Manufacturing Crisis, Who to Believe?

The joint manufacturing report from the opposition parties was released at the same time that the Government was attempting to celebrate an economic upturn. For those who listen to the spin rather than looking at the detail it appears to be all rather confusing; the Government is celebrating an economic upturn that they claim is the result of their good management, while the opposition is claiming things aren't so good and major changes are needed.

It can't be denied that there is more economic activity than there has been in the previous few years but a closer look at what is driving this makes it clear that the recovery is patchy and probably not sustainable. Three main areas are supporting the current economic upturn; the Christcurch rebuild, Auckland's buoyant property market and our agricultural exports. If you are involved in the construction industry, property investment or the dairy industry, things are looking rosy, but if you are attempting to buy your first home or are trying to export high tech manufactured products then times are tough. This isn't a balanced recovery and the manufacturing report highlights the fact that if we want to really grow jobs and raise living standards in New Zealand then we have to do more to support our manufacturing sector. 

The government is supporting the easy money that is coming out of the dairy sector and is ignoring the fact that the industry may have already gone beyond a point of environmental sustainability. Rather than ensure that the existing dairy herds are being managed with minimal environmental impact, the government is spending up to $400 million on irrigation schemes and has decided to stop comprehensive environmental reporting. The recent drought was thought to be a precursor for future climate trends and for such a water dependent industry as dairying this should indicate some caution is needed when regarding future expansion. The number of jobs that will be generated from further growth in this industry may also be limited, farms are larger and less labour intensive and we seem to be employing greater numbers of imported workers. Due to the huge costs involved in buying and setting up dairy farms much of the income generated is profiting Australian Banks rather than increasing government revenue.   

The Christchurch recovery is also problematic in terms of broad benefits. Fletchers has a monopoly over the construction industry, and even more so with the demise of Mainzeal, and the lack of competition is causing delays, raising the costs of construction materials and driving down wages. The Canterbury region is also attempting to deal with the recent loss of over 4,000 workers from the industry and much of the needed workforce will be imported. Rather than most incomes of construction workers being spent locally, and boosting the domestic economy, many wage packets will leave the country. It also appears that the amount of money available to support the rebuild is being restricted with many insurance companies and EQC paying out less than what was expected and the Government is putting pressure on the Christchurch City Council to sell its assets. Rather than using an earthquake levy to help finance the recovery, as the Greens suggested, the Government has decided to continue to borrow and increase our already sizable public debt. 

The Auckland property market is seeing another bubble emerging with investors again seeing property as a lucrative area. At the same time we have a huge demand from lower income earners for affordable properties to buy or rent. With the Government supporting the reduction of compliance costs and opening up greenfield areas for development, we will still see developers continue to favour elite housing and support for a continuation of inflated prices. Already New Zealand's private debt is huge and the borrowing that will occur because of the current property boom will only increase as people are tempted to take on large mortgages.  

New Zealand desperately needs to develop a sustainable economy and the areas that are supporting the current recovery have obvious limitations. Investing more into high value exports would mean an increase in research and development and a growing demand for a skilled workforce. A stronger manufacturing sector would broaden our export base, leave us less reliant on one or two industries (the demise of one would be catastrophic).  The resulting growth of a higher skilled workforce would raise living standards, increase government revenue and boost the domestic economy. 

The major recommendations in the report just seem to be commonsense to me:

Recommendation 1: The government adopt macroeconomic settings that are supportive of manufacturing and exporting, including:

•   a fairer and less volatile exchange rate through reforms to monetary policy;

•   refocusing capital investment into the productive economy, rather than housing speculation; 

•   and lowering structural costs in the economy, such as electricity prices.

Recommendation 2: New Zealand businesses are encouraged to innovate. Research and Development tax credits, with a stronger emphasis on development, should be introduced as part of a package for innovative manufacturing, supporting exports and quality jobs.

Recommendation 3: The Government adopt a national procurement policy that favours Kiwi-made and ensures that New Zealand manufacturers enjoy the same advantages as their international competitors.

John Key and his Government are desperate to present a positive spin on the state of the economy, but in doing so they are not telling the full story and are promoting false hopes. It is good luck rather than good management that has got us through the last four years and it won't be long until even luck will be in short supply. With its huge investments in uneconomic motorways and subsidising the dairy industry (with its grand irrigation schemes and changing the ETS) it is obvious that no lessons were learned from the demise of Solid Energy. 

PaCT and the Devil

By announcing the mandating of the PaCT assessment tool in 2015, this Government has finally managed to line their National Standards' ducks in a row and satisfy a major element of their GERM (Global Education Reform Movement) agenda. This decision now means New Zealand will no longer lead the world with its child centered teaching and learning approach and will shift to a nationalised assessment regime that has failed in the UK, US and other countries ranked well beneath us. We haven't learned from the experience of others, including Australia, that found that national testing regimes did not have a positive effect on achievement.

The online PaCT tool (National Standards Progress and Consistancy Tool) was never designed, or initially intended, as a system of national assessment. It was designed as just another tool that teachers could use to check the accuracy of their overall teacher judgements. Many schools agreed to trial the system as they could see the benefits of having an online tool that could be used for some children and support the range of other assessments available to them.

The teaching profession has long recognised that a single assessment provides a limited perspective on a child's achievement and multiple measures provide broader coverage and will be more likely to establish the level a child is working at and what the next learning steps should encompass. It is important to recognise that no child is alike and certain assessments can be more useful than others when related to different children, especially in a multi-cultural country like New Zealand. Doctors do not rely on a single test to establish the overall health of patients and neither should teachers.

Once a single assessment is used to compare all children and schools and measure teacher performance  (as this PaCT tool will inevitably be used to do) we will create a high stakes system that will shift the focus from the needs of children. Despite the fact that other assessment systems will still exist PaCT will become the most important one and teaching will naturally shift to ensuring that children will do well in it. This will narrow teaching to the requirements of the test, and create high levels of stress for children, parents, teachers and schools. The potential that exists in our National Curriculum and its holistic approach will not be realised and important learning areas such as Science, Technology and the Arts will suffer further.

The current National Standards data (despite its flaws) just revealed what teachers already knew, achievement levels are closely related to the decile of the school and those children who are come from environments affected by poverty will do less well than kids from affluent backgrounds. Teachers and schools can make a difference but research has shown that of all the factors influencing a child's achievement, a teacher contributes only 10%.

When the PaCT results are aggregated into the inevitable league tables, and are used to compare schools, then the data will gain a significance well beyond what they really represent. Teachers and schools will be reluctant to take on children with high needs or those who will have a negative impact on test scores. Teachers will be reluctant to teach in low decile schools as unfair judgements will be made on their professional abilities based on the test scores of their children.

If this Government is really serious about their priority of lifting the achievement of Maori and Pasifika children and improving education delivery then they should invest in professional development and properly resourcing schools, not high stakes assessment systems. Mandating PaCT may sound perfectly reasonable to those not involved in education but the devil is in the detail.

Crisis Management Governance Failing

Listening to Tim Groser on Q+A this morning just emphasised how little forward planning this Government does. Despite being very open about the fact that we probably lack diplomatic capacity and admitting we need more mandarin speakers when dealing with China, it does make me wonder why more hasn't been done to rectify this before now. Whether it be Novopay or the certification blunder that held up our meat shipments, it was poorly performing bureaucracy that caused the problems. While the Government is quick to blame officials and claim that in retrospect things could be done differently, this doesn't absolve it from responsibility.

Since 2008 the National led Government has not focused on building capacity and performance in the state sector, but saving money. It has been apparent in all ministries and state departments that  reductions in funding have been based on arbitrary decisions rather than ones that have been strategically managed or based on performance reviews and future needs. The fact that many sacked staff have had to be re-employed as expensive consultants to cover skill deficits supports this view. Arbitrary cost cutting often results in unintended consequences that then have negative economic impacts.

This Government also seems to think that improving the capacity of our state services is just about telling people to work harder and getting tougher on those who don't perform. Many state service CEOs have been employed to manage cost efficiencies rather than lifting performance and this was especially true for ACC chief, Ralph Stewart, who did exactly as he was asked to do in reducing expenditure but had to resign because of the human consequences. Lesley Longstone's short stint as the Secretary of Education came to an abrupt end because she was employed to implement private models of education but had no understanding of our public system.

If one wants to lift performance of a department or sector there has to be an understanding of what needs to be done and that there are appropriate levels of skilled staff to do the work. It is up to Government Ministers to ensure that they are up to speed with their portfolios and ensure they have the necessary information on which to base decisions. They are also charged with employing the right people into leadership roles. It is not just Lesley Longstone or Ralph Stewart's fault that things turned to custard under their leadership, much of the blame should rest with the Government that employed them in the first place. The Government has seriously misjudged what was really important for the effective management of ACC and Education. In both cases an ideological stance had influenced the appointments rather than an informed approach based on readily available evidence.

Too many decisions are now reactionary ones resulting from a crisis and a little bit of prior planning and prioritised investment would have avoided costly emergency measures. We see the human consequences of an under-skilled and poorly staffed  EQC, we are seeing a $24 million blowout in costs related to Novopay, we are having a housing crisis that needs attention and we are urgently having to feed thousands of children arriving to school hungry. In each case the crisis could have been predicted and much of it averted if we had acted faster and were properly prepared. The biggest of all crises confronting us is climate change and again delaying action will only cost us dearly in the future.

Hekia Parata, Mid Term Report

Hekia Parata stepped her high heels gingerly over of what remained of New Zealand's public education system (battered by funding cuts, Novopay failures, sacked advisory services, recent closure announcements, bullying implementation of ideological systems and a struggling Ministry) and sat before microphones and cameras. With practiced composure and a broad smile she announced that the latest National Standards results revealed a "small but incremental increase in reading, writing and mathematics".

The way Parata presented the information one could believe that the data arrived from the heavens and was inscribed in stone and was not derived from roughly moderated teacher judgments and testing systems that had recently been scaled upwards. For all we know the small but incremental increase could just as easily have been a 10% drop in achievement, the data is so flawed.

For teachers to hear this Education Minister appearing to take credit for the apparent gains in achievement and then condescendingly suggesting areas that needed improvement, it was almost too much to bear. Most of us would love to present a report on the Minister's own achievement and I have constructed my own here (based on real evidence):

MID TERM REPORT 

Name: Hekia Parata

Level: Minister 

CONSULTATION: Well below the standard (see Ombudsman report) 

EVASIVE ANSWERS: Well above the standard (see recorded example)

STAFF MANAGEMENT: Well below the standard (difficult relationships in office and Ministry)

SPECIAL NEEDS: Well below the standard (Salisbury School judicial review)

PRIVATE SCHOOLS: Well above the standard (always given priority over public schools)

MAORI / PASIFIKA: Well below the standard (many successful initiatives had funding cuts)

LEADERSHIP / OVERSIGHT: Well below the standard (Novopay glaring example)

Comment: Hekia Parata has an excellent vocabulary and is an expressive speaker but she needs to understand that her speeches still need substance and she must try harder to connect with her audience. Hekia has been accused of bullying behaviour and needs to develop greater empathy for those less fortunate than herself. Hekia must take responsibility for her own actions and remember that great things can happen through co-operating with others.

Climate Losing to Partisan Politics

The news event of the moment is whether Peter Dunn really did leak confidential information or did he just momentarily let his guard down because of the attentions of a young female journalist. While politicians and journalists are falling over themselves to take advantage of the situation or catch the next piece of juicy gossip, worrying stuff is happening elsewhere.

Extreme flooding has hit central Europe effecting Poland, Germany, Czech Republic and Austria. Flood waters four times higher than normal have resulted in many deaths and tens of thousands having to leave their homes. People have described unusual tropical weather during a period that is normally very dry.

A series of devastating tornadoes are wrecking havoc through the central US only days after dozens were killed by a massive twister in Oklahoma.

The past year has seen multiple weather records:

• Jerusalem saw more snow fall than over a decade and heavy rain saw flooding in parts of the Middle East.
• The Australian Bureau of Meteorology reported the hottest temperatures ever recorded and had to invent a new colour for the weather maps to accommodate temperatures over 50 degrees celsius.
• China recorded its coldest Winter in decades with temperatures regularly below -40. 
• In the first week of January Northern India suffered extreme cold causing the deaths of over a hundred people.
• Southern Brazil and Northern Argentina experienced temperatures amongst the hottest ever recorded.
• New Zealand experienced one of our worst ever droughts and farmers are being advised to begin expecting such events as "the new normal".
• 2012 was declared as the wettest Britain has experienced since records began.

The volatility of the world's weather has seen events that were once considered as something occurring every hundred years happening several times over the past decade. The climate change that scientists have been warning about is actually being experienced ahead of predictions. With carbon levels in our atmosphere passing 400 ppm in May, we are now well past the 350 ppm that was assessed to be the safe upper limit to avoid a climate tipping point. 

Despite the scientific evidence and the physical realities of the dangerous situation we are in, most world governments are still supporting the fossil fuel industry that is causing most of the atmospheric damage. One of the worst Governments is our own. We have now abandoned Kyoto, made the ETS totally ineffective, allowed cheap carbon units into the country and are actively creating new coal mines and subsidising oil exploration.

Kennedy Graham is resolutely questioning the Government's policies around climate change and continues to get a similar answer: why should we sacrifice our economy when other countries pollute more than us? The fact that we have one of the worst levels of emissions per capita is conveniently ignored. Kennedy has even presented a strong economic argument to show that the effects of climate change is actually costing economies far more than the measures that would mitigate it, but to no avail.

Kennedy convened a conference on climate change last Friday (7 June) where he had invited leading scientists, farmers, politicians, foresters and business people. This was a well attended and informative conference and yet National MPs refused to attend. Kennedy was disappointed at their attitude and had the view that because Climate Change is a global ecological crisis, it is far more important than petty partisan politics.

Bob McKibben, founder of 350.org is currently touring New Zealand with his documentary "Do the Math" where he demonstrates that the numbers that describe our current situation can't be ignored. This is a not to be missed event if you really care about our future:

▪    Auckland – Tuesday, 11 June, Epsom Girls Grammar School Hall, 7-8.30pm

▪    Dunedin – Wednesday, 12 June, venue tbc

▪    Wellington – Thursday, 13 June, The Embassy Theatre, 7-8.30pm

Many smaller centres are setting up video links or showing the documentary and I will be attending the Invercargill showing tomorrow evening.

Greens Play Hardball!

We are six months away from election year and the political missiles are already being fired thick and fast. The fact that the Green Party is being heavily targeted by both National and right leaning journalists is a good sign that our Party has finally made it as a political force. We should be celebrating.

The last two elections it was difficult to get any media time at all and even though we ran a strong campaign and were the third largest party in 2011, it was Winston who hogged the TV with his drip fed revelations about the "tea cups" saga.

During the last election National flirted with the Greens as a potential coalition partner, they actually saw us as a more stable and rational group than the fractious Act Party and for three years our memorandum of understanding delivered some useful stuff (including home insulation, cycle tracks and the Tui Mine clean up). Our Party hasn't changed but National's tactics have. When we publicly declared an interest in a coalition with Labour, National almost wiped the home insulation scheme and, despite its obvious success, has scaled it back (it is interesting that they often mention the scheme as one of their main strategies to deal with poverty).

Now the Greens can do nothing right in the eyes of National Party Ministers, every other answer during question time ends with a derogatory reference to the Greens. It is obvious that they see us as a real threat.

The attacks on the Greens are verging on hysterical, especially when most of the policies we espouse are actually fairly mainstream and most have already been adopted by other OECD countries. It is National that is actually beginning to look out of step with the rest of the world. Whether it be a Capital Gains Tax, bank deposit insurance, addressing child poverty, the Kyoto Protocol, or even Quantitative Easing the possible solutions promoted by the Greens are widely used and conventional responses.

There have been extreme and bizarre reactions from Key and his Ministers, rather than directly comment on the Green solutions they have resorted to personal attacks and abuse. While Key is happy to defend and support John Banks, he feels comfortable referring to the Greens as "wacky, extreme, unusual". The Green's plan of managing electricity pricing was likened to something out of North Korea and was called "barking mad". Strangely the Government supports a very similar system in Pharmac, to manage prescription drug prices.

One National MP even accused the Greens of being dishonest because we were straying from our supposed core role of just commenting on environmental issues. He expressed the view that we had no mandate to meddle into social policy or economics and should stick to saving trees and snails.

It has been most entertaining to see the responses to Russel's AGM speech when he likened Key to Muldoon, it was very much the reaction one would expect when a playground bully meets someone who hits back. Russel got a similar response when he dared question the impartiality of Dr Brent Layton. It appears that the Green Party's refusal to turn the other cheek when under attack has unsettled many.

National is also desperately trying to label the Greens as "far-left" and the word communist is often used on right wing blogs. This is scaremongering in the extreme and one wonders if the dancing cossacks will make another appearance (yet another similarity between Key and Muldoon?). While Russel Norman is being widely lauded for being able to understand and articulate mainstream economics and business spokesperson David Clendon is traveling around the country supporting private enterprises, the far-left tag seems well off mark and a little desperate.

It isn't just Russel who has unsettled the Right, our Co-leader Metiria is also standing firm. Her blistering attack on John Banks and his Charter Schools gave him some of his own medicine (he regularly makes personal attacks on the Greens in his speeches) and he didn't like it. Interestingly his sexist references to Metiria's appearance were upheld by the speaker despite most women in the chamber standing because of the offense it caused.

All Green MPs are delivering intelligent and well researched rebuttal of the Government's failing policies and National is unable to respond in a similar vein.

By amalgamating the messages of the hysterical right we can summarise their spin:

The watermelon Greens led by a ginger headed Australian communist and his lipstick covered co-leader and their team of old fogies and young dudes are planning to subject the country to policies developed in North Korea. The Greens are going to use photocopiers to print truckloads of money and subject the country to other wacky and barking mad schemes. The Greens are devious and nasty and should never be given the reins of power. 

While National's loyal followers believe every word of this nonsense and repeat it ad nauseum, most thinking voters will see it for what it is, the desperate dying throes of a Government well passed its use by date!
 

National Led Government Imploding!

Each question time in Parliament sees a more desperate National Party as mistakes and bad legislation become harder to defend. The arrogant, dismissive answers of the past are less confident and a slight shrillness can be detected. It is also becoming more evident that National's caucus lacks depth and competence and is being held together by a few. To top it all National's coalition partners are evaporating.

John Banks was obviously the first to falter, even if he survives his current trial his reputation has taken a severe hit and the Act Party is almost a memory only.

The Maori Party has practically lost its mana from being National's lap dog for too long. The once respected Pita Sharples appears to be more interested in the baubles of office than opposing legislation that is forcing his people into into deeper poverty. Disillusioned Maori are leaving the Maori rolls in despair and those with political ambition are returning to Labour or switching to Mana or the Greens.

United Future was always Peter Dunn but recent developments have seen his Party die due to lack of numbers and the previous "Mr Commonsense" has had to resign as a Minister through a bizarre lapse of judgement. It is now unlikely that he will get enough people to get United Future reregistered and his own future as an MP seems all but over.

It is highly possible that National may still get more votes than other parties in 2014, but as the only substantial party of the right it will not have enough to govern alone. Their brief flirtation with the Green Party in 2011 has been abandoned and they now spend more time attacking the Greens than Labour. Their only options now are New Zealand First or the Conservative Party and, given the unpredictability and polarising nature of both Peters and Graig, this must be a little galling.

National were re-elected largely because of John Key's popularity as Prime Minister, however his teflon suit is losing its sheen as more people are becoming aware of his unseemly behaviour in the House and his re-occurring memory lapses. His penchant for using legal technicality rather than ethics when guiding major decisions and his dodgy back room deals are even causing discomfort for National supporters.

Deputy Prime Minister, Bill English, lost much respect early on when it was revealed he was double dipping regarding his housing allowance. His lack of judgement in the GCSB debacle and being one of the Ministers who signed off the Novopay implementation has not helped him either. While English is still regarded by many as a competent Minister of Finance, he is struggling to convincingly answer Russel Norman's probing questions. His obsession with "balancing the books" is the causing much collateral damage.

Gerry Brownlee has not provided strong oversight of the Christchurch recovery and we have regular revelations of a struggling EQC and families suffering great hardship through unnecessary delays. When the pressure is on, Brownlee tends to lash out at critics rather than addressing the concerns.

We are seeing numerous National Ministers struggling with their portfolios and needing support from "Mr Fixit", Steven Joyce. Hekia Parata has rarely put a foot right as Education Minister and has been forced to backtrack on many decisions. Her ongoing refusal to follow good process or properly consult have seen judicial reviews and Ombudsmen findings come out against her. Despite her evasive answers and ability to speak extensively without providing anything of substance, Key insists on calling her a great communicator and still supports her as Minister.

National is desperate to achieve something positive for other than the top quintile of earners, who are the only group really benefiting from this Government. It is only the fact that that their spin is still being largely accepted by the MSM and that Labour is struggling to fire that they have managed to continue polling in the mid 40s.

All of National's election platforms are shaky or collapsing:

• Welfare reform: Combined with low wages, reforms that encouraged beneficiaries into any work have forced many into casual low paid jobs and this has created a new and growing demographic, the working poor. Welfare reform has actually just resulted in subsidising wage bills for major employers.
• Fossil fuel extraction: This formed the major part of the Government's Energy Strategy, rather than a shift to supporting renewables and alternative energies. Its encouragement of Solid Energy's grand plans for coal and lignite saw the eventual collapse of the SOE and a debt of almost $400 million. Petrobas' abandonment of it's exploration permits was also a major blow.
• Raising academic achievement of Pasifika and Maori children: This was never sincerely supported and instead most funding changes have favoured the private provision of education. Money has been cut from proven schemes to support Maori and Pasifika children and has gone instead to bailing out Wanganui Collegiate and supporting the dodgy Charter Schools. The failure of National Standards to lift achievement has possibly led to a dumbing down of testing systems to fabricate a sense of success.
• Restructuring state sector: While essentially just an attempt to cut government spending the opposite has occurred. Redundancies have cost millions, and consultants spending has sky rocketed. The wisdom of forcing experienced staff out of ministries and departments has seen an erosion of services, numerous privacy breaches and expensive mistakes like Novopay. 
• Selling state assets: was probably a desperate attempt to recover some of the $8 billion of income lost when they cut taxes to the wealthy. This is a hugely unpopular initiative that has seen assets owned by all New Zealanders shift into the ownership of a few. 
• Motorway development: The Roads of National Significance were decided on before any cost benefit analysis and the proposed $12 billion is largely going into roads that will never see a positive return. Meanwhile regional roads are deteriorating through lack of funding and Auckland's much needed rail loop is not being supported. The lack of a comprehensive transport plan is becoming increasingly evident as most funding is directed at developments that support only 4% of total traffic. 

National is desperate to label the Greens as supporting far left economic policies but it is becoming increasingly evident that the rest of the world has shifted while National stubbornly holds onto failed Neoliberal ideas. 

Any minor economic recovery or increase in jobs is occurring despite this Government, not because of it,  and this National led Government is rapidly imploding through the weight of its own incompetence.