eric Goldman's piece on the "Segregate-and-Suppress" approach to regulating child safety online. He puts up a very good argument against legislating parental signoff for kids installing the apps. He's right. I just think it sucks less than anything else Parliament might do. 
• The Harmful Digital Communications Act has itself been used to abusive purpose. 

The Ring: discount rates edition

Locked at the bottom of a dark well is a beautiful-looking idea. 

"Set discount rates to very low levels when thinking about intergenerational issues."

It is a beautiful looking idea. We don't discount utilities. Future people matter. Conventional discount rates mean that far-off benefits or costs count for next to nil. Don't we care about future people?

Let the beautiful idea out of the well. 

Surely it will be used only for very long-term lovely environmental projects with century-long returns. 

Who locked it in the well anyway? It had to have been bad people for bad reasons.

Let the beautiful idea out of the well. Free it!

A couple of decades ago, Treasury was the place that warned about public choice considerations. About how this sort of thing might be a bad idea, and the reasons it would be a bad idea, and the safeguards that might be needed if you wanted to let the thing out of the well. 

Lately, Treasury's been drinking from the well instead. 

I was pretty sceptical of the initiative, figuring that the proposed dual discount regime would lead to shenanigans. 

An earlier version of this stuff had a 5% discount rate for social investment projects. Tauranga's business case for the Te Manawataki o Te Papa civic redevelopment consequently claimed that the thing was a social investment project that could get the 5% discount rate. Of course this stuff was going to encourage shenanigans. 

The final version sets a standard discount rate for 'commercial' projects at 8%, and that only 'non-commercial' projects would get the much lower discount rate: 2% in years 1-30, 1.5% in years 31-100, and 1% in years 101+. Along with a 'mandatory' sensitivity test at 8%.

And again without and decent definitions or guardrails - just hopeful suggestions about considerations that might affect whether something is commercial or non-commercial. Or any explanation of what enforces mandatory sensitivity tests in a world where zero other Ministries or Agencies respect Treasury as enforcer on anything any longer. 

But boy this sure sounds hopeful and full of rainbows and unicorns.

Updating the discounting regime to use SRTP as the default for proposals with mainly non-commercial costs and benefits makes the CBA settings more technically robust, especially in a policy environment where there is increasing focus on long-term impacts of policy. 

They let it out of the well. 

And it's going about as well as expected.

NZTA in January decided that "most transport activities undertaken by the public sector" are non-commercial. And, in fairness, there's no commercial case for most stuff NZTA now does. So it's 'non-commercial' in that sense. 

And so earlier this week a pile of new Roads of National Significance got announced, many with very low benefit-cost ratios, with the things assessed at a 2% discount rate. And no sensitivity testing at 8% that I can find. 

It's terrible of course. 

But there's a poetry to it. 

Folks wanted to let her out of the well to justify environmental projects. 

And instead we get more motorways.

Dieter warned you about some of this. And you didn't listen. 

Treasury is a fallen place that has forgotten the faces of its fathers.