Is National Really Hands-Off Then?

In David Shearer's speech on Sunday he made much of National's "hands-off" approach to governing the country, comparing it to Labour's preference for a more interventionist "hands-on" approach.

There has been some debate about what the terms "hands-on" and "hands-off" really mean, and it appears that some within National don't like it when people use the term "hands-off" to describe National's style of government.

It's true of course that this government still has its hands on a whole lot of things, and will continue to do so. National can point to various spending initiatives to show that it is just as "hands-on" as Labour or the Greens would be.

But "hands-off" doesn't mean "do nothing" or "spend nothing". Every government is active in numerous areas. When David Shearer uses the term "hands-off" he is really talking about a mindset that influences almost everything John Key and his government do.

A hands-off government prefers market-based solutions to problems to those imposed by the state. State-imposed solutions require active interventions and active management by government, and these often require more regulation and more spending. A hands-off government looks for the private sector to take the lead, and will only reluctantly intervene in markets.

Political considerations will normally require a hands-off government to do things it would rather avoid, or to hold back from pushing ahead with reforms that would reduce its involvement in market activities. If a hands-off government becomes hands-on in a particular area, this will often be a result of lobbying from business interests who generally support the hands-off government's approach, but wish to have the benefit of the government's largesse for their particular sector. This explains why a hands-off government might still spend billions of dollars on a particular type of infrastructure, such as roads.

It's also important to understand what isn't mean by "hands-off". It doesn't automatically follow that a hands-off government will have a reduced part to play in everyone's lives. For example, a government can only achieve its desire to have a reduced role in the provision of welfare if it moves people off benefits. A hands-off government might achieve this by putting in place procedures that target people perceived as slackers or undeserving, but these procedures can have devastating consequences for people.

So is National really hands-off? In absolute terms the answer is no, because the National government continues to be involved in lots of activity. But relative to Labour and the Greens the answer is yes. 

Here are just a few examples of hands-off activity by National.

• National clearly has a preference for private ownership of assets over state ownership. An obvious example of this in action is the partial asset sale programme. The only thing preventing a larger asset sales programme is public opinion.
• National wants a smaller government and sees the public service as a necessary evil rather that a vital tool to transform the economy. Both John Key and Bill English regularly express the desire for a smaller public service, and National has taken active steps to reduce the number of public service employees.
• National believes that the state should not be involved in providing welfare or other entitlements to those in need except where absolutely necessary, because welfare results in dependency. Welfare reforms have focused on pushing beneficiaries off the government's books, when a more hands-on government might have instead focused more on finding work for those people.
• There is a mindset that people should self-insure wherever possible, rather than rely on the state to provide. The government's efforts to dismantle the ACC system are a good example of this mindset in action. The government has made no secret of the fact that it wants to open up some areas of accident compensation to private providers in the long term.
• National has actively sought to outsource the provision of many services traditionally provided by the state. For example, private prisons, Whanau Ora.
• John Key appears driven by an overriding belief that markets and businesses works best when governments don't interfere. This belief has resulted in further moves to deregulate the labour market, giving employers more freedom and flexibility, and reducing the influence of unions. e.g. the 90 day trial period law, the "Hobbit" law.
• National believes that private providers may be better at educating children than the state. This has led to the creation of a charter school system (albeit only a trial at this stage).
• National also believes that parents are better placed to provide for and make decisions about their children than the state. This manifests itself in a National Standards system opposed by educationalists, and the government's reluctance to implement a "food in schools" programme.
• National continues to show a reluctance to explore options for addressing New Zealand's volatile currency, such as giving the Reserve Bank more powers. The preference is to leave the currency markets to go where they may.
• John Key appears to prefer that the government does deals with private companies to provide infrastructure, rather than itself provide that infrastructure e.g. PPPs, the Sky City convention centre deal.
• There is a general unwillingness to look at serious tax reform as a tool to stimulate economic growth and encourage investment. Tax reforms have mostly been tweaks around the edges, and the readjustment of tax rates.
• There is also a belief that additional layers of government create complexity, delay and bureaucracy. This explains the establishment of the Auckland "Supercity", and the government's actions in the Canterbury region.
• National has a reluctance to intervene to address the nation's long-term problems, because long-term planning would require a more active government. John Key's refusal to take any action to address the problem of our ageing population is a good example.
• National is also reluctant to involve itself heavily in the housing market, although this may change if housing continues to be a hot political topic.
• Influencing almost every decision is an all-consuming focus on reducing government spending (and thus governmental activity) and meeting an arbitrary budget-surplus deadline, as opposed to continuing to run deficits in order to stimulate growth and encourage economic activity.
• National's broadcasting policy has at its heart a belief that the state really shouldn't be involved in broadcasting. This allows commercial players to do largely as they please, encourages monopolies, and provides very little funding for the few remaining state-owned broadcasters, who are encouraged also to behave like commercial players.
• The desire not to burden businesses with regulation has resulted in a reluctance to take active steps to protect the environment. Progress on protecting the environment has tended to be slow, and business interests have dominated policy-making. For example, the rewriting of the emissions trading scheme to favour polluters. 

Some people will argue that these kinds of hands-off activities are appropriate and desirable, and my aim with this post isn't really to argue that National is all bad and Labour is all good. 

But it should be obvious that, compared to Labour or the Greens, National is very much a hands-off government.