I have now also read the 2025 Taskforce Report, which came out today. And it left me depressed. Never have I felt so dismayed by an official report.
The report is fatally flawed, because its findings stand or fall entirely on the belief that if you cut taxes and government spending, the economy will be magically transformed. This is economically illiterate nonsense of the highest order. If we want to examine why we do poorly we need to go beyond arguments about tax rates and welfare. We are not a high-tax country. So clearly the taskforce authors have completely missed the point of the exercise.
There are so many things to dislike about the report. Here are my main points:
No need to increase R&D spending
We need to innovate if we want to grow our economic base. We will not catch up with Australia if we remain predominantly a commodity exporter. We don’t innovate well, in part because of a lack of investment in R&D – both privately and publicly. There are few incentives for organisations to invest in research and development.
The Taskforce rejects outright any suggestion that we need to invest more in R&D (see pg 67). But their arguments don’t make a lot of sense, and their efforts to explain why we are at the bottom of the OECD sound a bit desperate, driven solely by ideology (se pg 68).
Maybe they should have added that if you take out all the countries in the OECD list that don’t have a Z in their name, we actually are damn near the top of the pile.
No strategic focus
The report argues against implementing strategies to focus on growing specific industries (pg 71).
The authors prefer the “magic fairy” approach – just do nothing, except slash taxes and state spending, and the magic pixie-dust will transform us into a land of milk and honey.
No compulsory savings scheme
Some have argued that we should adopt a compulsory saving scheme. Some believe this is the key reason why Australia has prospered and we have not. But anything that is state-mandated is anathema to the report's authors, regardless of its merits. They are of the view that people should save at their own rates, and that if you cut taxes they’ll do so (pg 74). Evidence for this assumption is not offered to the reader.
Screw the exchange rate
Our exchange rate woes damn us (at least in the short to medium term) to poverty. But, again, the authors are wedded to the notion of a fully floating exchange rate (pg 79), and reject outright any suggestion we should consider a different model.
Here's to your ill-health
Their views on health and education are dispiriting (pgs 92 to 96). The authors argue against retaining subsidies on doctors' visits and pharmaceutical prescriptions:
We also see little justification for the significant increase in recent years in the extent of universal subsidies paid for visits to the doctor. For many people these are simply churn: they pay in taxes what they later get back in benefits.This ignores the reality that for a significant section of the community (and not just a few poor), access to affordable medical care is a real problem. Because of lifestyle and environmental factors (e.g. poor diet, poor housing etc), the poor often need more healthcare, not less.
If you averaged things out and gave everyone back a share of what the “average” person pays in taxes to subsidise doctors visits, a large section of the community would suffer. That would have consequences later when those people ended up needing expensive interventions.
The Brash prescription is a poison pill.
Education is a commodity, not a right
The authors of the report again refers to “middle class churn” when talking about the early childcare subsidies available to parents (pg 94). They clearly have no comprehension of the enormous costs of childcare.
The authors want more competition in education. They believe competition and accountability will encourage excellence. They have no evidence to show this to be true. Indeed they have no evidence any of their crackpot theories will work.
They also want to see an end to interest-free student loans. A highly educated workforce is an essential part of any high-growth economy. But the authors do not consider the possibility making education more affordable may be beneficial to society in the long run.
Sell sell sell!
In Brash-land, the state has no business being in business (pgs 105-110). The taskforce authors want to see wholesale privatisation and asset sales, and are of the firm belief private enterprise can always do things better and more efficiently.
Brash and his cohorts are utterly bereft of imagination and can’t look beyond their narrow accountants’ focus. Could it be that some enterprises exist for reasons other than to make money? What about the public good?
Supernova NZ Super
The taskforce authors want to see the NZ Super Fund being shut down and its funds used to pay back debt (pgs 110-111). The report fails to address how we are supposed to pay for superannuation in the future in the absence of such a fund.
What climate change?
The report criticises the spending on rail infrastructure, while advocating for more roading (pgs 112, 113).
Perhaps the authors have never heard of climate change, or don’t believe in it. They make no mention of climate change as a reason for investing in rail and public transportation.
We are also told spending in broadband should be put on hold, because it is not certain what the benefits will be (pgs 114, 115).
Presumably we should just do nothing and then commission another report in ten years that castigates us for missing this vital opportunity to invest in infrastructure.
Imaginary red tape
It is a hobbyhorse of the libertarian right that we are over-regulated. This rather ignores the fact that international surveys regularly find New Zealand to be one of the easiest places in the world to do business.
So the regulatory slash and burn the report authors argue for (pgs 116 – 119) would be at best ineffective, and most likely would be counterproductive.
The authors claim New Zealand has one of the more restrictive environments for foreign investment (pg 129). They quote OECD statistics, but inconveniently those statistics show Australia has a more restrictive environment than our own. In any case, this is a highly dubious claim. I haven’t seen the OECD report on the topic, but it is a fact that New Zealand has very little regulation on overseas investment.
Get off my land!
The report authors’ contempt for environmental issues is obvious. When writing about the Resource Management Act they put the word “sustainability” in inverted commas (pg 119). They are more interested in property rights, which they see as more important than the rights of the community to determine the type of environment we live in.
Reduce workers' rights
They are opposed to workers’ rights, are against the minimum wage, and want the youth minimum wage reinstated to the pre-1999 level (pgs 124-127).
I presume they would like New Zealand’s reputation as a low-wage economy to remain intact.
Down with this sort of thing
The report lashes out at the monopoly rights given to Zespri, and at the co-operative structure of Fonterra (pgs 131, 132). Its authors do not share with us why these are bad things. We are just supposed to believe them.
In short, this report is flaky and lightweight, and is devoid of serious analysis.
I would like to know how much Brash and his fellow taskforce members were paid to write this rubbish. Can we have our money back?