ECONOMICS: Our Dipton Lad Dips Out

You can rule out one source of influence on the decisions of our Deputy Prime Minister and Minister of Finance: Bill English’s fondness for his home town of Dipton. This columnist once lived in Dipton and was taught at Dipton school – for just year. I crassly hoped this might count for something when, just before Christmas and the season of giving, I tried to secure an interview on economic advice, decision-making and what have you.
It didn’t. Trying to seek favour on the strength of having lived in Dipton and walked down English Road may even have been counter-productive. English declined to answer an emailed set of questions. His advice – according to his press secretary, Craig Howie – was that “Bill is happy for you to talk to others about this, rather than do an interview or comment himself.”
A politician refusing an interview? What’s up? Sure, he was busy at the time, preparing for the publication of the Budget Policy Statement 2010 and the December Economic and Fiscal Update but… Maybe he had become publicity-shy, too, at the end of year in which he often featured in stories about issues – such as his housing arrangements and haircuts – unrelated to fiscal or monetary policy management or the Government’s programme for hauling the economy out of the recession.
The question at the top of NZ Management’s list – about whether Treasury or the Reserve Bank has the upper hand in influencing policy – does offer scope for discussion and debate among the pundits of the capital. Yep. It could be buck-passed for others to answer. It seems odd, however, for English to tell journalist to bugger off and ask someone else who is the biggest influence on his policy-making and what, for him, was the year’s policy-making highlight.
But there we have it. He wouldn’t talk to me, so I got on as best I could with the job of finding out who he talks with and what influence they exercise. English unquestionably leaned heavily on the Reserve Bank during the global financial crisis, because of the banking implications and the need to keep an eye on prudential requirements. On economic policy more generally and fiscal policy in particular, the Treasury holds sway. Its involvement in monetary policy nowadays is limited but it was involved in advising on issues like the deposit guarantee scheme. It has some new duties, too. From November 3, 2008 it became responsible for the regulatory impact analysis work transferred from the Ministry of Economic Development.
Taskforces and working parties are another source of advice for English and the Government. Five of them have been on the go – the Regulatory Responsibility Taskforce (looking to improve law making and regulations); the 2025 Taskforce (looking at trans-Tasman gap-closing options by 2025); the Capital Markets Development Taskforce (investigating options for building and improving better capital markets); the Tax Working Group (wanting to re-balance the tax system in fiscally neutral way); and the National Infrastructure Plan (to set out the Government’s thinking and priorities for building productive infrastructure over the next 20 years). The Government will consider all of the taskforce/review ideas in the New Year and feed any decisions into preparation of the Budget.
Former Trades Union Council economist Peter Harris served as an economic adviser in Michael Cullen’s office when he was Minister of Finance. His counterpart in English’s office is Paul Dyer, once Treasury official and former chief investment officer at the New Zealand Superannuation Fund. Brian Dunne, seconded Treasury official, worked with English when he was in opposition and has stayed on.
The influence of business lobbyists is not so clear. One commentator thinks English is close to the farming community because his brother, Connor, is chief executive at Federated Farmers and the feds president, Don Nicolson, is constituent. But prominent lobbyist says not so, he doesn’t think English has any favourites among the business lobbies. And it’s worth noting that another brother, Mervyn, has been general manager at the Electricity Commission, an outfit that is being disbanded.
Whatever the influences, English can be characterised as the economic management conscience of the Cabinet. So was Michael Cullen in the early days of the Clark Labour-coalition government, of course, but as time went on he joined those who believe anything goes when it comes to staying in government. There was stubborn streak, too, about his pet projects: the Cullen Fund, KiwiSaver and so on.
In the upshot English has not, so far, been bold reformer. That’s disappointment to those who insist bolder moves are needed if the Government is serious about reaching its 2025 goal. But it’s early days and the minister from Dipton has had recession to climb out of. M

Bob Edlin is leading economic commentator and NZ Management’s regular economics columnist.

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