Wednesday 31 July 2019

Abolish coroners

Edgeler nails this one.

Recall that coroners in NZ operate under crappy legislation that invites them to speculate about measures that might prevent identical cases in future, but putting zero weight on practicability or cost-effectiveness or sanity.

NZ coroners have made a lot of nutty calls based on this. I'd put together a list a few years ago:
Search Google NZ for "Coroner recommends" and you'll find:
This case is worse. The coroner here blames grieving parents for letting their daughter walk to school. This is not the parents' fault. Fear of other parents casting a side-eye drives a lot of cotton-woolling of kids elsewhere. We shouldn't start this here.

Abolish coroners. And especially abolish Coroner Tim Scott. 

Tuesday 30 July 2019

Plastic and landfill

A snippet:
Modern landfills are constructed to deal with any leachate from the disposal of plastics. Fees charged at the tip are designed to ensure that the landfill covers its costs. When those fees are set properly, all of the costs of waste disposal are incorporated into the price each of us pays for a council rubbish bag or for a trip to the dump – including the cost of the land purchased for the tip.

Contrary to the usual stories of shortages of land for landfill, fairly simple back-of-the-envelope calculations show it would take thousands and thousands of years before lack of land for landfill became anything close to a problem. The more relevant problem is ensuring that tips are properly constructed – land is a small part of the overall cost of a new site. And at the end of their useful lives, landfills do not have to be a blight. Hamilton’s superb gardens, for example, are built over its old rubbish dump.

Rather than using the waste disposal levy to encourage waste minimisation, we might instead use it to help councils deal with legacy issues from ancient landfills built to inadequate standards with insufficient provision for whole-of-life contingencies, and to improve the filtration of storm-water outflows to keep litter from flowing out to the sea.
But there may now be an even better solution that has some rather serious backing:
One startup wants to eliminate the pollution by essentially vaporizing garbage to turn it into clean energy and fuel. The company, called Sierra Energy, just raised a $33 million Series A investment round led by Breakthrough Energy Ventures, the Bill Gates-led fund that also includes investors like Marc Benioff, Richard Branson, and Jeff Bezos.

The company isn’t aiming to replace recycling or composting, but to handle the millions of tons of waste that currently goes to landfills. “We take what’s leftover,” says CEO Mike Hart. The technology can process nearly anything, including medical waste and hazardous waste. “It allows you to recycle the entire waste stream,” he says. “The way we do that is by bringing the temperature of waste up to 4,000 degrees Fahrenheit, twice the temperature at the core of a volcano. At that temperature, everything breaks down molecularly.”

The technology, called FastOx, uses a modified blast furnace, the same basic equipment typically used to make steel. By injecting pure oxygen into the furnace, the new process starts a chemical reaction with carbon in the waste, heating up the furnace. “This doesn’t require external energy,” Hart says. “It’s just a chemical reaction of carbon and oxygen.” The process also adds steam to regulate the temperature, which sustains itself as the system keeps feeding in more trash. Any metal inside the garbage melts and can later be reused.
Another nice feature of landfills: if this kind of tech pans out, you can pop one of these units next to the old dump and you've a great source of feedstock for it. Garbage goes in, energy comes out. Read the whole thing over at Fast Company.

Haidt comes to the Outside of the Asylum.

I'm looking forward to Jonathan Haidt's visit to New Zealand. Sounds like he's also looking forward to it too.
We're still the Outside of the Asylum.

Monday 29 July 2019

Why you've had to dumb down your syllabus

From the latest issue of Intelligence:
We examined trends over time in vocabulary, a key component of verbal intelligence, in the nationally representative General Social Survey of U.S. adults (n = 29,912). Participants answered multiple-choice questions about the definitions of 10 specific words. When controlled for educational attainment, the vocabulary of the average U.S. adult declined between the mid-1970s and the 2010s. Vocabulary declined across all levels of educational attainment (less than high school, high school or 2-year college graduate, bachelor's or graduate degree), with the largest declines among those with a bachelor's or graduate degree. Hierarchical linear modeling analyses separating the effects of age, time period, and cohort suggest that the decline is primarily a time period effect. Increasing educational attainment has apparently not improved verbal ability among Americans. Instead, as educational attainment has increased, those at each educational level are less verbally skilled even though the vocabulary skills of the whole population are unchanged.
Vocabulary skills of the whole population are unchanged. As more people go to university, the average vocabulary skills of the college-educated go down - those going to uni who otherwise wouldn't have gone to uni aren't picking up more words.

There are consequences of this for the quality of university education for those who would have gone to university during the prior era.

Saturday 27 July 2019

Plastics and health

The Royal Society has a short report out on plastics. I don't think the takeaways I've gotten from it are quite what they'd have wanted.

My takeaways:
  1. Plastics in the ocean are bad (duh).
  2. Synthetic fibres and fragments coming out of polyester and such in the laundry - I'd never thought of this before. Similarly, tyre wear winds up in storm drains and then to the ocean. No obvious ways of dealing with this. 
  3. Well-constructed landfills are the absolute safest place for plastics. When we send plastics abroad for recycling, they risk blowing off the boats into the ocean, or being dumped and winding up in the ocean. I take from this that it is strictly better to put my plastic waste into the council rubbish bag for the landfill rather than risk its heading into recycling streams that may head overseas. 
  4. Cruddy old legacy landfills are a problem, so it makes sense both to ensure that new ones have an appropriate post-closure plan, and that councils keep an eye on old ones that might be in need of some love. 
  5. The report could have been far more helpful. There's tons of information on global flows of plastic into the ocean, and on NZ consumption of plastic, but little on how much NZ waste plastic makes it into the oceans instead of into well-managed landfills. How many landfills are out there like the long-closed one that spilled into Fox River during a flood? No mention. Odds that any current landfills under current regulatory setting could ever have that outcome? My prior is that the likelihood is exceptionally low, but again, no mention. It does note that much of the plastic pollution that accumulates here is lost equipment from the local fishing industry - but again, no numbers. It almost feels like the report wants people to draw inferences from global averages so have folks here worried about plastic consumption per se rather than the volume of plastic that winds up in the ocean. Some of the details are there if you're paying attention to what you're reading, but it feels like the report's authors were aiming for different inferences to be drawn. 
I was surprised by this quip from the incoming President of the Royal Society on the report launch:
“We have all seen the piles of plastics in rivers and on beaches or seen images of the immense ocean garbage patches. Through reading this report, it is incredible to learn that we have only been creating plastics in any quantity since the 1930s."
Emphasis added.

I wouldn't have thought it incredible to learn that plastics didn't really get going until the 1930s. I don't keep any detailed history of this stuff in my head, but I'd thought that everybody knew that commercial plastics of any significance didn't really get going until Bakelite (remember the old radios and telephones at the museums? Bakelite.). And that was early 20th century, Art Deco stuff. So if you'd gotten the card "Bakelite telephones" in a game of Timeline, you'd pick 1920s/30s for the Art Deco styling. Not really incredible.

Would it be incredible to learn that nylon didn't really pick up until the Second World War, or that oral contraceptives have only been around since the 60s? I guess folks are surprised by different things.

Friday 26 July 2019

Great Kleiman quote

“If you do drug policy and you’re asked whether you use drugs, you’ve got two choices,” he replied. “You can say, ‘Yes, I’m a lawbreaker. Please come arrest me and ignore everything I say, because I’m a bad person.’ Or ‘No, actually, I don’t know what the hell I’m talking about.’

“Since neither of those is an advantageous admission,” he added, “I don’t answer the question.”
The Drug Foundation hosted Kleiman a few years ago; it's where I first heard about the 24/7 programme that seems rather effective in reducing the harms caused by harmful drinkers

Wednesday 24 July 2019

Youth Parliament and fixing the housing market

New Zealand's Youth Parliament called me in to provide testimony about policies that could improve economic growth without worsening disparities in wealth. 

I suggested that they take a close look at housing markets - as well as regulatory structures that work to stymie competition and entrench existing interests. The Committee of the Youth Parliament took up some of my recommendations in their report - along with some of the recommendations from the presenter from Living Wage Aotearoa.

The hearing was a lot of fun. Since the witness from Victoria University of Wellington failed to show up, the Committee prodded me and the other witness into arguing with each other - I had a blast.

I went through the case on housing in my inaugural fortnightly column over at the Dom Post; I expect it's running more broadly across the Fairfax/Stuff stable.
New Zealand's income inequality statistics, by the Ministry for Social Development's figures, have been roughly flat for 15 to 20 years, depending on the measure.

But concern about inequality, at least as measured by the number of newspaper headlines, followed the rise in Auckland house prices rather than the flat inequality statistics.

The real experience of inequality comes in household budgets strained by too-high housing costs and in worries about whether they or their kids will ever be able to afford a home. The latest report from the Ministry of Social Development tells us that almost 40 per centof our poorest renting households are now spending more than 50 per cent of their income on housing costs.

Fixing the housing mess will directly work to mitigate those inequities. Doing so will also improve, rather than hinder, economic growth. Here is why. 
Read the whole thing!

I should be showing up there fortnightly; Oliver or someone else on the team here may jump in in my place from time to time depending on other commitments.

Tuesday 23 July 2019

IRD polling and the Official Information Act - Updated

Back in February, Stuff reported on IRD's polling about attitudes to tax. The poll was controversial because it included questions on respondents' ideological self-identification.  

I never took the polling as having been undertaken with partisan intent - I'd thought that the left-right identification question came from the standard battery of questions included in that poll, with IRD's questions added to that battery. So I was rather more interested in IRD simply releasing that polling data to avoid any potential appearance of partisan advantage that might obtain if anyone expected the government had access to the poll data while the opposition did not - and because it would just be cool to have that data. You could imagine that, in the context of policy argument around capital gains taxes, polling data on tax attitudes combined with data on ideological affiliation would have partisan advantage; releasing the data to everyone would level any perceived tilt to the playing field.

Hamish Rutherford reports today on the SSC investigation into that polling work - and polling undertaken by DoC and even Stats that had the appearance of partisan effect. That SSC report is available here.

This part of Hamish's reporting now worries me:
In a statement, Commissioner of Inland revenue, Naomi Ferguson said the department "absolutely understands the principle of political neutrality".

IRD had instructed Colmar Brunton to delete the data on political learnings and not report on it, while Ferguson said no evidence of political motivation had been found. She had indicated she accepted the findings and recommendations of the SSC report.
On 12 February, I requested that data via an Official Information Act request. The information Hamish now reports destroyed - and almost certainly destroyed only after I made the request. Can they do that? [UPDATE: the request for data deletion was made more quickly than I made my OIA requests. See update at the end of the post. I'd thought that my request was very prompt on reporting having started on the issue; IRD requested deletion on 9 February.] 

Here's the trail.
IRD declined the request, citing its general rule that every single thing in the IRD building or that IRD has ever breathed upon counts as secret tax data - the release of which would imperil the administration of the tax system. It also cited assurances of secrecy provided to survey respondents. 

On 13 March, I asked the Ombudsman to review Deputy Commissioner Cunnington's decision. If IRD's position that an undertaking with survey participants was sufficient to block an OIA release, that could have interesting OIA implications. Every government meeting with anyone could begin with an undertaking that the results of the meeting would never be released to anyone. 

On 25 June, the Ombudsman's Office told me that they had received some relevant information and their investigation was continuing. I've not heard anything since then.

And, today, I find out via the Dom Post that IRD told Colmar Brunton to destroy the data that I have requested. I do not know whether IRD also destroyed its own copy.

Is it quite cricket to order the destruction of data that is under OIA request and Ombudsman investigation? Seems a bit ... peremptory.

I should follow up with the Ombudsman again.

UPDATE: The SSC report has the date of the request from IRD to Colmar Brunton as 9 February - so the request for deletion happened after media enquiries began but before my OIA request; I thought my OIA request was quicker off the draw than that. So at the point that IRD answered the request, they either still had their own copy of the data, or knew that the data no longer existed.

Around the traps

Blogging has been light as other commitments have pressed, but you may have caught me around the traps:
  • I pointed to Stats NZ's disaggregated CPI figures in this piece by Susan Edmunds over at Stuff
    "Statistics New Zealand recently began releasing cost-of-living statistics for different groups to take account of differences in spending patterns. Since they started doing that, they have found that increases in the cost of living have been most sharply felt by the poorest because tobacco excise increases, petrol price increases and housing costs there have the worst effects. And these are areas directly under the government's control. Ceasing punitive tobacco excise increases and fixing the regulatory settings to allow new housing be built would substantially affect living costs for the poorest."
    You can check out Stats' shiny Living Cost Explorer right here.

  • I also pointed to the consequences of failing to adjust NZ Superannuation in recognition of rising life expectancy in another article over at Stuff:
    Crampton said, if things were left as they were, it would not mean fiscal collapse.

    But it would mean government budgets were increasingly skewed to helping those who are older rather than those in greater need.

    "And, the longer we wait to make changes, the harder it will be to make changes because of changes in voter demographics. I view that as inequitable, but others can reach different conclusions."
  • At the Herald, I suggested that reductions in the projected number of superyachts attending the America's Cup would worsen the already dubious case for government funding big sporting events. Tom Dillane there was only able to use a smaller part of my more verbose commentary, so here's the full text:
    “The case for government funding of the America’s Cup was always rather weak. After correction to some errors in the initial estimates, MBIE reported an estimated benefit-to-cost ratio only slightly higher than 1:1, with a range from 0.997 to 1.14. So every dollar of estimated benefit was matched, nearly one-to-one, for a dollar of cost. We can worry that these kinds of estimates are often optimistic about the benefits of these kinds of events. But the estimates would have been based on an expected number of visitors. If fewer superyachts are coming in for the event, then the benefits of the event will be a bit lower than expected. If we think that events like the America’s Cup do more to change the timing of just when tourists and superyachts come to New Zealand than to affect whether they ever come to New Zealand, then we should perhaps be less worried about things – except that that would also mean that the initial benefit estimates were always overstated.”

    “We should be sceptical that the path to national riches lies through public subsidy of large sporting events. If New Zealand taxpayers are happy for the government to spend a lot of money on what is effectively a big party in Auckland, then the event should be funded on that basis. But we should not delude ourselves that big parties attended by some foreign tourists are really investments.”

  • Finally, I had a chat with Heather du Plessis-Allan about New Zealand's mess of regulations around heritage-listed buildings, that too often make it just too hard to own the things.

Morning Roundup

The closing of a big set of browser tabs brings a few gems.

Thursday 18 July 2019

Stats and IDI funding

Stats don't come for free. Who should pay? 

Newsroom covers budget problems over at Statistics NZ.
An appendix document to Shaw’s February briefing raises the prospect that, without extra money, some Government priorities – surveys on social statistics, child poverty, and the household labour force survey – might have to stop.

Stats NZ, which employs more than 900 people, seems keen to cut surveys rather than staff. It says budget constraints “would limit our ability to ensure remuneration kept pace with the market, and Stats NZ would lose capability”.

(For the year ended June 30, 2018, Stats NZ’s personnel costs were $115 million, up from $83 million the year before. The census accounted for 81 percent of the increase. This year’s estimate, contained in the last annual report, is for an $89 million personnel bill.)

One way to raise more money, Stats NZ suggests, is to start charging a “value-add service” for use of its so-called integrated data infrastructure, or IDI. That’s data used by government agencies, researchers and academics to better understand societal issues. A quick search reveals research topics using IDI such as “causes and consequences of criminal activities”, “child obesity prevalence”, and “predicting suicide and self-harm risk”.

Substantial increases in the use of IDI would require “more aggressive charging”, Stats NZ tells Shaw. In fact, the appendix says forecasts of increased Stats NZ revenues rely on charging more for IDI.

After its clash with MBIE over the accommodation survey, you’ve got to wonder how much success Stats NZ will have in demanding other agencies and universities pay for the data.
In a pure model, you'd run all of these services on cost-recovery where Ministries using data series would pay the costs of running them. The value of the data is in the using; figuring out what data should be prioritised should be worked out by looking backward from usefulness; if the value of a data series to a Ministry in running its operations is less than the cost to Stats of running that survey, then the Ministry should be finding other ways of doing things. Now that all requires some tight prior assumptions about that funding to each of the Ministries for each is appropriate and that Ministries are getting things right in their own prioritisations, but it isn't a crazy first cut.

Now let's tweak things.

Suppose we expect that Ministries have weak-as-heck incentives to run post-implementation reviews and are looking for excuses not to run the things. First best is Cabinet demanding the things and budget bids for programme continuation depending on them. If something blocks that, then subsidising the inputs into PIRs and CBAs might not be nuts. It might not be particularly cost-effective if the incentives to undertake them are sufficiently weak and if the cost of the stats is small relative to staff time in running the analysis of the stats, but you can then at least get rid of lines for excuses. It's harder to plead reasons for not running the PIR if the data for doing it is sitting right there.

When we start looking at external uses of IDI, things get more complicated. And, full disclosure, our organisation does work in the IDI.

Every project in the IDI has to pass a public interest test:
2. Safe projects – to gain access to integrated data, researchers must have a project they can demonstrate is in the public interest.

Research projects must focus on finding insights and solutions to issues that are likely to have a wide public benefit. The IDI and LBD cannot be used for individual case management, such as making decisions about a specific person or family.
These are not for-profit consultancy reports helping to drive business decisions. If they were, then it would make complete sense for Stats to at least charge full cost recovery. They're instead public interest projects judged likely to have wide public benefit.

If those projects are undertaken by the public sector, then you'd hope that the funding line for the project would incorporate the data costs and the whole thing weighed on whether the overall benefit outweighs the overall cost.

Where those projects are undertaken by NGOs on limited budgets, putting their own resources into the provision of those public goods, you might generally expect that public goods are underprovided relative to a first best. So things then depend on the actual measure of public benefit relative to the cost of providing the IDI infrastructure and staffing - and that's anybody's guess. I'd like to think that the kind of data lab work we're doing on getting better measures of school performance could lead to policy changes that improve school outcomes overall, but I could be wrong.

I don't know what we're currently being charged for IDI access, but do know that there are prices we couldn't pay. The main project cost is researcher time; charges will be small relative to that.

Maybe Stats could spread the fixed costs of the IDI by making it easier for foreign academics to use, so per-project costs could be lower than otherwise.

I generally see government investment in this kind of data as being potentially highly leveraged. For an upfront investment in good and accessible data, you let a lot of not-NZ-government-funded people do a lot of work that can help the government in setting better policy. That's especially true where you let foreign researchers help out. In that kind of context, the cost of increased access fees could be outweighed by the reduction in the value of produced research. And I'm reminded of the story of the CURF that took an analyst months to make but was hardly ever used by anybody because Stats just makes it too hard to access the things.

Tuesday 9 July 2019

Demotion, or second chance?

My Newsroom column from last week looks at the Twyfortunity in the cabinet shuffle - belatedly posted here as I was off at the NZAE meetings last week. 
Cabinet shuffles provide great journalistic set-pieces.

For the politics-as-sport contingent, it provides all the narrative arc of changes to the Black Caps line-up for the World Cup: winners and losers, who’s in and who’s out, and whether the changes will do more to help the team score political runs or to defend against the Opposition’s bowling attack.

As expected, the Government’s changed the housing line-up. Megan Woods became Minister of Housing; Kris Faafoi took over public housing; Nanaia Mahuta took responsibility for Māori housing; and Phil Twyford took up Urban Development and Economic Development. Sporting commenters framed it as a loss for Twyford. But is it a loss for housing?

In last week’s column, I urged the Government to give Minister Twyford the chance to see through his housing supply agenda. I have argued that no one in Parliament better understands the underlying failures in local council incentives, regulatory settings, zoning, and infrastructure financing. And solving that complicated mess is what is required if New Zealand is to build its way back to affordable housing.

When it comes to housing, it isn’t just the batting line-up that’s out of order, it’s the selection process, the training system, and the club system generating the talent that might be picked. It needs fixing from top to bottom.

An optimistic read of the cabinet changes is that this is not a demotion for Minister Twyford, who maintains his ranking within Cabinet, but rather an unshackling. The Government’s housing supply agenda has not made necessary progress, at least in part because the Minister and the Government have been distracted by impossible-to-achieve Kiwibuild targets. Twyford will be able to focus on the areas where he can make the most difference.

But let’s step back to the mess of problems that yet needs solving and consider the way forward.
Minister Twyford’s supply agenda, on the surface, begins with a change to infrastructure finance. Rather than falling onto Council balance sheets, or onto homebuyer mortgages, the cost of new infrastructure will be covered by levies on the housing benefiting from the new infrastructure over the life of that infrastructure. Targeted rates on new developments will pay off the bonds issued to finance new infrastructure.

Separating infrastructure financing decisions from political processes helps set a longer-term platform for urban development. Even if a substantial Crown infrastructure push over the next few years was able to get around the very real capacity constraints in a sector already under strain, it would not set the foundation necessary for long term growth. It would instead help to perpetuate the boom-and-bust cycle that has bedevilled the construction sector for ages.

Infrastructure bonds whose financing depends less on political interest than on the commercial viability of the underlying development can set the stage for greater longer-term urban growth that is responsive to changes in demand. When demand for more housing makes it profitable to build more housing, the developer can issue infrastructure bonds and start building without having to convince the Crown to take on new infrastructure debt. It is a way of sustaining infrastructure investment beyond the current crisis.

But it also requires the buy-in of those who will be paying the levies. And here, I think, Minister Twyford may need to do a bit more work.

This kind of infrastructure finance, in the United States, typically has the assent of those who will be footing the bill. Property owners setting a new development establish infrastructure boards that will own the infrastructure, that will be responsible for paying off the debt through a tax on the properties within the development, and that will be governed by those who buy properties in the new development. Taxation is coupled with representation.

Here, so far, proposals for new infrastructure bonds do not require the assent of the levied. In greenfield sites, where the land’s owner or development partner might set the bond, that kind of assent process will matter less. But it will matter in brownfield sites where an Urban Development Authority might seek an infrastructure bond to allow for upzoning. Homeowners who do not redevelop in response to the zoning change would still be on the hook for contributions toward the new infrastructure.

And while that may be fair enough where the infrastructure increases the value of those properties, it can also be a problem. If an Urban Development Agency seeks a new infrastructure bond without some credible demonstration that the bond issue is supported by most of those who will be paying the levy, political opposition to the process can stymie development.

New Zealand’s business improvement districts may provide a useful model. Business improvement districts allow businesses in a village centre, for example, to levy themselves for the provision of amenities that are to their mutual benefit. But that requires the assent of the affected owners through a ballot. A double-majority requirement is there in place. A majority of business owners is required, as well as the assent of owners whose combined holdings represent a majority of the capital value of the businesses in the proposed district. That double majority requirement prevents a large number of smaller owners from preying upon a small number of wealthier businesses, and also prevents a small number of large owners from imposing too high of costs on smaller owners.

A similar double-majority threshold could provide democratic legitimacy to new infrastructure districts, while leaning on an established body of New Zealand practice.

It is all rather complicated, and hits only onto the infrastructure financing part of the work ahead for Minister Twyford. Unwinding the mess is not a small job.

Focusing on the ballsports [EC: I wrote sportsball; I don't know who changed it to ballsports] parts of politics suggests the cabinet changes were a loss for Twyford. But if it allows him to focus on the parts of the portfolio that play to his strengths, it may instead be a win both for Twyford and for housing. Carving out the parts of the job that can be well handled by others, like social housing, makes a lot of sense. Letting Minister Woods take over Kiwibuild should let Minister Twyford make progress in the parts of the housing agenda that will matter the most over the longer term.

But we will need to see progress now that the barriers and potential excuses are out of the way.
 Ungated version here.

It is not hard to come up with scenarios where brownfield sites for the new bond-and-levy-funded projects get blocked because a small number of owners who'd be subject to the levy are very rightly aggrieved - they'd be paying for something for which they have no use. The levy has no particular democratic legitimacy. There are potential ways around it - like maybe you could accrue those levies against the property until sale or transfer. But things will get messy more easily, and the whole thing potentially binned as having proved too hard, if they get too many cases where the project's been blocked because they've tried imposing the levies on folks who don't agree to them.

Monday 8 July 2019

Is this subsidiarity?

Subsidiarity is the principle that different levels of government should handle the tasks for which they are best suited. 

If you think about it with a bit of public economics in mind, you can see it as siting policy and regulation at the level that best internalises whatever externalities are at play. It makes little sense for central government to decide on whether a stop sign, traffic light, or roundabout is the best traffic management option in some local neighbourhood; local governments shouldn't run their own monetary policy. 

The Initiative has been pushing for greater subsidiarity and better frameworks for aligning local council incentives. Councils frequently, and rightly, complain about unfunded regulatory mandates from central government that do not suit local conditions. And councils also operate under often tight capabilities constraints. 

So a few bits at this week's Local Government New Zealand conference puzzle me.

Delegates at the conference voted to support a central government ban on the sale of fireworks. This could make sense if the cost of enforcing council-level bans on the use of fireworks were preventing councils from enacting their own bans in the places and times where the costs of fireworks are particularly high, but it doesn't immediately seem consistent with greater local control and subsidiarity.

The bigger and odder one though is Councils wishing remit over climate change policy.
Wellington City Council asks that LGNZ members collectively adopt the position that government should revise the Resource Management Act 1991 to adequately consider the impact of greenhouse gases when making decisions under that law and to ensure that the Resource Management Act 1991 is consistent with the Zero Carbon Bill.

The remit was passed with 64 per cent support of the sector.
If prices are working properly in the ETS, there is no more need for councils to consider GHG reductions in consenting than there is need for councils to worry about whether the world is running out of lithium or helium or anything else. Anyone doing anything will have worked expected carbon prices into their own planning. Councils will need to think about it for stuff like whether to renew old coal boilers or upgrade to electric kit on their own properties, and they could think about it in forecasting demand for public transport once carbon prices become more binding, but they needn't check off any particular activity against a zero-carbon priority. It's already worked into the price - if central government is getting things right in strengthening the ETS.

Where councils regularly worry about unfunded mandates and where council capabilities can be binding constraints, adding carbon planning to their remit seems inconsistent with subsidiarity (the carbon price is better handled through national level trading where international trading isn't there yet) and with council complaints of needing more resource to be able to handle their necessary functions.

Hopefully central government does not accede to local government pressure here and rightly views it as inconsistent with government achieving its objectives around affordable housing. If new subdivisions get bogged down into arguments about whether they're consistent with zero-carbon mandates, when petrol is already in the ETS and so the carbon costs of transport are already in the system - madness that way lies.

Update: a slide on what that could involve.

Tuesday 2 July 2019

Taxing tobacco in a world of vaping

Here's the blurb; register at the link above.
Tobacco taxes are both an important source of revenue and an attempt to deter behaviour that can lead to social costs (e.g. healthcare costs from both active and passive smoking). Even in a world with just traditional tobacco products such taxes may not be as effective as their advocates would wish, leading to higher-quality products (e.g. filtered cigarettes) being substituted with lower-quality ones (e.g. unfiltered roll-you-owns). They can also be regressive, harming vulnerable communities like Māori, and in a “well-being” world, how do we balance pleasure and harm?

Like many other sectors, the tobacco industry is under “disruption”, with the advent of a range of alternatives to conventional tobacco products, such as vaping. Should these alternatives be taxed the same or less as conventional products, or possibly even encouraged? Will they result in less harms (and pleasure) then conventional products, or introduce whole new segments to the pleasures (and harms) of “smoking lite”?

LEANZ is delighted to bring together a panel of prominent experts to traverse these questions, from medical, economic and fiscal perspectives.

Panel Details

Professor Marewa Glover is a New Zealand public health academic specialising in smoking cessation. Her research includes comparisons of electronic and traditional nicotine delivery, as well as of different types of conventional tobacco products. She has also researched the impacts of smoking cession programmes and tobacco taxes on Māori. Professor Glover was a Finalist in the 2019 New Zealander of the Year Awards.

Dr Eric Crampton is the Chief Economist at The New Zealand Initiative, and has published on the challenges of regulation in a world of disruption. He served as Lecturer and Senior Lecturer in Economics at the Department of Economics & Finance at the University of Canterbury from November 2003 until July 2014. He is also the creator and author of the well-known blog “Offsetting Behaviour”, in which he has discussed the pros and cons of tobacco taxation.

Peter Wilson is Principal Economist and Head of Auckland Business at NZIER, which he joined in 2015. He has over 30 years’ experience in the public and private sectors, including time as a senior policy manager and economic adviser on tax policy at the Treasury. His professional interests range over regulatory economics, local government and planning to climate change and social policy.

Burton on the OIA

Tony Burton, ex-Treasury Deputy Chief Economist, lays out some of the problems in the OIA over at The Spinoff.

He describes an incident in which a minor letter from him to DoL in preparation of the annual minimum wage review became, after an OIA request, well, this:
As a Treasury adviser on labour market and welfare issues I was asked to see if DoL could be encouraged to improve the report. I thought, naively as it turned out, that if I discussed evidence in bite-sized chunks some of it might sneak into the report. This was the content of my email. Labour market economists would regard what I wrote as anodyne. They would not all agree with it – academics never all agree on any matter – but it would be unexceptionable. The DoL officials ignored my email and the subsequent meeting when writing their report.

Described this way I imagine the eyes of most readers glazing over. “Conversation on academic evidence between unimportant people makes no difference” is not an attention grabber. But when released through the OIA, in the midst of an election campaign, the issue turned into “Mr Key ‘sat on’ the advice for 18 months and ‘tried to fool people’ by using only a later Labour Department review to back his argument”.

This version became one of the issues in a television debate between the party leaders.

A cursory glance at the emails would have made clear they were not sent to ministers. They did not include any reference to a Treasury report to ministers because there was no report.
Tony links through to some reporting by Andrea Vance on it, but that's perhaps because linkrot has set in on TV3's coverage. It was a TV3 OIA.

Here's how Gower reported it at the time, which I'd then blogged. This is the blockquote from Gower:
Everyone knows it’s got bloody hard to live on the minimum wage - even John Key admits that. His defence is that a rise from $13 to $15 an hour will cost jobs.

Key has used this defence in a televised debate, and he's used it to workers on the shop floor at McDonald's as seen in my story last night. But what Key doesn't want to admit, is that this claim is not the full picture and may just be fear-mongering - a rise may not cost jobs at all.

That's what Treasury says in this advice from March 2010 obtained by 3 News under the Official Information Act.


Yes, that's right - the Treasury.

The Treasury are the big guns - Government's quasi-independent economic advisers.

And the Treasury says the "claim" (yes Treasury calls it a "claim") a minimum wage rise may cost jobs - "has not been true in the past".
I'd then written:
Gower tries to frame this as a scrap between Treasury and the Ministry of Labour over estimates of the disemployment effects of minimum wages.
So the Department of Labour report actually mentions about 6000 forecast new jobs that might not happen under a theory that the Treasury doesn't believe.
But absolutely nothing in the OIAed email from a single Treasury analyst speaks to the Ministry of Labour's estimates. Nothing.
Gower wanted a gotcha, and he framed what he had as a gotcha.

When I asked about that a couple years later when the issue popped up again, I got this answer (which I still don't really understand).
The term 'fake news' hadn't yet been invented, but Gower's reporting here surely would have made the cut. An email between analysts hardly constitutes an agency's position.

What are the consequences of this kind of use of the OIA? Burton describes a culture akin to prey animals approaching a watering hole in the savannah, constantly scanning the horizon for predators.
Public servants experience the OIA the way savannah animals experience crocodiles lurking under the surface of a river. The animals have to go to the river but do so aware that random attacks are a moment of inattention away. If this metaphor seems over the top, I invite the reader to look over the last few weeks of everything they wrote, typed or texted. Imagine someone had a legal right to publish any three consecutive words, without context or explanation, and with the potential that you might lose your job. Would that make you a little more guarded about what you wrote? Within the public service, versions of this thought experiment are called the “Dom Post test”.

Unsurprisingly public servants take steps to avoid the crocodile. The OIA is meant to include verbal exchanges, but in practice that is hard to enforce. The result is the habit of minimising the written record if there is a risk of failing the Dom Post test. This habit is so endemic it is applied semi-consciously and only noticeable when someone, usually a junior official who has not been fully acculturated, needs to be reminded to “take the discussion off-line”.

Of course there are many occasions when it is common sense to have a quick chat rather than to draft documents and set up meetings. (And anyone who has wasted time in pointless bureaucratic meetings will wish for more of this common sense.) However, extending this to replacing written comments is not in the spirit of the OIA.

In truth, any criticism of OIA avoidance of this sort needs to recognise it is a pragmatic response by people who want our government institutions to function. Public servants are meant to both serve the minister and have some level of independence. In practice this means some of what they do is not what the minister would want them to do were they simply serving the minister. Strict adherence to the spirit of the OIA would see these differences continuously used to attack the minister. It is hard to see how ministers could use their ministries effectively when the process of generating advice would be so damaging to what they were elected to achieve.

In as much as the OIA puts pressure on public servants to only write what they are personally prepared to defend in the full glare of the public they serve, it’s a good thing. The problem is that’s not the reality of how it is experienced, which means people do not just respond by improving what they write but by trying to avoid the lurking crocodile.
The OIA is broken, but so are the underlying incentives. Trying to fix the OIA without addressing the underlying incentives won't work well. 

Monday 1 July 2019

Meth and availability cascades

Over at Stuff, Susan Edmunds goes through the meth testing mess in which ridiculously tight standards were taken as a requirement. 

I provided a minor bit of comment on it:
Eric Crampton, chief economist at the New Zealand Institute, said it was probably a snowballing moral panic that went something like this.

"Nobody wants meth users as tenants. They're too high risk.

"Some at Housing New Zealand started applying far too stringent a test. It's easier to make those kinds of mistakes when it's on the public's account rather than coming out of a landlord's own back pocket.

"That then started triggering news stories about meth contamination, making the issue salient for others. Some tenants started demanding them, and some landlords started running them, taking the Housing New Zealand example as what good landlords should be doing.

"And every meth contamination and clean-up provided another news story that fed demand for more.

"It's an example then, of what Timur Kuran calls an 'availability cascade' – a few news stories on a weird scary thing has journalists watching out for more of them, so they all become more likely to be published but at the same time, in this case, also increase the number of real events because it fuels demand for more testing."
We still need better mechanisms to insulate regulation against this kind of nonsense. You know how we keep pushing for cost-benefit testing?

Timur Kuran's piece with Cass Sunstein on availability cascades is great, and is here.

An availability cascade is a self-reinforcing process of collective belief formation by which an expressed perception triggers a chain reaction that gives the perception of increasing plausibility through its rising availability in public discourse. The driving mechanism involves a combination of informational and reputational motives: Individuals endorse the perception partly by learning from the apparent beliefs of others and partly by distorting their public responses in the interest of maintaining social acceptance. Availability entrepreneurs - activists who manipulate the content of public discourse - strive to trigger availability cascades likely to advance their agendas. Their availability campaigns may yield social benefits, but sometimes they bring harm, which suggests a need for safeguards. Focusing on the role of mass pressures in the regulation of risks associated with production, consumption, and the environment, Professor Timur Kuran and Cass R. Sunstein analyze availability cascades and suggest reforms to alleviate their potential hazards. Their proposals include new governmental structures designed to give civil servants better insulation against mass demands for regulatory change and an easily accessible scientific database to reduce people's dependence on popular (mis)perceptions.

Regulatory icebreakers

Not too long ago, Canada’s Northwest Passage was effectively unnavigable. The ice was simply too thick for sailing ships to make it through during the too-short summers.

And while Netflix’ excellent miniseries The Terror brings an additional supernatural element to the horrors of being icebound on the Royal Navy’s Arctic expeditions of the mid-1800s, the reality was awful enough.

It took more modern icebreakers, and global warming, to make the route more viable.

And for one part of the global regulatory pack-ice, it took Uber.

Imagine, if you will, a heavily armoured icebreaking cargo ship designed to plough through the Northwest Passage. Once the path through the ice is cut, other ships can follow more easily. The icebreaker will get its cargo through first but at a much higher cost per container than the ships that follow in its wake. The armour and the fuel to push through the ice do not come for free.

Over the past decade, Uber has been breaking a lot of regulatory ice.

Most here will remember Uber’s 2016 Parliamentary hearings. Uber’s Richard Menzies had to explain to a Parliamentary committee, some members of whom may have gotten just a little too accustomed to chauffeured services, that there was no risk of someone trying to flag down an Uber as though it were a taxicab. The cars could only be hired using an app on a phone.

Perhaps because our MPs so badly embarrassed themselves in those hearings, New Zealand wound up with workable regulations. It would have been hard for Parliament to recover from a second demonstration of technological incompetence.

But New Zealand is only one country in a big world. And most other countries start with far worse policy than New Zealand. Their pack-ice is thicker than ours.
I go through some of the regulatory ice-breaking that Uber has undertaken, and note the work yet necessary in sorting out reclassification risk.

I conclude:
Principles-based regulation establishing safe harbours against reclassification risk for those providing greater benefits to contractors seems a useful path forward but the path to get there is not free and clear. It takes an icebreaker.

In other areas we talk of first-mover advantages. That is not the case when we think about icebreakers. Breaking the ice is something of a public good. It is a difficult job, and I expect the terrors of trying to make Uber’s model work in France were only slightly less terrifying than being icebound in the Northwest Passage.

But once the ice is broken, anyone can follow. In those cases, there is some merit in being a fast-follower – unless someone is willing to pay an awful lot to have their container be first through the passage. Those of us along for the ride might raise a glass from time to time to the icebreakers.
An ungated version will be up on the Initiative's site in due course and will be linked at that point [Update: it's here].