Volume 10 – Issue 2 – May 2014

Restoring What? The practice, promise and perils of restorative justice in New Zealand Picking up the Pace in Public Services Chris Marshall 3 Al Morrison 43 ‘A Fair Go’ in Public Policy Climate Change: towards policy coherence David Bromell 12 Adrian Macey 49 Lifting New Zealand’s Productivity – a Reflections and Outlook for the New Zealand research agenda ETS: must uncertain times mean uncertain Patrick Nolan 22 measures? Overview of the New Zealand National Jessika Luth Richter and Lizzie Chambers 57 Integrity System Assessment 2013 Collaborative Planning for Freshwater: Liz Brown 30 the challenge of a new paradigm The Open Government Partnership: what Jim Sinner and Natasha Berkett 67 are the challenges and opportunities for Reflections on the Life of Kenneth William New Zealand? Piddington (1933–2014) Michael Macaulay 36 John R. Martin 73 Editorial Note This issue of Policy Quarterly commences with two explores what ‘a fair go’ means in practice and how it articles on the critical and enduring quest for a just might be achieved. Given the current public concern in society – ‘just’ in its varied and manifold dimensions. New Zealand about matters of inequality and poverty, Volume 10 – Issue 2 – May 2014 The lead article is the inaugural lecture by Chris his analysis is highly pertinent and deserves careful Marshall – the first Professor of Restorative Justice in reflection. Policy Quarterly (PQ) is targeted at readers the School of Government – on the question: ‘Restoring The remainder of this issue of Policy Quarterly in the public sector, including politicians and What? The practice, promise and perils of restorative examines three very different sets of issues. First, Patrick their staff, public servants and a wide variety of justice in New Zealand’. Marshall’s answer engages Nolan explores New Zealand’s poor productivity record professions, together with others interested in with the approach of the American judge, Ross London, and what to do about it. In particular, he summarizes public issues. Its length and style are intended in the recent book Crime, Punishment, and Restorative the nature and initial findings of the Forward Looking to make the journal accessible to busy readers. Justice. According to London, the overriding goal of the Agenda of Research (FLARE). The main purpose of FLARE The journal welcomes contributions of criminal justice system – and hence of all sentencing and is to produce an agenda to aid in the coordination and about 4,000 words, written on any topic punishment – should be to restore trust in the offender collaboration of research work on understanding and relating to governance, public policy and and in society. This approach rests on a fundamental improving New Zealand’s productivity performance. management. Articles submitted will be proposition – that the principal harm of crime is the Second, aspects of public management are explored reviewed by members of the journal’s Editorial loss of trust. As Marshall argues, “This loss is only so by three contributors. Liz Brown examines the findings of Board and/or by selected reviewers, depending devastating a problem because we are irreducibly social the National Integrity System Assessment conducted by on the topic. Although issues will not usually creatures, who only ever exist in an intricate network of Transparency International New Zealand during 2013. Her have single themes, special issues may be relationships. The malice of intentional wrongdoing serves argument, in short, is that “serious and urgent action” is published from time to time on specific or to violate the trust on which these relationships depend.” needed to protect the integrity of our governmental and general themes, perhaps to mark significant Viewed from this perspective, the policy challenge is to non-governmental institutions, systems and processes; events. In such cases, and on other occasions, devise a criminal justice system that helps to heal broken there is no room for complacency. contributions may be invited from particular relationships and re-establish trust. But how? The answer, Next, and closely related to the theme of integrity, people. Marshall contends, resides in the principles, priorities Michael Macaulay considers the Open Government Subscriptions: The journal is available in PDF and practices of restorative justice. These include, for Partnership (OGB) – established in 2011 and comprising format on the Institute for Governance and example, encounters between victims and offenders, 63 nations – to which New Zealand signed up in late Policy Studies (IGPS) website: http://igps. truth-telling, accountability, confession, contrition. Only 2013. The OGP has two dimensions. At the national level, victoria.ac.nz/publications/publications/list/10. through such methods, it is argued, can genuine healing, it involves a partnership between governments and Readers who wish to receive it by email should forgiveness, and reintegration be promoted. Only in this civil society organisations to effect reforms in various register as PQ subscribers [email protected]. way can real trust be restored. areas. Globally, it provides a platform for nations to This service is free. Marshall recognises, of course, that incorporating the share good ideas and practice, and collaborate in areas For all subscription and membership principles of restorative justice into the criminal justice of transparency, integrity and public safety. Macaulay enquiries please e-mail [email protected] or system is neither simple nor without risk. As he argues, crisply summarizes the history, goals and targets of post to Institute for Government and Policy “Peril exists on all sides. Restorative justice is imperilled the OGP and explores how New Zealand might meet its Studies, P.O. Box 600, Wellington. by the possibility of institutional capture and control, and obligations under the partnership. Electronic Access: The IGPS directs by the dilution of its distinctive values. The justice system The third piece with a public management focus interested individuals to its website: www.igps. is in peril of having its adherence to procedural fairness is by Al Morrison, a Deputy Commissioner within the victoria.ac.nz where details of the Institute’s and equality of outcome compromised by idiosyncratic State Services Commission. His article briefly reviews publications and upcoming events can be and potentially anarchic restorative justice processes. the efforts of various governments over the past three found. Both threats are real, though they may often be decades to enhance the performance of New Zealand’s Permission: In the interest of promoting debate exaggerated.” Nevertheless, he concludes with the hope public sector, before turning to the recent policy initiatives and wider dissemination, the IGPS encourages “that, in this wonderful country of ours, ever conscious of under the Better Public Services reform programme. use of all or part of the papers appearing in the perils entailed we may continue to work together – as These initiatives include measures to enhance inter- PQ, where there is no element of commercial practitioners, policy makers, politicians and ordinary agency collaboration, strengthen the quality leadership gain. Appropriate acknowledgement of both citizens – to move the vision of restorative justice, and all and improve the quality of services and the stewardship author and source should be made in all cases. that it promises, from the margins of our consciousness of resources – all worthy goals, but will the reforms The IGPS retains copyright. Please direct to the mainstream of how we live together in society, in deliver? requests for permission to reprint articles from faith, hope and charity.” The next set of three articles focus on different this publication to [email protected]. Professor Marshall now has the daunting challenge, aspects of environmental management: Adrian Macey Editors: Jonathan Boston and Bill Ryan but also the wonderful opportunity, of using his wealth of outlines a strategy for enhancing New Zealand’s efforts to Editorial Board: Guy Beatson, David Bromell, expertise, scholarship and experience to help policy- mitigate climate change; Jessika Luth Richter and Lizzie makers extend and improve the practice of restorative Chambers discuss the development and performance Valentina Dinica, Don Gray, Gerald Minnee, justice, both within this country and beyond. Such of New Zealand’s Emissions Trading Scheme, drawing in Mike Reid and Andrea Schollmann. practices are relevant, of course, not only in the criminal particular on the results of a survey conducted in April ISSN: 2324-1098 (Print) justice system, but also across many other important 2013 of stakeholders’ perceptions of the scheme; and ISSN: 2324-1101 (Online) areas of human endeavour such as education, health Jim Sinner and Natasha Berkett explore the potential for Volume 10, Issue 2 – May 2014 care, the social services, and defence and international collaborative planning in the management of freshwater Copy Editor: Rachel Barrowman relations. It has been encouraging in recent years resources, especially in New Zealand. Design & Layout: Aleck Yee to witness the strong interest in many government Lastly, John Martin pays a warm tribute to a talented, Cover Design: Aleck Yee/Alltex Design departments and agencies in the idea of restorative dedicated and far-sighted New Zealander, Ken Piddington. Production: Alltex Design justice. Hopefully, this will provide a firm foundation of Ken made a huge contribution to public life over many Proof Reader: Vic Lipski support on which Professor Marshall can build. decades, including during his later years as a Senior While Marshall’s article focuses on the concept of Associate of the former Institute of Policy Studies. He will restorative justice, the next piece, by David Bromell, is be greatly missed. devoted to a related and equally important idea, namely ensuring that everyone in society has ‘a fair go’. With Jonathan Boston his usual analytical flair and sharp insight, Bromell

Page 2 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Chris Marshall

Restoring What? The practice, promise and perils of restorative justice The conventional justice system, he knew, has its merits. Evolving over centuries, it has proved reasonably effective in in New Zealand keeping crime under tolerable levels of control, while at the same time giving place to an ever-expanding body of basic human rights. Yet, reflecting on personal Introduction experience London was left, even on his In the opening pages of his recent book Crime, Punishment, better days, with a hollow feeling inside, a feeling that the system was not actually and Restorative Justice, American author Ross London achieving much good at all. tells of what prompted him to embark on the journey Despite the efforts of many brilliant of discovery that led to the writing of the book.1 After minds and the expenditure of vast sums, we have managed to more than 25 years of professional involvement in the create a criminal justice system that transforms innumerable criminal justice system as an attorney, a public defender personal misfortunes into yet and a municipal judge, London found himself asking the other calamities. Victims, who have suffered the trauma of crime, enter question: ‘Is this the best we can do?’ the portals of this system with high expectations of justice, only to find themselves wandering its halls Chris Marshall is the inaugural Professor of Restorative Justice in the School of Government at Victoria University of Wellington. Professor Marshall has published widely in the areas of New feeling bewildered, unfulfilled, and Testament studies, Christian ethics and restorative justice. used. For those accused of a crime,

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 3 Restoring What? The practice, promise and perils of restorative justice in New Zealand

entry into the system portends the break the cycle of crime, blame, and theorists are yet to adequately bridge the beginning of a personal nightmare punishment. (ibid., pp.2-3) gap between informal justice (that is, the of dehumanization, ruinous financial private justice of personal encounters losses, and unending suspicion … As Searching for answers, London took between individuals in conflict) and a criminal justice professional, I came himself back to graduate school to study formal justice (the demands of the public in contact with hundreds of human criminology. Criminologists, he found, justice system, which must operate in the beings caught up in this labyrinth. had lots of interesting things to say interests of society as a whole) (p.20, cf. Time and again, I saw the same look about crime, but shared little agreement pp.41-56, 161-206). Until it finds a way to of despair on those who emerged on its causes or on how best to reduce reconcile these two domains, restorative from the process, embittered, it. Detached from the real world of justice risks remaining on the sidelines exhausted, and defeated. (London, legal practice, they proposed theories of of the criminal justice system, doomed 2011, p.1) punishment that bore no relation to ‘the ultimately to irrelevance and marginality. reality of sentencing practice I had seen To help overcome this dilemma, Pondering this dismal state of affairs, in every courtroom I had ever entered’ London offers his own recipe for how London decided that the American (p.5). He also found that, as a breed, restorative justice can move ‘from the criminal justice system is ‘fundamentally criminologists tended to be even more margins to the mainstream’. Some of his flawed’. The problem is not with the cynical and confrontational than are the proposals are peculiar to the American people who administer the system. most hardened trial attorneys. system, and there are features of his Judges, he notes, with precious few But some good did come of analysis with which I would take issue. But exceptions are no fools. The problem is his induction into criminology: he in building his case London introduces one fresh, overarching concept to the debate that I have found particularly ... a good case can be made for commencing the helpful, and to which I will return in due course. First, however, let me locate the modern restorative justice story [is] Canada in debate in a broader historical context. 1974, where a Mennonite probation officer, Mark Emergence of restorative justice Yantze, and a volunteer prison worker, Dave Worth, The whakapapa of the restorative justice movement is complex and disputed, with ... took two young men ... to meet their victims to different scholars tracing its emergence discuss reparation and to offer to do community to different influences. This is hardly surprising. Social reform movements work. nearly always have fibrous root systems rather than a single taproot: they are with the adversarial nature of the system encountered the work of Howard Zehr shaped by a wide array of historical forces itself, with its ‘winner takes all’ approach and John Braithwaite and their ‘beguiling’ and draw sustenance from a diversity of to litigation in which success for one side notion of restorative justice. Immersing sources. Nonetheless, a good case can invariably means defeat for the other, himself in their writings, and of others in be made for commencing the modern and a defeat of sometimes crushing the so-called restorative justice movement restorative justice story in Canada in 1974, proportions. – which he characterises as ‘a veritable where a Mennonite probation officer, “Noah’s ark” of criminal justice critics, Mark Yantze, and a volunteer prison It seemed to me that, in devoting idealists, and reformers’2 – London worker, Dave Worth, with permission all of its efforts to the tasks of concluded that ‘the original visionaries from the sentencing judge took two young determining culpability and of restorative justice have bequeathed to men who had vandalised 22 properties imposing sanctions, the criminal the world a wonderful gift: an idea to in their small town to meet their victims justice system had succeeded in transform criminal justice as we know it’ to discuss reparation and to offer to do becoming an efficient instrument for (pp.6, 269). It is an idea that has ‘engaged community work. After the meetings, condemnation and exclusion, but the energies and excited the hopes of the judge ordered the youths to pay had utterly failed as an instrument criminal justice reformers throughout the restitution to the victims as a condition of of healing and reconciliation. The world over the last several decades’, and probation. system that had evolved as a powerful will continue to do so (p.315). But it is That experience led to the birth of instrument for apprehending also an idea, London says, whose potential the first ‘victim offender reconciliation criminals, assessing blame, and remains seriously under-realised – partly program’ – or VORP – which was imposing punishment was oddly because of the ideological blind spots established in Kitchener, Ontario in 1976, indifferent to the need of the victim, and romantic illusions of some of its and two years later in Elkhart, Indiana. As the offender, and the community to proponents, and partly because restorative the name suggests, the aim of VORP was

Page 4 – Policy Quarterly – Volume 10, Issue 2 – May 2014 to bring victims and offenders together, hundreds of scholars working in the field, transgressions and needs of their young with a mediator, to talk about the wrong dozens of conferences held every year, people. It was not, as is sometimes that had been done and to discuss how it and mountains of secondary literature claimed, a conscious attempt to recover could be repaired, thus hopefully paving that grow higher by the day. Mäori customary practices for dealing the way for reconciliation to occur. The speed with which all this has with family or tribal conflict; rather it Intellectual capital for this new approach, happened is quite extraordinary. Clearly was a bureaucratic endeavour to provide which was soon being replicated elsewhere there is something about the idea of a simpler, more flexible, and culturally in America, came principally from reframing or reimagining the criminal more appropriate way of processing the work of criminal justice historian justice problem in relational and reparative young offenders. Howard Zehr. In the training manuals, terms, rather than in solely legal and It was also not a conscious attempt to promotional materials and other retributive terms, that has resonated with introduce restorative justice philosophy literature Zehr produced, a new way of people all around the globe. The reason it into the mainstream system. The working thinking and talking about the problem has done so, I suspect, is that the notion party that crafted the legislation had no of crime and the requirements of justice of restorative justice signals that justice is awareness of restorative justice theory began to take shape, though it was not about concrete change. It is not just about as it was emerging overseas. It was only initially called ‘restorative justice’. abstract principles, or legal doctrines, or after Youth Court judge Fred McElrea The programme flourished over human rights, or metaphysical beliefs; it encountered Howard Zehr’s work during the next 15 years, and began to attract is about changing things on the ground. a period of sabbatical leave in England in international attention, especially after True justice restores what has been lost; 1993 that FGCs began to be hailed as an the publication of Zehr’s influential 1990 book Changing Lenses: a new focus for crime and justice. In 1994 the victim– ... [a New Zealand] Youth Court judge Fred McElrea offender mediation process was endorsed by the American Bar Association, and encountered Howard Zehr’s work ... in 1993 that the following year by the National Association for Victim Assistance. By the FGCs began to be hailed as an internationally end of the 1990s the idea of restorative unique example of state-sponsored restorative justice had become familiar to criminal justice reformers and scholars all around justice, and on a colossal scale. the world, and it is today considered one of the most fertile fields of criminological thought. It has been called one of the ‘big it rectifies or repairs what has been internationally unique example of state- ideas’ in contemporary justice studies, broken; it transforms people’s lived sponsored restorative justice, and on a and even the most significant innovation experience. That way of conceiving of colossal scale. Whether that is true or in the administration of justice since justice intuitively makes sense to people, not depends on how strictly one defines the emergence of the nation state (see even if they do not know how to define it, restorative justice. But there can be little Marshall, 2012, pp.4-7, 301-3; also or describe it, or achieve it in practice. doubt that the participatory, whänau- Johnstone, 2012, pp.1-8, 133-59). based format of the FGCs was well suited What began, then, as a trickle near New Zealand’s chapter in the story to producing restorative outcomes, and Toronto has since become a torrent. There Within this larger narrative of origins the impact of the new system in reducing are over 400 victim–offender mediation Aotearoa New Zealand has its own incarceration rates of young people was schemes in the United States alone, and chapter to tell. This, too, is a complex and dramatic. Many other countries have a comparable number in Europe. It perhaps disputed story, which there is no since followed New Zealand’s lead in is estimated that similar programmes space to lay out in detail here. But two this innovation, and we are still regarded now exist in over 100 countries, with key ‘moments’ are worth noting. The first internationally, rightly or wrongly, as more and more governments showing was the passing in 1989 of the Children, something of a mecca for good youth interest in the potential of restorative Young Persons and Their Families Act, justice policy (MacRae and Zehr, 2004; justice to curtail crime and reduce its which mandated the use of so-called Lynch, 2012). costs to society. Significant multinational ‘family group conferences’ – or FGCs The second key moment in the New bodies, such as the United Nations, the – for all young offenders (except those Zealand story was in 1994 when Judge Council of Europe and the European guilty of murder or manslaughter). This McElrea invited the Reverend Douglas Union, have issued conventions calling was an entirely new mechanism, intended Mansill, a Presbyterian minister in on member states to develop restorative to, among other things, recognise the Auckland, to facilitate the first adult options and specifying standards of good rights of children, honour Treaty of restorative justice conference, based on practice. Academic engagement with the Waitangi obligations, and allow families the FGC precedent. Other conferences subject has also exploded. There are now to take leadership in dealing with the soon followed, and within the space

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 5 Restoring What? The practice, promise and perils of restorative justice in New Zealand of a few years community groups of the ever-widening range of application of In fact, contrary to what most voluntary facilitators, beginning with Te restorative justice principles and practices, people assume, research confirms what Oritenga in Auckland, had sprung up which creates significant problems for practitioners know to be true from all over the country, offering restorative defining the field and distinguishing its experience: namely, that restorative justice services to their local courts, with normative features. The question ‘What is justice is most effective when the crime the support of sympathetic judges. This restorative justice?’ is actually becoming is most serious. The greater the trauma remarkable groundswell of community- harder, not easier, to answer as time involved, the more powerful restorative based activism, together with the backing passes. The second trend is the mounting approaches can be (Strang and Sherman, of key political and judicial figures, led interest governments are taking in 2007, pp.21, 37, 68, 70, 75). Indeed, in the to a four-year-long court-referred pilot restorative justice, which raises the knotty most recent survey of research, published scheme trialling the use of restorative issue of how restorative justice can be in November 2013, the authors conclude justice conferencing for adult offenders integrated into the mainstream system of that ‘there can be high confidence of in four district courts (2001–04). It also social control and punishment without good results with violent crime, and enabled the incorporation of the first compromising its ideals or blunting its somewhat less confidence with property explicit reference to restorative justice radical edge. Both these trends are widely crime’, so that the common strategy of in four key pieces of legislation: the discussed in the academic literature, and ‘banishing restorative justice conferences Sentencing Act 2002, the Parole Act 2002, in the practitioner community, so let me to low-seriousness crimes is a wasted the Victims’ Rights Acts 2002 and the say something more about each. opportunity. If governments wish to fund Corrections Act 2004. Over the ten years restorative justice at all, this evidence suggests the best return on investment will be with violent crimes, and also Some theorists place predominant emphasis on with offenders convicted after long prior histories of convictions’ (Strang et the noun ‘justice’, and limit restorative justice al., 2013, p.48; also Joudo Larsen, 2014, to a particular way of pursuing justice after the pp.vii, 10, 23, 32, 33). As well as an expanded reach within occurrence of a crime, one which focuses on a the justice system, there has also been a remarkable outward ‘migration’ of respectful, facilitated encounter between victim restorative practices into other spheres and offender. of social life, where they have been used to address more everyday problems: disruptive behaviour in schools, anti- social activities in the community, since, government has continued to fund An expanded field of application interpersonal conflicts and employment the provision of adult restorative justice Perhaps the most striking development grievances in the workplace, incidents of services through community providers at over recent decades has been the abuse in residential and daycare facilities, a fairly modest level. But there has been a substantial increase in the range of misconduct in sports teams, disputes notable increase in commitment over the application of restorative justice principles between neighbours and community- past couple of years, including Ministry and procedures, both within the criminal level conflicts, disciplinary procedures in of Justice support for moving boldly into justice system and beyond it. Within the the armed forces, student misconduct in the two most challenging areas of practice system, restorative justice has always been higher education, and complaints against (both excluded from the pilot): those of predominantly used for young offenders corporate bodies for non-compliance with sexual offending and family violence. and for offences of a relatively minor regulatory schemes. The application to A great deal more could be said about nature. This is partly because it has been schools has been particularly impressive the current restorative justice scene in much easier to commend restorative and inspirational. There has also been a New Zealand. There are some facets that priorities to politicians and policy makers migration ‘upwards’ from the domestic are unique to us, especially with respect in this space, in view of the long-standing sphere to the sociopolitical sphere, where to the Treaty context which frames how belief that youngsters who offend, because restorative practices have been used to we must wrestle with justice issues in this of their immaturity, require interventions deal with episodes of political violence, society. But most of what is happening in of care and support, not merely of gross violations of human rights, hate New Zealand is characteristic of ‘second punishment. But, while remaining most crimes, ethnic conflict and genocide, and wave’ trends in restorative justice interna- firmly rooted in the youth jurisdiction, the destructive legacy of historical wrongs, tionally. there has been a progressive expansion of such as slavery, racial discrimination and Two of these trends are worth restorative justice into the adult domain colonial land confiscations. highlighting, because both raise as well, and with respect to crimes of the Each of these new spheres of fundamental issues of principle. The first is most serious nature. application has unique challenges. But

Page 6 – Policy Quarterly – Volume 10, Issue 2 – May 2014 in every case the concept of a justice For all its fluidity and multiplicity To speak of crime as injury is not mere that remediates, not merely retaliates of uses, there remains something emotionalism; it is how victims actually has provided a constructive new lens recognisably distinctive about a restorative experience crime and other injustices. for viewing the issues at stake and for framework for approaching personal and Victims usually know themselves to be developing a range of distinctive processes social harms, something that marks it victims because they feel violated, not to address them. out as different from business as usual; because they realise some legal rule has something that sets it apart from both been broken. It is the very pain of such Problems of definition retributive and rehabilitative approaches violation, and the visceral resentment it But distinctive in what way? What qualifies that have long dominated the penal always triggers, that helps us to locate some practice or procedure or perspective landscape. Restorative justice shares the presence of an injustice. Philosophers as restorative justice? How should the with retributivism a concern to rectify may not be able to agree on how to term be defined and what limits should the imbalances created by crime in a define ‘justice’, but they can usually agree apply to its application? There has never morally serious manner, and it resembles on where injustice has occurred. Injustice been full agreement on this issue, and utilitarianism in its rejection of avoidable manifests its presence as intentional injury it has become more contentious than suffering in the quest for resolution. to the innocent and as a contemptuous ever.3 Some theorists place predominant Where it departs from both, however, is disrespect of their rights. That, essentially, emphasis on the noun ‘justice’, and limit in the thoroughgoing ‘relationalism’ of is what crime is too. restorative justice to a particular way of its undergirding concepts of justice and This leads to the second distinguishing pursuing justice after the occurrence of a crime, one which focuses on a respectful, facilitated encounter between victim ... [Annalise Acorn] notes, justice does not reside and offender. Others give more force to the adjective ‘restorative’ and broaden in any second-order tokens, such as retributive the designation to include any approach punishment, nor in any of the procedural steps to human conflict that promotes collaborative decision-making and peace- in the restorative process, such as personal building in place of antagonism, coercion and exclusion. Some widen it even further encounter, confession, restitution or forgiveness. to embrace a whole way of viewing the world and living within it ‘restoratively’, in every department of life.4 justice making. The distinctiveness of feature of restorative philosophy: its Rather than choosing between these these concepts is easiest to describe in notion of justice as the existence of options, or abandoning the label as now so criminal justice terms, but the analysis right-relations between persons. The inclusive as to be meaningless, it is better to can be extended by analogy to other injury done through criminal or other envisage a continuum between minimalist domains as well. intentional wrongdoing is fundamentally and maximalist conceptions of restorative a relational injury. It is the dishonouring justice. The spectrum ranges from those Three core convictions of the kind of relationship that ought who restrict the category to a particular Restorative justice practice is informed exist between the parties as fellow citizens criminological procedure, at one pole, to or controlled by three core convictions and fellow human beings. In her searing those who apply it to an entire way of life or foundational assumptions. The first critique of restorative justice, Canadian at the other, with applications to personal, is an understanding of crime as injury legal scholar Annalise Acorn identifies political and professional conflicts falling more than infraction. Crime is not viewed this as the key idea that sets restorative at points in between (Johnstone, 2012, simply as the breaking of the law, or the justice apart from other theories of p.157). Within each application there is transgressing of some moral or spiritual justice – its notion of justice as right- also a continuum between interventions code; it is the harming of actual persons, relation and crime as wrong-relation. For that are minimally restorative and those the infliction of real personal losses, the restorativists, she notes, justice does not that are maximally restorative. Practice tearing of the web of relationships that reside in any second-order tokens, such models, for example, which work solely interconnect us in society: the wounding, as retributive punishment, nor in any of with one party to an offence – be it the indeed, of our very humanity. Not all the procedural steps in the restorative victim, offender, or those secondarily harms are crimes, of course, and not process, such as personal encounter, caught in the slipstream – will only be par- all crimes cause equal harm. But what confession, restitution or forgiveness. tially restorative in effect, whereas models fundamentally marks out crime as wrong It inheres rather in the establishment that enable all the parties involved to col- is that it injures, or seriously threatens to of a right-relationship between the laborate on devising a mutually beneficial injure, the persons involved and violates parties. ‘The justice to be restored is the solution have the potential to be maximal- their relational integrity. experience of relationships of mutuality, ly restorative (Zehr, 2002, pp.54-7). equality, and respect in community. And

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 7 Restoring What? The practice, promise and perils of restorative justice in New Zealand it is this extravagant ambition – this at their relational core (including their actually restore? This question may be understanding of justice in terms of an relationship to themselves), and distorts answered in various ways. Some stress the idealised conception of right-relation – the rightful conditions that bind them role of material and financial restitution, that is the single distinguishing element together in community, then justice must the making good of the physical losses of restorative justice’ (Acorn, 2004, p.22). require the repairing or healing of the caused by the crime. Others emphasize Acorn goes on to object strongly to injury. This is something the punitive the rehabilitation of offenders, their such a conception of justice because it justice system largely fails to deliver, reintegration into law-abiding society. sets the bar impossibly high. It requires because punishment does little or nothing Others speak of the restoration of the of victims a supererogatory devotion to heal, either the offender or the victim. victim’s dignity, or mana, or sense of to forgiveness and reconciliation, while Long ago, George Bernard Shaw put his security and peace of mind. Some deny denying them their right to seek a total finger on the problem of punishment for that anything is restored, objecting to any disconnection from their abuser – which offenders: ‘If you are to punish a man suggestion that the clock can be turned is what victims of sexual or domestic retributively, you must injure him. If you back and the past retrieved. There are violence, in particular, often want and are to reform him, you must improve some losses that can never be made good, require. ‘They don’t want right-relation’, him. And men are not improved by such as the life of a murder victim, or Acorn exclaims. ‘They want no relation. injuries’ (Shaw, 1961, p.26). the independence of someone disabled And they want to be able to look to a The problem for victims is even by a drunk driver, or the innocence of a powerful and trustworthy state capable greater. A system that devotes almost all child subjected to sexual abuse; and even of prohibiting relation’ (p.116). its energies and resources to punishing lesser offences change things for ever. But Acorn misses the point. To speak offenders has little left over for victims. It Others object to the implication that justice is being restored, since justice may never have existed in the first place. As I ... a meeting where the story of the damage was frequently asked in Taiwan, how can you have restorative justice in an unjust done through the collision of their lives in the society? What is needed is not a return to wrongful event is told as truthfully and fully and some imaginary justice of the past, but a transformative justice that works for social compassionately as possible, and where all those change. Clearly, then, the phrase itself is directly affected together decide what is needed to ambiguous. But, to my mind, what is write a new chapter ... fundamentally in need of repair are the relationships violated by the wrong. This includes the relationship between victim and offender, and also the relationships of justice in the wake of crime as the may be true in some cases that knowing each has to others in their wider social recovery of right-relations is not to imply that the person who wronged them group which have also been affected. the emergence of a new-found intimacy is being punished may help a victim’s These relationships are not being restored and mutuality between the parties. It emotional recovery (more research is to what they were before; they are being is to suggest, rather, the restoration needed on this question: see London, restored to ‘rightness’, to what they ought of rightness to their relationship. The 2011, pp.98-103). But it will only ever to be like in the circumstances. Even if the relationship is righted or rectified or be of limited help, for punishment itself parties never knew each other personally ‘right-wised’ because the wrongs that does nothing to redress the physical, prior to the crime, their co-participation have blighted it have been exposed and relational, moral and material dimensions in the criminal event has created a dealt with, not because new depths of of the harm inflicted. Whatever other relationship between them, an unhealthy intimacy and respect have arisen. It is social good the punitive justice system and destructive relationship that needs therefore a healthier relationship than may achieve (and there is some), it is to be restored to a rightful condition. it was before and, in that sense, a ‘right’ not empowered to heal. Something more The same applies to all the other layers relationship. But it is not necessarily a powerful than punishment is needed to of relations that constitute us as social closer or ongoing relationship, which loosen ‘the bond of victimisation’ that creatures, since we are relational beings may not be the right kind of relationship binds victims and offenders together in all the way down. for the parties to have anyway (see further the pain and shame of the criminal event Because interpersonal relationships are Marshall, 2012, pp.302-12). and to bring repair. reciprocal and storied realities, one of the This brings us, then, to a third most effective ways to initiate change is distinctive theme in restorative justice Restoring what? by means of direct or mediated encounter philosophy: its understanding of justice- But what, precisely, is this damage that between the parties: a meeting where the making as repair. If crime injures persons needs repair? What does restorative justice story of the damage done through the

Page 8 – Policy Quarterly – Volume 10, Issue 2 – May 2014 collision of their lives in the wrongful made a case for seeing it as the damage simply presumes the minimal expectation event is told as truthfully and fully and done to the relationships that bind us that he or she will play by the same rules, compassionately as possible, and where together in society and comprise our so that society can accommodate their all those directly affected together decide essential humanity. But London finds presence without fear or force. Of course, what is needed to write a new chapter in that explanation too generic and abstract. even this minimal expectation still the saga, so that the relationship can be It doesn’t help us, for example, to presupposes relationship. Mutual trust restored to rightness. That is the heart of distinguish between the kind of relational is meaningless outside of a relational restorative justice. damage caused by crime and the kind context. Even if the parties to a crime caused by non-criminal wrongs, such as had no previous personal relationship, Restoring trust jealousy, insensitivity, gossiping and so in so far as their common membership Before finishing, I want to return to Ross on. It is better, he thinks, to see relational of society necessitates mutual trust they London’s work which I mentioned at the damage as the result of the harm, not as were still in relationship. outset, both because it serves to sharpen the harm itself. The real harm associated That said, I am persuaded that there the focus even further on what restorative with the commission of crime is the loss is much to be gained from focusing justice restores, and because it does so in a of trust. It is the betrayal of the most basic specifically on the relational component way that has direct bearing on that second expectations we have of our fellow human of trust. It helps to explain, for example, big trend I noted in restorative justice beings – which is, put simply, to live by the power of the central elements of internationally, the growing interest of the negative form of the Golden Rule, restorative justice dialogue, such as governments in the approach. ‘not to do unto others as you would not story-telling, accountability, emotional In his somewhat protracted analysis, London is often quite critical of the rhetoric surrounding restorative justice All members of society, ... have a legitimate interest in the literature. He especially dislikes the common claim that it is an entirely in seeing crime prosecuted and punished, as a ‘new paradigm’ for doing justice, necessary precondition for the existence of social fundamentally incommensurate with the values of the prevailing system (pp.262- trust. 72, cf. pp.13-22). To assert, as proponents often do, that restorative justice is both a new paradigm and the recovery of have them do unto you’. If we are to live honesty, apology, restitution, community ancient or indigenous ways of achieving together in security and peace we need engagement and commitment to moral justice is self-contradictory. It can’t be to trust that everyone will abide by this change. These are precisely the things both. It is also self-defeating. Exaggerated rule, that they will not to try to overcome needed to heal breaches of trust and claims of novelty will only serve to our will through fear or force or fraud. restore relationships to rightness. keep the practice on the margins of the Crime confounds this expectation. Crime Even more telling is the way trust mainstream justice system, as an exotic shows that we can no longer trust the functions as the common property of diversionary strategy for petty offending person who has broken the rules and both personal and social relationships. rather than as a comprehensive model for threatened our safety. The wrongdoer has The trust of personal relationships systemic change. proven themself to be ‘untrustworthy’, an depends on having subjective knowledge Yet, while denying that it is a wholly outsider to the law-abiding community. of the individual to be trusted. The trust new paradigm, London still thinks What is most needed, then, in the of social relationships, on the other hand, there is something genuinely new about wake of crime is to regain trust in the requires an objective confidence that the restorative justice. Its greatest innovation offender. Not a perfect trust, but a basic wider social order will operate predictably is not its creation of a new set of criminal trust that he or she will respect the rights, and fairly according to agreed-upon justice practices, such as victim–offender feelings and values of others and regulate standards, and that even strangers will mediation or family group conferences. his or her behaviour without the need hold themselves accountable to the What is ‘wholly original and crucial’ is of external coercion. Offenders must Golden Rule. its goal of repairing the harm of crime. prove their readiness to be readmitted to One critical prerequisite for the ‘Whereas the traditional goals of the the moral community by showing their existence of social trust is confidence that criminal justice system are to deter, trustworthiness again. the state will act to redress the breaches censure, incapacitate, and rehabilitate The virtue of focusing on the of trust that occur through criminal offenders, restorative justice poses an restoration of trust rather than the offending and enforce the standards of entirely new and original goal: repairing restoration of right relations, London behaviour encoded in the law. If the state the harm of crime’ (p.24). suggests, is that it does not presume fails to do so it denies its own legitimacy. What, then, London asks, is the the existence of a previous or ongoing All members of society, therefore, have harm that needs to be repaired? I have personal relationship with the offender; it a legitimate interest in seeing crime

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 9 Restoring What? The practice, promise and perils of restorative justice in New Zealand prosecuted and punished, as a necessary itself is ‘an extraordinarily poor way of and in society’, London writes, ‘we can precondition for the existence of social restoring trust in either an offender or devise a criminal justice system that trust. This is one of government’s primary in society’ (p.105, emphasis added). It is promotes genuine healing, forgiveness, responsibilities, one that some restorative only when punishment is accompanied and reintegration’ (p.89). justice advocates are too quick to decry. by such ‘indicia of trust’ as acceptance The key to this integration is the Rather than disparaging the punitive of blame, empathy, remorse, apology recognition that the principal harm of system root and branch, they should and restitution that evidence exists for crime is the loss of trust. This loss is affirm the state’s obligation to sustain the rebuilding personal trust.5 This is where only so devastating a problem because reservoirs of social and personal trust in restorative justice has a powerful role to we are irreducibly social creatures, who society, and commend restorative justice play. An offender’s willingness to engage only ever exist in an intricate network of as a promising new tool for doing so in a dialogue with his victims, and with relationships. The malice of intentional more effectively. the community he has betrayed, provides wrongdoing serves to violate the trust on a unique setting for honest explanation, which these relationships depend, and Towards a restorative justice system acceptance of moral responsibility, when that happens it is the core business London’s chief concern is to find a way of manifestations of empathy, voicing of of restorative justice practice – encounter, straddling the divide between the informal apology, and a commitment to future truth-telling, accountability, confession, contrition and restitution – that has unrivalled power to begin to heal the Of course, efforts to integrate restorative priorities breach. and practices into the mainstream justice system, Of course, efforts to integrate restorative priorities and practices into and into the social order at large, are not without the mainstream justice system, and into the social order at large, are not without risk. Peril exists on all sides. risk. Peril exists on all sides. Restorative justice is imperilled by the possibility of institutional capture and control, and by the dilution of its distinctive values. justice of victim–offender encounter and change, all of which are the seeds of The justice system is in peril of having the formal justice of the public system. renewed ‘trustability’. its adherence to procedural fairness and The key to unifying these two domains, Crucially, everything an offender equality of outcome compromised by he believes, is to understand both as ways does in such a setting to regain trust also idiosyncratic and potentially anarchic of serving the larger goal of restoring benefits his victims. As well as meeting restorative justice processes. Both threats trust. The criminal justice system exists their needs for information, reassurance are real, though they may often be to uphold the necessary conditions for and vindication, it helps them to restore exaggerated.6 It is my hope that, in this social trust. This requires it to employ all their trust ‘that the world is inhabited wonderful country of ours, ever conscious the procedural safeguards enshrined in by people who are much like ourselves: of the perils entailed we may continue to the mainstream retributive system, such people with a conscience, with empathy; work together – as practitioners, policy as due process, just deserts, equal access, people who play by the same rules as we do makers, politicians and ordinary citizens predictability, proportionality, consistency and, if they break those rules, understand – to move the vision of restorative justice, and so on. These principles help to satisfy the wrong they have committed and and all that it promises, from the margins society’s need for certainty and security. accept the agreed-upon consequences of of our consciousness to the mainstream But within these objective parameters their wrongdoing’ (p.105). of how we live together in society, in judges still need to address the problem of faith, hope and charity. personal trust attaching to the individual Conclusion 1 This article is the edited text of Professor Marshall’s inaugural offender. In sentencing, judges should be London makes an intriguing case for the lecture, delivered at Victoria University on 25 March 2014. 2 On restorative justice as a social movement, see Umbreit and guided, London suggests, by three simple integration of restorative justice processes Peterson Armour (2010), pp.1-33. but penetrating questions: Why don’t I into the criminal justice system in a 3 As Umbreit and Armour (2010, p.318) comment, ‘the identification of a program as “restorative” can be confusing trust this person to re-enter society right way that both supports and transforms because others cannot determine if the word refers to the movement’s values and principles, its aims and outcomes, its now? What must he or she do, and over mainstream practice. It supports the specific processes, its programs, or combinations thereof’. what period of time, to demonstrate their mainstream system by endorsing its 4 Johnstone (2012, p.156) observes that, ‘increasing numbers of people are seeking not only to reform “external” trustworthiness? And what evidence do I necessary function of upholding the rule organisations and social practices in line with the ideas of restorative justice, but to practice principles such as these have to help me answer these questions? of law and protecting the innocent, and in their own lives and to encourage others to do so. Nor, (p.55). it transforms it by proposing a new way for many, is this an optional extra. Rather, there is a fairly widespread view among campaigners for restorative justice While the lawful imposition of of understanding the overriding goal of that it would be contradictory and self-defeating to seek to punishment may be necessary to sustain sentencing and punishment. ‘Guided by “restorativise” the societal response to crime while behaving non-restoratively in the workplace and in our everyday lives. social trust, he writes, punishment by the goal of restoring trust in the offender Trying to transform … society’s response to crime is now

Page 10 – Policy Quarterly – Volume 10, Issue 2 – May 2014 just one concern … of a social movement which aims to not to profit from his freeloading; by his voluntary approaches and given the widespread acceptance of propagate a new way of seeing the world and living in it’. agreement to submit to rehabilitation, he expresses his restorative justice, evident in the expansion of restorative 5 ‘By voluntarily submitting to a deserved punishment, the desire for commitment to change; and, finally, by the totality justice to encompass adult offenders and more serious offender indicates that he respects the rules of the game of these actions and expressions, he indicates his desire to offences, this question seems to have been answered. of reciprocal altruism; by his apology, he expresses his return to the good graces of the moral community’ (London, Restorative justice practices provide an important renunciation of the contempt he has shown for the rights 2011, p.83). supplement to the sanctions placed on criminal behavior by of the victim and for all those who play by the rules; by his 6 ‘Commentators have asked whether restorative justice the traditional criminal justice system’ (Joudo Larson, 2014, agreement to make restitution, he expresses his agreement practices can co-exist alongside formal criminal justice p.35).

References Acorn, A. (2004) Compulsory Compassion: a critique of restorative Shaw, George Bernard (1961). The Crime of Imprisonment New York, justice, Vancouver: UBC Press Citadel Press. Braithwaite, J. (1989) Crime, Shame and Reintegration, Cambridge: Sherman, L.W. and H. Strang (2007) Restorative Justice: the evidence, Cambridge University Press London: Smith Institute Johnstone, G. (2012) Restorative Justice: ideas, values, debates, 2nd Strang, H., L.W. Sherman, E. Mayo-Wilson, D. Woods and B. Ariel edn, London: Routledge (2013) Restorative Justice Conferencing (RJC) Using Face-to Face Joudo Larsen, J. (2014) Restorative Justice in the Australian Criminal Meetings of Offenders and Victims: effects on offender recidivism Justice System, AIC research and public policy series, 127, Canberra: and victim satisfaction. a systematic review, Oslo: Campbell Australian Institute of Criminology Systematic Reviews, 2013:12 London, R. (2011) Crime, Punishment, and Restorative Justice: from the Umbreit, M. and M. Peterson Armour (eds) (2010) Restorative Justice margins to the mainstream, Boulder, Col. and London: First Forum Dialogue: an essential guide for research and practice, New York: Press Springer Publishing Lynch, N. (2012) ‘Playing catch-up? Recent reform of New Zealand’s youth Zehr, H. (1990) Changing Lenses: a new focus for crime and justice, justice system’, Criminology and Criminal Justice, 12, pp.507-26 Scottdale, Pa: Herald Press MacRae, A. and H. Zehr (2004) The Little Book of Family Group Zehr, H. (2002) The Little Book of Restorative Justice, Intercourse, Pa: Conferences New Zealand Style, Intercourse, Pa: Good Books Good Books Marshall, C.D. (2012) Compassionate Justice: an interdisciplinary dialogue with two gospel parables on law, crime, and restorative justice, Eugene, Oreg: Cascade Books

The New Electoral Politics in New Zealand Edited by Jack Vowles

Around the world there was unusual interest particularly since 2005, with a vote share in New Zealand’s electoral politics during the and polling that made it well within reach of a 1990s, because of the country’s adoption of the single-party majority in 2014. For these reasons, Mixed Member Proportional (MMP) electoral apparently, National appears unwilling to change system. Since then, international interest has the MMP system in ways recommended by an lapsed. Yet at the 2011 election, at a concurrent Independent Review. Various chapters in this referendum, New Zealanders voted to retain the book explore these questions, as well as others, MMP system. Among other inquiries, this book including voter turnout decline, attitudes to asks the question: why? welfare reform, women’s representation, changes Since the 2005 election, there are signs that in Maori politics, and the growing importance of New Zealand has adapted to MMP and become immigration in New Zealand politics and society. accustomed to a ‘new electoral politics’. Voting Jack Vowles is Professor of Comparative choices have become less volatile between Politics at Victoria University of Wellington. Other elections and during campaigns. The two main contributors to the book are Peter Aimer (formerly parties, National and Labour, have retained their at the University of Auckland), Gerald Cotterell, dominance of the votes, but in their respective Jennifer Curtin, Louise Humpage, Aimee Matiu, terms of government they have been obliged Raymond Miller, Ann Sullivan, and Martin to share power with other parties. At the next Von Randow (all currently at the University of election in 2014, as in 2011, the choice appears Auckland), Charles Crothers (AUT University), to be between a National government, with Jeffrey A. Karp (Australian National University) perhaps one or two minor parties in support, or and Thomas Lundberg (University of Glasgow). a Labour and Green Party coalition. Yet other parties could still complicate the picture: in An Institute for Governance and Policy Studies Publication edited by Jack Vowles particular, Winston Peters’ New Zealand First. Publication Date: May 2014. Format: A5 Paperback, pp 276 ISBN 978-0-475-12414-2 . Price: $39.95 (including P&P within New Zealand) Looking back to the 2011 election and Place your order by phone or email. Preference is for payment via credit card, before, this book lays out the current state of but invoices can be issued on request the play in New Zealand’s electoral politics. Institute for Governance and Policy Studies, Victoria University of Wellington Despite its reservations about MMP, the National Email [email protected] Telephone +64 4 463 6588 PO Box 600, Wellington, New Zealand Party has done very well under that system,

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 11 David Bromell

‘A Fair Go’ in Public Policy

Introduction 1. A great deal of public policy-making In the context of the 2013 retirement income review (CFLRI, involves arguments about who gets what, when and how, relative to 2013), Kathryn Maloney and Malcolm Menzies from the others, and who pays (cf. Laswell, 1950). Commission for Financial Literacy and Retirement Income 2. These arguments take place within a put the question to me: what does ‘a fair go’ mean in public society that exhibits deep diversity, including a plurality of values. People 1 policy? I mentioned this in a chance conversation with Colin do not necessarily want, or value, the James, who suggested tackling the question in an active, same things to the same extent, in the same way (Bromell, 2009a).2 verbal sense (‘a fair go’), rather than attempting to elaborate 3 There is not and never will be a perfectly just world, or a perfect on ‘fairness’ as an abstract noun. Consequently, this paper social system, or a perfect set does not propose ‘a theory of fairness’ as a proxy for, say, a of institutional arrangements and regulations. As Sen (2009) theory of distributive justice, or a theory of social justice, has argued, we need to abandon even a non-ideal theory of justice (cf. Arvan, 2014; Simmons, pretensions to ‘transcendental institutionalism’ and focus instead 2010). My aim is more modest: to provide a framework for on advancing justice, rather than perfecting it. He proposes public reasoning in contexts where there is argument across ‘government by discussion’: the the political spectrum about whether a public policy gives exchange of public reasons to arrive at partial rankings and limited people who are affected by it ‘a fair go’. This approach is agreements about practicable options to make life better for people than it based on three assumptions. is now.

David Bromell is a Senior Associate of the Institute for Governance and Policy Studies. He lectures Etzioni (2014) has similarly urged us in political philosophy and public policy in the School of Government. Since July 2013 he has been a Principal Advisor in the Strategic Policy team at Environment Canterbury. Previously he was a to view public policy as a fixer-upper, Principal Advisor and acting Chief Policy Advisor in the Ministry of Social Development. rather than a new construction. Policy-

Page 12 – Policy Quarterly – Volume 10, Issue 2 – May 2014 making is less about defining a goal, (Homo economicus) is a caricature that sav, fair’s fair. Consider, for example, the considering options to get there and obscures a much more complex reality’ extraordinary longevity of the consumer implementing the most cost-effective (Corning, 2011, pp.9, 82; cf. Sen, 1977). affairs television programme Fair Go, option than it is about asking what can In other words, the moral judgement which first screened in 1977 and is one be done with the conditions we have ‘that’s not fair’ is first a feeling, an of New Zealand’s longest running and been given and the unfolding trends we emotional reaction, voiced as an highest rating programmes. may ride, and working out how we might objection to an actual or proposed state On a visit to New Zealand, historian make things better than they are now, of affairs or distribution of benefits and David Fischer noticed how frequently within the resources at our command. costs. Emotions play a more prominent New Zealanders talk about fairness, Thus the argument that follows is based role in social decision-making than we and reflected on his fellow Americans’ on a further (fourth) assumption: often care to admit (Sanfey, 2007; cf. characteristic preoccupation with liberty 4 The vast majority of public servants, Hume, 1777, part I, opening para.). As or freedom. In an extended comparative whether elected or appointed, Haidt (2012, p.48) puts it, ‘Moral reasons study (Fischer, 2012), he explains this in enter public life not for the naked are the tail wagged by the intuitive dog’. two ways. First, the United States and New exercise of power, nor predominantly We characteristically proceed from Zealand are products of different waves to satisfy and advance our own an emotion or intuition to a moral of imperial expansion, in reaction to interests, but because we want to judgement (‘fair enough’/‘that’s not fair’). different social conditions and pressures. make a difference and improve outcomes for our fellow citizens as well as ourselves. The notion of ‘a fair go’ is, of course, relevant not Making sense of moral judgements only to retirement income policy ... but also to Something of a consensus has emerged in recent years between anthropologists, matters as diverse as poverty, income inequality animal behaviourists, psychologists, and redistribution neuroscientists, game theorists and behavioural economists that a concern for fairness is a ‘wired’ trait in humans (Alesina and Angeletos, 2005; Fehr and Only when we ourselves have second The United States was settled in the 17th Schmidt, 2003; Gazzaniga, 2005; Pfaff, thoughts, or are challenged by others, do century by people who felt themselves to 2007; Hausman, 2008; Crockett, 2009; we apply reasoning, somewhat after the be victims of tyranny and persecution. Corning, 2011). This trait has also been fact, in order to explain and justify our Consequently they elevated the principle found to exist, at least rudimentarily, in moral judgements to ourselves and to of liberty.3 New Zealand on the other some non-human primates (Brosnan and others. hand, was settled in the 19th century by de Waal, 2003; Bräuer and Hanus, 2012). I have argued elsewhere (Bromell, people who felt they were victims less of The norm of fairness seems to be universal, 2012) that public policy-making needs tyranny than of social injustice and gross and a product of both nature and nurture, to go beyond ostensibly ‘values-free’, inequity. Consequently they elevated the like the acquisition of language. Like empirical analysis of ‘the evidence’ and principle of fairness. language, development occurs as children ‘what works’, and find ways to engage in Secondly, the US and New Zealand mature from reliance on simple decision co-production with citizens of the sort afforded different material conditions. rules (equal shares, taking turns, tossing that factors into policy making explicit In the US, many Americans continue a coin, drawing straws) to more complex critical reflection and public deliberation to have a sense of boundlessness and considerations of age, merit, social on purpose, values and emotions. opportunity (‘Go west, young man!’), of relationships and ‘us/them’ distinctions, Freiberg and Carson similarly invite us living in ‘the land of the free’ in a universe all shaped by the values, customs, rules, to recognise emotion and affect within without limits. In New Zealand the young stories and practices of a given society ‘a reasoned and open dialogic process of nation quickly ran up against resource (Almås et al., 2010; Corning, 2011, p.7). policy formulation’ (Freiberg and Carson, constraints. Climate and soil were not Corning (2011) concludes that 2010, p.161). as kindly as first thought, and survival ‘altruistic sharing backed by a threat of depended on developing cultural norms, punishment for selfish violations is a A Kiwi preoccupation social practices and political institutions fundamental element of human nature, A ‘wired’ concern for fairness is amplified to encourage and enable fairness, sharing coupled with the strong expectation for in the New Zealand context by a cultural and redistribution. Anne Salmond notes, reciprocity from others’. Accordingly, preoccupation with ‘a fair go’ that is for example, that: he argues that ‘the standard neoclassical reflected in everyday habits of thought economics model of a rational, and speech: a fair go, fair play, fair share, In their dislike of the aristocratic calculating, acquisitive economic man fair enough, fair game, a fair shake of the monopoly of land and waterways

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 13 ‘A Fair Go’ in Public Policy

Figure 1: Occurrence of ‘fair’ and its cognates in 2008 and 2011 general election society we have. People love New party manifestos4 Zealand because they feel at home

35 here. You and I value access for everyone to quality health care. All 30 New Zealanders value schools that are safe with dedicated teachers, and 25 an education system that delivers

20 quality results for our kids. These values are rooted in the fact that 15 New Zealanders have an underlying sense of fairness. It is what makes 10 New Zealanders tick. We love to see

5 everyone having a fair go. Our pride in our identity as New Zealanders 0 is tied up with a sense of fairness. y e y y y rst rt rt rt Act rt utur Pa (Clark, 2010) Labour National ed F Green Pa Mäori Pa Mana Pa Unit ogressive In everyday discourse and in political Pr New Zealand Fi rhetoric, New Zealanders seem to appeal 2008 2011 more commonly to ‘a fair go’ than to ‘rights’ or to some or other theory of at home, the settlers fought for the For example, ‘a fair go for the ordinary justice. This may have wider significance. establishment of the Queen’s Chain, [or ‘decent’] bloke’ was a favourite slogan The notion of ‘a fair go’ appears to bridge and made successive attempts to of ‘Rob’s Mob’ and Sir Robert Muldoon a gap between more abstract accounts break up large estates. Part of their when he was prime minister and leader of political principles and the actual legacy is the idea of the ‘fair go’, a of the National Party from 1975 to 1984. beliefs – and actions – of political actors powerful motif in our society, along (Perhaps it is fortunate that ‘Rob’s Mob’ (Klosko, 1992, p.xii). As Sen notes, ‘we with a marked dislike of arrogance did not elaborate on its aspirations for have good reason to be persuaded by and pretension. (Salmond, 2012, p.4) ‘the ordinary woman’.) The 1986 Royal Rawls that the pursuit of justice has to Commission on the Electoral System be linked to – and in some sense derived Policy relevance and political rhetoric identified ten criteria for evaluating from – the idea of fairness’, which is The notion of ‘a fair go’ is, of course, electoral systems, with many involving foundational and in some sense prior to relevant not only to retirement income ‘fairness’ – to Mäori, to ethnic minorities development of principles of justice (Sen, policy – the context in which the question and to political parties: ‘For New 2009, p.54). It may be more productive, was first put to me – but also to matters as Zealanders an electoral system – and, therefore, to think critically about what diverse as poverty, income inequality and more broadly, a political system, or a set ‘a fair go’ means in public policy and to redistribution (Rashbrooke, 2013; Stiglitz, of government policies – is defensible structure policy debate in these terms, 2013); education; housing; health care and only if seen to be “fair”’ (Levine, 2012). than to attempt to assess or justify policy medical rationing (Koch, 2002), including More recently, the words ‘fair’, ‘unfair’, options in terms of ‘rights’ (Walzer, 1981; access to pharmaceuticals (Coyle, 2012); ‘fairness’ and ‘fairly’ were used 74 times cf. Geiringer and Palmer, 2003, 2007) settlement of historic Treaty of Waitangi in political party election manifestos in or by appeal to some or other theory of grievances; sentencing guidelines; resource 2011, an increase of 68% over their use in justice. management, including the use of fresh the 2008 election. While New Zealanders seem to water; risk management in the use of While questions are increasingly value the idea of ‘a fair go’, we do not new technologies (McComas and Besley, asked about whether New Zealanders do often pause, however, to bring to this 2011); and the sale of shares in state- indeed get ‘a fair go’ (Kilgallon, 2013), explicit critical reflection or to clarify owned assets (Salmond, 2013). Fairness is the concept of fairness still resonates and what ‘a fair go’ means in public policy critical for the stability and sustainability continues to be used in political rhetoric. (Kerr, 2005, p.23). The remainder of this of public policy (Alesina and Angeletos, For example, David Clark, candidate article provides a framework for public 2005, p.974). If regulation is perceived to and subsequently (following the 2011 reasoning and comparative assessment of be fair, it is more likely to win cross-party election) MP for Dunedin North, wrote a ‘a fair go’ in public policy. support and less likely to be subsequently blog post in August 2010 that argued: amended or repealed. Context, relationships, time Given its currency as a vernacular The reason people choose to stay The framework I propose is designed to concept in New Zealand, political in New Zealand, or return to New facilitate an exchange of public reasons rhetoric commonly appeals to ‘a fair go’. Zealand, is tied up with the type of where there is argument about what ‘a fair

Page 14 – Policy Quarterly – Volume 10, Issue 2 – May 2014 go’ means in relation to a specific policy or Impartiality democracy, or government by discussion, set of policies. It is important, therefore, Impartiality declines to introduce private in which eligible citizens and permanent to clarify at the outset the context, considerations into decisions that should residents participate in the proposal, relationships and temporal dimensions of be made on public grounds (Barry, 1995, development and creation of laws, either the policy problem. What is fair depends p.13). It respects equality of moral worth, directly, or indirectly through the free and on the people who are the participants, equal consideration of interest – i.e. fair election of representatives. and their relationships and interactions ‘democratic equality’ (Anderson, 1999) – Deliberative fairness requires com- within a specific context at a particular and principles of natural justice. Justitia mitment to public justification: Rawls’ point in time (Corning, 2011, p.19; wears a blindfold when she weighs our ‘reflective equilibrium’ ‘overlapping Fleurbaey and Maniquet, 2011, p.234): competing interests and passes judgement. consensus’ (Rawls, 2001, pp.29-38 and Everyone counts for one, and none counts 2005, pp.133-72), or Sen’s ‘open’ (as Context: In what context has the for more than one – a foundational, and opposed to ‘closed’) impartiality (Sen, question of ‘a fair go’ arisen? What at the time radical, idea in Bentham’s 2009, pp.124-52), together with the social, do we want to change? What are utilitarianism. economic and cultural conditions that the goals (outcomes) and objectives Impartiality is why we have due enable the free and equal participation of (results) we want to achieve? process, and formal separation of powers citizens in political self-determination. between the monarch or head of state, the Deliberative fairness requires an Relationships: Who are the key legislature and the judiciary. Impartiality exchange of public reasons, given the ‘stakeholders’ (interested and affected parties)? What is the nature of the Administrative consistency is part of what we relationship between them? Are there existing agreements, contracts or examine when asking whether someone is getting treaties between the parties? ‘a fair go’ in public policy. Time: What time constraints do we face? What time trends can we observe, and what are the is why public sector ethics matters. There inevitable arguments about what ‘a fair implications of those trends now is, or should be, no place in public policy go’ means in any particular case. For and in the future? How are costs and for mates’ rates, special access to decision this reason a government may publish benefits currently allocated between makers and backroom deals. a ‘white paper’ or discussion document past, present and future generations? Fairness as impartiality precludes and receive submissions from the public. permanent special group rights, including Parliament, through the select committee Fair process special political representation based process, invites and hears submissions The next stage in my argument is to on ancestry or ethnic identity (Bromell, on legislation before the House. consider, in the context of public policy- 2008, 2009a, 2009b). As Brian Barry Parliamentary debates test the rationale making in a liberal democracy, what ‘a argues in presenting his theory of justice for policy change. The media interview fair go’ requires procedurally, because as impartiality: politicians and probe the reasons for ‘how things work’ is as important as ‘what doing this and not that. works’. The procedures that govern public The underlying assumption here The question ‘is it fair?’ is illuminated, services, and the perceived fairness of is that claims to special advantages Barry (1995, p.113) suggests, by phrasing how rules are set and implemented, can based simply upon membership of it as, ‘could it reasonably be rejected?’ As significantly determine public responses: a certain bloodline, ethnic group Barry points out, appeal to public reason ‘These responses can condition trust in or race are too transparently self- does not, however, restrict us merely to public services, and determine how willing serving to form a basis of agreement logical deduction in the public sphere, people are to cooperate with service that others can seriously be asked or to ostensibly ‘neutral’ or ‘value-free’ providers: cooperation that, in turn, can to assent to. More deeply, the language and modes of reasoning and be crucial to achieving the objectives of a whole idea that we should seek the communication (cf. Bromell, 2011; service’ (Pearce, 2007, p.11). Fair process agreement of everybody rests upon Bradstock, 2010, 2012; Boston, 2013): requires impartiality (equal consideration a fundamental commitment to the of interests), deliberative fairness (how equality of all human beings. (Barry, Historically, reason has been the rules are set), transactional fairness 1995, p.8) contrasted with authority, (how the rules are operationalised – prescription, revelation, or coercion and playing by the rules once set) and Deliberative fairness as a basis for the justification of transitional fairness (how rules are revised Secondly, ‘a fair go’ requires deliberative institutions. In this context, ‘reason’ or repealed, and the timing of policy fairness, which is about how the rules are means reasoned argument, from implementation). set. Deliberative fairness is why we have premises that are in principle open

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 15 ‘A Fair Go’ in Public Policy

to everyone to accept. We can add General, select committee hearings, the once for their own retirement. As Ross a contemporary gloss to this by Privileges Committee of Parliament, Guest argued in a background paper saying that these are premises which parliamentary commissions and inquir- prepared for the 2013 retirement income reasonable people, seeking to reach ies, appeals and tribunals, parliamentary policy review: free, uncoerced agreement with questions, televised parliamentary others, would accept. (Barry, 1995, debates and the publication of Hansard. People’s income tends to be highly p.7) Transactional fairness is about keeping variable over their lifetime. They the buggers honest. prefer to have much less variability Amartya Sen has similarly argued in their consumption. But in order that: Transitional fairness to smooth their consumption they Fourthly, fair process requires reason- need to be able to make plans, which Rationality is in fact a rather ableness in how rules are changed or requires stable policy. Some change permissive discipline, which demands repealed, and, in particular, the timing of is inevitable but policy stability the test of reasoning, but allows policy implementation. The 1988 Royal requires that change occur after due reasoned self-scrutiny to take quite Commission on Social Policy reflected deliberation and that people have different forms, without necessarily that: adequate time to adjust. (Guest, 2013, imposing any great uniformity of p.25) criteria. If rationality were a church, Changes must be able to be it would be a rather broad church. implemented in an orderly Another example is tertiary education (Sen, 2009, p.195) manner which does not cause funding policy for student support. undue disruption to the lives of Changing the eligibility or amount of student allowances, or the terms and conditions of student loans, is bound to ... we need to arrive at a social evaluation of raise questions of transitional fairness and intergenerational equity, particularly what ‘a fair go’ means in a specific context, at where students have committed to a particular point in time, through negotiated a lengthy period of education and training. agreement ... of alternatives ... Fair outcomes ‘A fair go’ in public policy requires more Transactional fairness New Zealanders; nor should they than fair process. Outcomes, or results, Thirdly, transactional fairness is about undermine people’s legitimate also matter and need to be seen to be fair, how rules are operationalised and expectations of security and and especially our outcomes relative to about playing by the rules once set. certainty, and, too, of the role that one another. As Bräuer and Hanus note, Implementation planning frequently government plays in their daily lives. ‘Humans have a sense of fairness, i.e. an involves communications with people It is also important that the reasons interest in the ideal of equity. This sense who will be affected by new or changed underlying the proposed changes are allows them to compare their own efforts rules. There may be a phase-in, or understood in the community. (Royal and subsequent outcomes with those of amnesty, period, but within a reasonable Commission on Social Policy, 1988, others, and thus to evaluate and react to period of time we expect the same rules vol. 2, p.740) inequity ’(Brauer and Hanus, 2012, p.256, to apply to people in the same situation in emphasis mine). the same way. Administrative consistency Retirement income policy is one Fair outcomes cannot, however, be is part of what we examine when asking example. If a government were suddenly defined in the abstract, in advance, once whether someone is getting ‘a fair go’ in to change the policy settings for New and for all. Rather, we need to arrive at a public policy. Zealand Superannuation without any social evaluation of what ‘a fair go’ means Playing by the rules once set also transitional period, a cohort of older in a specific context, at a particular point requires transparency and rights of review people would be affected with no time or in time, through negotiated agreement and appeal. This is why it is important opportunity to prepare for changes to the (based on public reasoning) of alternatives to preserve the independence of the amount of entitlements, criteria or age of that can be concretely realised and that judiciary. It is why we have legislation like eligibility. And any transition from a pay- take account of the values and priorities the Official Information Act 1982, the as-you-go (PAYGO) system to a save-as- of the people involved, and of relativity Local Government Official Information you-go (SAYGO) system would need to be or interpersonal comparison. As Harry and Meetings Act 1987 and the Public managed carefully to avoid the transition Frankfurt opens his paper on ‘Equality as Finance Act 1989. It is why we have the generation being called on to pay twice: a moral ideal’: ombudsmen, the Office of the Auditor- once for their parents’ generation, and

Page 16 – Policy Quarterly – Volume 10, Issue 2 – May 2014 First man: ‘How are your children?’ capital, social capital and human capital) is more likely than alternative policies Second man: ‘Compared to what?’ to enable evidence-informed evaluation to achieve better results across these (Frankfurt, 1987, p.21) along these lines: five dimensions, then we might arrive Economic growth at a working agreement that a policy is I am thus arguing for Sen’s ‘realisation- • Does this [policy or set of policies] substantively ‘fair’. A particular policy, or focused comparison’ through the exercise improve the opportunities or set of policies, gives the people affected by of practical judgement, rather than the incentives for higher incomes or it ‘a fair go’ when it improves their overall sort of ‘transcendental institutionalism’ greater economic growth? well-being, and the distribution of well- (Sen, 2009, introduction) whereby • Does this remove obstacles that being, now and in the future. technocrats set out to create a ‘perfectly hinder resources moving to their just’ system or arrive at ‘a single, uniquely most efficient use, or enhance the Values-based assessment rational, determinate answer’ (Gauss, ability of people to take up new An alternative (or additional) approach is 2010, p.64). Moreover, as Klosko reminds opportunities? to assess the substantive fairness of a policy us, ‘because of the inevitable imperfection Sustainability for the future by reference to an agreed set of values or of all social arrangements, a certain • Does this impact on the capital normative precepts. Proceeding in this way measure of unfairness should be expected stocks for future use (e.g. physical prompts explicit deliberation on the kind and accepted’ (Klosko, 1992, p.66). capital, human capital, or the of society we want to create, inhabit and There are at least two ways we sustainability of the environment?) bequeath to the next generation, and the might proceed, both of which require Increasing equity quality of life we wish to enjoy with one comparative assessment of policy options • Does this impact on the distribution another now and in the future. Corning against each other and the status quo. The across society (both intra- and proposes a biosocial contract based on first approach is to assess the substantive fairness of policy options by the extent to which they contribute, or might reasonably be expected to contribute, in a significant Public policy should promote and facilitate and measurable way to an overall increase ‘reciprocity between the state and its citizens and in well-being and to improvement in the distribution of well-being. The second among citizens themselves’ ... so that together we approach is to assess the substantive fairness of policy options against the can live, live well and live better. extent to which we can reasonably expect them to actualise an agreed set of values or normative precepts. intergenerational)? three normative precepts in his book on These two approaches are not • Does this improve opportunities for ‘the fair society’: mutually exclusive, and there is no reason people to improve their position? • Goods and services must be why both might not be employed within Social infrastructure distributed to each of us according a framework for comparative assessment • Does this impact on core institutions to our basic needs (in this there must and public deliberation. It is important, that underpin our society (e.g. be equality). however, to keep any such framework at trust in the rule of law, democracy, • Surpluses beyond the provisioning of a relatively high level, and to avoid over- Crown–Mäori relationship, cultural our basic needs must be distributed specification that becomes restrictive or identity)? according to ‘merit’ (there must also exclusionary. • Does this impact on the trust and be equity). connections between people? • In return, each of us is obligated Living Standards Framework Reducing risks to contribute proportionately to To adopt the first approach (a policy is • Does this impact on New Zealand’s the collective survival enterprise in substantively fair if it improves overall ability to withstand unexpected accordance with our ability (there well-being and the distribution of well- shocks? must be reciprocity). (Corning, 2011, being), we might assess fair outcomes • In particular, does this impact on p.154) against the five dimensions of the our macroeconomic position (debt, Treasury’s Living Standards Framework deficits, inflation, etc.)? Isbister (2001), in envisioning social (Treasury, 2013): economic growth, and economic fairness, appeals to three sustainability for the future, increasing In other words, if there is agreement dimensions of social justice, noting that equity, social infrastructure and reducing that the five dimensions of the Living these can and do conflict with each other: risks. The Treasury framework uses a Standards Framework broadly capture ‘People deserve to be treated as equals, capital stocks and flows approach (i.e., outcomes desired by a majority of New they deserve to be free, and they deserve financial and physical capital, natural Zealanders, and that a particular policy

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 17 ‘A Fair Go’ in Public Policy to get the best they can out of their appropriate housing, and opportunities Including efficiency in the assessment limited resources’ (Isbister, 2001, p.4). to engage in meaningful paid work. This of ‘a fair go’ protects against a risk Any selection of values or moral in turn implies that our pre-eminent highlighted by Kaplow and Shavell: precepts for the sort of deliberative social obligation in ‘a fair society’ is first ‘virtually any method of evaluation that framework I am proposing will inevitably to meet the basic needs of our fellow gives weight to notions of fairness will be somewhat arbitrary. The values set citizens (Corning, 2011, ch.7). sometimes lead to choices that make all needs to be sufficiently ‘broad church’ to persons worse off’ (2002, p.xviii). Indeed, enable people with diverse conceptions of Equity there seems little to commend a policy the good, and rival political theories, to After basic needs are met and the enablers option if there is another policy option engage with one another in ‘realisation- of democratic equality are assured, ‘a fair go’ that is likely to produce or contribute focused comparison’. (Imagine, for requires equity in the sense of proportional to greater well-being for everyone example, a utilitarian, a libertarian, an equality in the distribution of costs and (Fleurbaey and Maniquet, 2011, p.235).6 egalitarian and a communitarian engaged benefits. Equity does not mean treating Zajac argues that: in debate about which policy is most likely everyone equally. (I have incorporated to give people ‘a fair go’.) The point is not equality in the assessment of fair process: all other factors being equal, one that the values set be comprehensive, but impartiality in the sense of equality of might consider economic efficiency that it resonate sufficiently with a broad moral worth, and equal consideration of to be a necessary fairness condition range of protagonists to keep them ‘at the interests.) In considering the distribution in any reasonable definition of table’ long enough to arrive at a practical of benefits and burdens, equity takes fairness, while granting that, political consensus, so that decisions can account of factors such as age (Atkinson, depending on the definition of be made and action occur. 1983, ch.7), needs, luck (Dworkin, 1981), fairness, some economically efficient With this in mind, I propose four agreements (e.g. treaties), merit, effort allocations may be fairer than values for starters: freedom, equity, and contribution. It allows for social others.7 (Zajac, 1995, p.14) efficiency and reciprocity. recognition of unequal needs, unequal talents and abilities, unequal application of Reciprocity Freedom those abilities, and unequal contributions Reciprocity means give and take, over a Freedom can be understood both to the common good: ‘No doubt talented complete life, with opportunities to be- negatively (freedom from … oppression, people do not deserve any moral credit for long, participate and contribute to the discrimination, domination, humiliation their native talents. But they do deserve collective enterprise proportionately in ac- or disrespect) and positively (freedom moral credit for developing their talents cordance with our ability (Corning, 2011, for … and freedom to … the capabilities and using them for our common benefit’ p.154). Public policy should promote and to lead a life one has reason to value) (Harsanyi, 2008, p.74, emphasis his).5 facilitate ‘reciprocity between the state and (Berlin, 1969; Honneth, 2004; Sen, 1999, Fairness thus requires breadth of its citizens and among citizens themselves’ 2009, pp.225-68; Pettit, 2008). Negative consideration (Hooker, 2005). It requires (Conrad, 1981, p.19), so that together we freedom requires us to reflect on whether us to distinguish between different sources can live, live well and live better. As Rawls a policy once operationalised intrudes to of inequality, rather than assuming that puts it, ‘we are not to gain from the coop- an unjustifiable extent on the liberty of everyone should necessarily have, or erative labors of others without doing our the individual. Positive freedom requires get, the same. Equity also challenges fair share’ (Rawls, 1971, p.112). us to factor in the social, economic and us to consider the intergenerational Reciprocity does not, or ought not, cultural conditions that enable people to accumulation of advantage and occur only between ‘people like us’ or pursue their own conceptions of the good. disadvantage, in order to ensure that near neighbours within the immediate As Anderson notes: future as well as present generations get circle of our moral concern. Reciprocity ‘a fair go’. challenges us to transcend tribalism, Libertarians tend to identify freedom embrace our common humanity and with formal, negative freedom; enjoy- Efficiency expand the ‘we’ (Singer, 1982). In ing the legal right to do what one Efficiency requires us to make the best response to large-scale natural disasters, wants without having to ask anyone use of available resources to achieve for example, we commonly witness else’s permission and without interfer- desired social ends (Isbister, 2001, p.21). reciprocity at work between, and not only ence from others. This definition of Sometimes we talk about this as ‘cost within, nation states. freedom neglects the importance of effectiveness’ or ‘value for money’. A Reciprocity makes ‘a fair go’ sustain- having the means to do what one policy that expends public monies to little able. As Barry notes: ‘If I am motivated wants. (Anderson, 1999, p.315) good effect, or that uses inefficient means by a desire to behave fairly, I will want to achieve a good that might have been to do what the rules mandated by justice Critical enablers of positive freedom achieved at less cost, does not deliver ‘a fair as impartiality require so long as enough are access over a complete life to primary go’ either to the recipient of the service or other people are doing the same. Thus, health care, education and training, to the taxpayers who fund it. people motivated by fairness reinforce

Page 18 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Table 1: Things to think and talk about when assessing ‘a fair go’ in public policy grandiose plans to convert our planet UNDERSTAND THE POLICY CONTEXT AND IDENTIFY GOALS AND OBJECTIVES into a new Jerusalem, but bourgeois Context In what context has the question of ‘a fair go’ arisen? liberals like myself are content to aim What is the policy problem? (What do we want to change or achieve?) at finding workable ways of making Relationships Who are the key ‘stakeholders’ (interested and affected parties)? life just a little bit more bearable for What is the nature of the relationship between them? everyone. (Binmore, 2008, p.332) Are there existing agreements, contracts or treaties between the parties? 1 Cf. the Commission’s own excellent background paper on ‘the Time What time constraints do we face? citizenship dividend’ (CFLRI, 2012). 2 As Rawls (2005, p.4) noted: ‘The political culture of a What time trends can we observe, and what are the implications of those trends democratic society is always marked by a diversity of now and in the future? opposing and irreconcilable religious, philosophical, and moral doctrines. Some of these are perfectly reasonable, and How are costs and benefits currently allocated between past, present and future this diversity among reasonable doctrines political liberalism sees as the inevitable long-run result of the powers of human generations? reason at work within the background of enduring free institutions.’ MULTI-CRITERIA COMPARATIVE ASSESSMENT OF POLICY OPTIONS 3 For example, Milton Friedman’s ‘Fair versus free’ argues uncompromisingly for the priority of liberty: ‘There is a real Criterion Status quo Option 1 Option 2 Option 3 role for fairness, but that role is in constructing general rules FAIR PROCESS and adjudicating disputes about the rules, not in determining the outcomes of our separate activities’ (Friedman, 1992). Impartiality 4 Analysis courtesy of Adrienne Fletcher, Knowledge Services, Ministry of Social Development. The Mana Party was formed Deliberative fairness in April 2011 following Hone Harawira’s resignation from the Mäori Party. The Progressive Party did not contest the 2011 Transactional fairness election. 5 In arguing (contra Rawls, 1971, pp.65, 101-04) that ‘justice Transitional fairness itself requires us to reward superior performance in a suitable manner’, Harsanyi nevertheless concurs with Rawls that ‘we Assessment of procedural fairness must not create needless economic and social inequalities’, and maintains that ‘such a policy would be fully compatible FAIR OUTCOMES with significantly smaller economic and social inequalities than we have today’ (Harsanyi, 2008, p.76). Assessed against the five dimensions of the Living Standards Framework 6 Fleurbaey and Maniquet do not treat efficiency as a criterion of fairness; rather, they introduce considerations of fairness Economic growth into welfare economics as a useful way of addressing ‘second-best policy problems’. In defining social ordering Sustainability for the future functions, efficiency is their central value (Fleurbaey and Maniquet, 2011, pp.22, 234). Increasing equity 7 Zajac notes (1995, pp.14, 77) that the relationship of Pareto efficiency to fairness is a crucial issue, for at least three Social infrastructure reasons: • strict Pareto optimality rarely exists: almost every policy Reducing risks change generates some losers; • if a Pareto-improving move were to be identified and And/or assessed against an agreed set of values, for example: implemented, how should gains from the exchange be divided?; Freedom • Pareto optimality may be possible in a static, risk-free world with perfect information, but policy-making happens Equity in a risky, dynamic world of imperfect information. 8 Chavas and Coggins (2003, p.226) report that, on their Efficiency analysis, ‘while better information typically generates improved efficiency, it can also contribute to unfair Reciprocity allocations. It also stresses the effects of asymmetric information in the evaluation of equity.’ Assessment of outcome fairness OVERALL ASSESSMENT Acknowledgements In September 2013 members of the one another’s motives’ (Barry, 1995, empirical analysis is not the cure for all University of the Third Age (Golden 8 p.51). policy ills. Bay) provided feedback on an outline of Central to ‘a fair go’ in public policy is the argument developed in this article, A matrix for comparative assessment what Cohen (1991) calls the interpersonal as did students in MAPP 523 (Politics, Table 1 summarises the approach I am test, or what Sen (2009, pp.xii–xiii) means Philosophy and Public Policy) in the proposing to the comparative assessment by ‘public reasoning’. The approach School of Government in October 2013. of policy options and the justification of ‘a outlined in this article intends to support A number of staff at Environment fair go’ in public policy. citizen engagement and deliberation, Canterbury also read a draft and discussed While assessment of options against through a public exchange of reasons, it in a seminar in February 2014. each criterion should be quantified where on practicable options to make our life The author is grateful to Malcolm possible, this matrix is offered not as a tool together fairer than it is now: Menzies, Philip Devenish, Steve Gibling, for technocrats to employ behind closed David Shanks, Jonathan Boston and doors in a misguided attempt to design the fact that fairness norms do not Michael Macaulay for their helpful review ‘perfect systems’, but as a framework to work like utopian thinkers would like comments on earlier drafts. guide public deliberation (‘things to think them to work should not discourage and talk about’). Quantification can and us from trying to use them in the should inform public policy-making, but manner in which they actually do work. Others are free to toy with

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 19 ‘A Fair Go’ in Public Policy

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(1777) An Inquiry Concerning the Principles of Morals (first 10.1126/science.1142996 publ. 1751), accessed March 2014 from http://www.gutenberg.org/ Sen, A. (1977) ‘Rational fools: a critique of the behavioral foundations of ebooks/4320 economic theory’, Philosophy and Public Affairs, 6 (4), pp.317-44 Isbister, J. (2001) Capitalism and Justice: envisioning social and Sen, A. (1999) Development as Freedom, New York: Knopf economic fairness, Bloomfield, CT: Kumarian Press Sen, A. (2009) The Idea of Justice, Cambridge, MA: Belknap Press of Kaplow, L. and S. Shavell (2002) Fairness Versus Welfare, Cambridge, Harvard University Press MA: Harvard University Press Simmons, A. (2010) ‘Ideal and nonideal theory’, Philosophy and Public Kerr, R. (2005) ‘Vote of thanks’, in R. Epstein, Fairness in a Liberal Affairs, 38 (1), pp.5-36 Society, Wellington: New Zealand Business Roundtable Singer, P. (1982) The Expanding Circle: ethics, evolution and moral Kilgallon, S. (2013) ‘Are some more equal than others?’, Sunday Star progress, Princeton: Princeton University Press Times, 27 March, p.A14, accessed March 2014 from http://www. Stiglitz, J. (2013) ‘Inequality is holding back the recovery’, New stuff.co.nz/life-style/life/8227563/Are-some-of-us-more-equal-than- York Times, 20 March, SR1, accessed March 2014 from http:// others opinionator.blogs.nytimes.com/2013/01/19/inequality-is-holding-back- Klosko, G. (1992) The Principle of Fairness and Political Obligation, the-recovery/?_php=true&_type=blogs&_r=0 Lanham, MD: Rowman & Littlefield Treasury (2013) Higher Living Standards, Wellington: Treasury, accessed Koch, T. (2002) Scarce Goods: justice, fairness, and organ March 2014 from http://www.treasury.govt.nz/abouttreasury/ transplantation, Westport, CT: Praeger higherlivingstandards Laswell, H. (1950) Politics: who gets what, when, how, New York: Peter Walzer, M. (1981) ‘Philosophy and democracy’, Political Theory, 9 (3), Smith pp.379-99 Levine, S. 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Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 21 Patrick Nolan

Lifting New Zealand’s Productivity a research agenda improved on. … Similarly, and in spite of New Zealand’s Sebastian Edwards (2013) wrote that when it comes to the wonderful showing in economy New Zealand appears to exhibit ‘Woody Allen ranking after ranking, there syndrome’. In most of Allen’s movies, he observed, the are a number of areas where main character is leading what appears to be a charmed life reforms would make the (‘interesting friends, a nice apartment, and a well-paying country’s position in the job’) but he still worries a lot. New Zealanders too ‘worry a world even better.’ So it is with New Zealand’s pro- lot. They worry about the economy and about the country’s ductivity, which is a measure of the position in the world.’ And, as Edwards went on to note, as economy’s ability to turn resources into goods and services. The latest figures ‘Woody’s movies progress, the viewers realise that, although suggest we are doing well. Over the last he is sweet and loveable, he has certain traits that could be couple of years measured sector output, labour productivity and multi-factor productivity have all been growing. And Patrick Nolan joined the Productivity Commission as a Principal Advisor in the Economics and not only is labour productivity growth Research team in February 2014. Before this he spent five years as the Chief Economist of Reform, picking up, but labour inputs are slowly a cross-party British think tank focused on public services and economic prosperity. Patrick completed his PhD on Working for Families in the School of Government at Victoria University of increasing too. Yet, when considered in a Wellington. wider context, the picture is not quite as

Page 22 – Policy Quarterly – Volume 10, Issue 2 – May 2014 rosy. Labour productivity growth since Figure 1: Sources of income growth in New Zealand the global financial crisis, and indeed throughout the 2000s, has been below 3 that of the 1990s. New Zealand is still 2.5 below the OECD average for output per capita and labour productivity. And 2 there is a question of how much of the ‘rock star’ growth expected in the next 1.5 year or so will be due to terms of trade increases and the Christchurch rebuild. 1 These factors will only take the economy rcent per year Pe 0.5 so far. We need to continue to lift our productivity. 0 The community of researchers 1992-2000 2000-2012 working to address these productivity- -0.5 Foreign income flows Terms of trade Labour productivity related issues in New Zealand, however, Labour utilisation GNI per capita is small and spread across a number of -1 organisations. There are gains to be made Source: Conway and Meehan, 2013, p.9 from coordinating research efforts. With this in mind, a Productivity Hub has been research agenda will evolve as progress is in labour utilisation, as the recovery established as part of the Government made and new knowledge generated. This from high unemployment and labour Economic Network. In July 2013 the is perfectly natural for a topic as complex participation moved towards natural Productivity Hub held a symposium to and important as productivity. This is limits. But growth in labour productivity discuss New Zealand’s relatively poor why the Productivity Hub’s governance slowed also (Conway and Meehan, 2013). productivity growth compared to other board felt that it was important to publish To some degree the effect of this OECD countries, and opportunities to this article summarising their assessment. slowing growth in labour utilisation turn this around. Following on from This is not a final word, but hopefully and productivity was offset by changes this symposium, the Productivity Hub’s the start of many more conversations on in New Zealand’s terms of trade (the governance board set out to develop a lifting productivity. ratio of export prices to import prices). Forward Looking Agenda of Research As the governor of the Reserve Bank (FLARE). The goal is to produce an What do we know about productivity? noted last year, New Zealand’s terms of agenda to aid in the coordination and The first step in developing FLARE was to trade were around 20% higher than the collaboration of research work on pull together what we already know about average for the 1990s (Wheeler, 2013). understanding and improving New New Zealand’s productivity experience This improvement, along with a rebound Zealand’s productivity performance. This and organise the major findings into following the Canterbury earthquakes article outlines the findings of the FLARE ‘buckets’: in particular, productivity and the global financial crisis, goes some process so far.1 performance, resources (e.g. natural and way to explaining the current period This interest in productivity is not intangible assets, people and capital) and of high growth. Yet this will only take new. Indeed, it is more than 50 years since intermediate outcomes (e.g. innovation, the economy so far, and consideration Conrad Blyth began his work measuring international connections and macro must be given to the long-run drivers of productivity at the New Zealand settings). economic performance. Institute of Economic Research (Blyth, The importance of lifting productivity 1961). Given this, the approach taken to Productivity performance becomes clearer when focus shifts from developing FLARE was not to develop a In the long run productivity is probably the past to the future. Like many other definitive review of the literature, but to the single most important factor in countries, New Zealand faces future highlight major findings, information determining a country’s wealth and challenges, including demographic gaps and relevant questions. A proposed well-being (Krugman, 1994). Take New change, environmental pressures, and agenda for addressing these questions was Zealand since the early 1990s. As shown in constraints and changes in the distribution also developed. The objective is to move Figure 1, increases in labour productivity of income and wealth (Upton, 2013). beyond simply identifying problems to, have made a bigger contribution to lifting In relation to the first, as Statistics New in turn, more closely identifying which gross national income (GNI) than any Zealand’s (2011) median population policy changes would be most effective other thing, accounting for over half of all projections show, between 2016 and in lifting New Zealand’s productivity and GNI growth. Yet this contribution must 2061 the number of people over the age the trade-offs involved in them. It is likely be seen against a backdrop of slowing of 65 is projected to increase by 142% to that there will be debate over the findings income growth over the 2000s. This largely 1,905,000 (from 788,000). The increase in and questions. It is also likely that the reflected a slow-down in the growth people over 65 makes up 79.3% of total

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 23 Lifting New Zealand’s Productivity – a research agenda projected population growth over these relatively efficient at utilising this resource to people management practices (Green years, and the median age will increase base (indicated by a relatively low natural et al., 2011). There has also been debate from 37.3 to 44 years, which will be resource depletion as a share of GNI over labour market regulations, which reflected in higher dependency ratios. (World Bank, 2013)), there is concern over affect the availability, flexibility and cost Important changes in the composition the management of some resources (such of labour (Frances, 2004). It has also been of the population will also take place, as water), and how natural resources are noted that gains could be made through with the Mäori and Pacifika populations, accounted for in the national accounts and better matching of skills and employers’ in particular, gaining population share productivity statistics. These resources needs, improved links between employers (Boston, Callister and Wolf, 2006). are not only valuable in themselves, but and the education and training systems, The fiscal effects of these demographic play a key role in shaping New Zealand’s and workplace training (Timmins et changes, such as on New Zealand intangible assets (e.g. New Zealand’s al., 2012; Barnes and Dixon, 2010). Superannuation and health expenditure, ‘clean and green’ reputation). A gap in Migration, or making New Zealand ‘a have been widely canvassed (Treasury, the knowledge of the full contribution place where talent wants to live’, to use 2013). What has been less widely of environmental assets creates a risk Paul Callaghan’s phrase, could also play canvassed is the economic effect of these that they will be undervalued (Clough, a role through increasing labour market demographic changes, including on Hickman and Stevenson, 2013; Kerr, density (McGuiness, 2013). And, finally, productivity. Guest (2013) showed that Coleman and Pemberton, 2013; Green while the school system does relatively population ageing affects productivity Growth Advisory Group, 2011). There well, this does not mean that there is no through the dependency ratio (ratio of are also gaps in our understanding about scope for improvement, particularly given the tail of underperformance. To a large degree the economy’s ... New Zealand has had a low ratio of capacity to utilise natural resources and people depends on capital. Hall and labour-to-capital prices, meaning that it Scobie (2005) argue that, in comparison has been relatively cheaper for businesses with Australia, New Zealand has had a low ratio of labour-to-capital prices, meaning to hire more workers than to invest in that it has been relatively cheaper for businesses to hire more workers than to physical capital. invest in physical capital. This high cost of capital relative to labour has been seen as a product of low national savings (although there is debate over this) and a shallow elderly dependents to workers), the second which industries are more or less eco- financial sector, which, in turn, lowers demographic dividend (potential increase efficient, and how structural economic capital intensity and negatively affects in savings as working lives increase) and change has influenced national-level eco- productivity (Dupuy and Beard, 2008; age complementarities (different skills) of efficiency measures. More generally, it has Cameron et al., 2007; Mason and Osborne, workers. This, he goes on to show, could been argued that New Zealand needs to 2007; Mazur and Alexander, 2001). But the have an aggregate negative impact on build more products around our existing cost of capital is not the only challenge. living standards of somewhere between biological base (with a stronger focus on The capacity of firms to make the most zero and 15% over the next 40 years. The intellectual property) (Maré, 2013; Smith, of capital spending is important too. width of this range highlights not only 2006). Information technology (ICT) is a good the inherent uncertainty of projections People are an important resource too. example. This has been shown to make a of the national economic impact of New Zealand generally does relatively strong contribution to labour productivity ageing, but also the value of getting the well in utilising the labour available (as growth (Statistics New Zealand, 2013), policy response right. An environment indicated by labour participation rates). yet the advantages of spending on new where workplaces successfully utilise the Further, while the quality of labour technology will only be fully realised when complementary skills of both younger is only partly captured in schooling, firms move beyond simply ‘computerising’ and older workers is, for instance, more this metric indicates that New Zealand or ‘web-enabling’ existing processes. This likely to face a loss in living standards produces good-quality labour by is especially important in New Zealand, closer to the zero end of the range rather international standards. Yet this is not as, although our investment in ICT as a than the 15% end. reflected in returns to education, as, share of GDP is about average compared despite having long working hours, New to a selection of other OECD countries, Resources Zealand’s per capita GDP is low. This the small size of the economy means that New Zealand’s abundant natural resources raises a number of issues. One is the a relatively higher proportion of GDP are an important factor in production weak nature of managerial capital in needs to be dedicated to this to achieve (Upton, 2013). Yet, although we are New Zealand, particularly when it comes equivalent ICT capability (as many ICT

Page 24 – Policy Quarterly – Volume 10, Issue 2 – May 2014 costs reflect a world price) (Productivity Innovation requires knowledge Nonetheless, as important as international Commission, 2014). absorption and knowledge application connections are (and they are important), (Lewis, 2008). Not only does the maximum gains come when these Intermediate outcomes technological frontier need to be pushed connections are supported by strong New Zealand’s economic geography means out, but firms need to make the most of domestic productivity performance. that it requires a set of structural policies these opportunities through developing By the end of the 1990s New Zealand that are attractive and welcoming enough new ways of working. However, the low was considered a world leader in to overcome distance and size and attract level of business R&D implies not only implementing product-market regulation the drivers of prosperity – investment, limited knowledge creation but also that was supportive of competition in skills and ideas (Guillemette, 2009). There an inability to absorb innovation from areas where it was viable. Since then, is a reasonably broad consensus on this, elsewhere. Further, as Knuckley and the intensity of reform has fallen and but less well understood is how specific Johnston (2002) showed, the R&D efforts New Zealand has lost some of its policy interventions and approaches could that are undertaken tend to be by a small advantage (Conway, 2011). This may be help address these challenges. Further, group of ‘leader firms’ (which they defined especially problematic given the ‘low as good as New Zealand’s reforms to the business environment have been in the past, the world is not standing still. Approaches that were once world-first are By the end of the 1990s New Zealand now more common; there are signs that industry concentration has increased; was considered a world leader in and regulatory risks and costs have risen in key areas. While New Zealand remains implementing product-market regulation an entrepreneurial country – in the sense that was supportive of competition in that it is relatively easy to start a firm – innovation and international engagement areas where it was viable. are persistent concerns. Innovation is important, as not only can it push out the technological frontier, it can help move laggard firms up to it. There is a popular view that as the top 20% in terms of practices and density’ nature of the New Zealand New Zealanders are characterised by outcomes). The size of the New Zealand economy and where New Zealand sits ‘ingenuity and innovation’. However, the economy may make leveraging off public relative to the world technological economy-wide evidence for this claim is R&D efforts particularly important frontier. But the optimal stance of mixed. Crawford et al. (2007) argue that (Crawford et al., 2007). regulation requires careful thought. New Zealand’s performance in patents There is an important distinction Take competition policy. It could be that and private research and development between an economy being open (an strengthening competition will reallocate (R&D) share is on a par with (or even absence of formal barriers to flows taking resources to more productive firms and above) what would be predicted given our place) and being connected (high actual thereby increase overall productivity. distance from major R&D-performing flows). New Zealand is relatively open but However, an alternative view is that larger countries, population, average firm size only moderately well connected (Skilling, firms and/or firms cooperating with one and industry composition. However, 2012). The flows of people and inward another may be more likely to achieve while the OECD (2013) ranks New investment are relatively high; but imports, innovation, which is also an important Zealand sixth in terms of academic exports and outward direct investment driver of productivity. publishing rates (publications in the top- are low. New Zealand firms’ exports There is also a question of whether quartile journals per GDP), we are only are not well integrated into global the balance of the economy is right 19th in terms of patenting rates (based on value chains, and they have difficulty – particularly the role of consumer triadic patent families: a set of patents in assessing and absorbing technological spending and investment in housing assets different countries that protect the same developments. Foreign direct investment – given the relative capital shallowness invention). On per capita expenditure on and outward direct investment could of the New Zealand economy. As Helm R&D by business we rank 31st. provide important mechanisms for (2012) argued in the United Kingdom, Further, without outperforming other building these international connections irrespective of whether it is funded counties in the upstream generation of (Wilkinson, 2013). Regulatory coordina- domestically or from overseas, investing innovation (such as patents and private tion, particularly between New Zealand in infrastructure requires an economy ‘to R&D), New Zealand cannot expect to and Australia, can play an important create the space to pay the bills, to provide match other countries in commercialising role too (Productivity Commission, the savings, to go into the investment’. and capturing value from innovation. 2012; Guerin, 2005; Goddard, 2002). In short, it is necessary to consider

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 25 Lifting New Zealand’s Productivity – a research agenda sacrificing some current consumption • added value (additionality): • How does productivity vary across to invest in the long-term drivers of addressing a clear gap in firms and sectors? growth. Further, while New Zealand has understanding and not duplicating • Which firms and sectors have the declining productivity relative to other work elsewhere; highest productivity growth (i.e., countries, it also has an exchange rate • contribution to capacity building: the who are the star performers)? that could be argued to be persistently potential to be a catalyst for other • What characteristics (age, size, capital overvalued. This high exchange rate may work (opening avenues for further intensity, ownership, use of migrant reflect traditional economic drivers, such research) and to contribute to staff labour, R&D, etc.) do they share (or as the terms of trade, relative cyclical development; differences do they have) relative to economic performance and inflation • feasibility: attainable objectives, low-productivity growth firms and outcomes (McDermott, 2013); but it realistic scale, timescale, scheduling sectors? also may, at times, have partly reflected and resource costs; and Although these are largely descriptive the interaction of monetary and fiscal • scholarly importance: contribution questions, they are nonetheless important, policy (with expansionary fiscal policy to theory and methodological as clearly identifying what you are potentially meaning that monetary policy development. dealing with is a useful starting point for analysis. Further, this descriptive analysis will provide a basis for an improved understanding of how changes take place There would ... be value in understanding at the level of the firm. As Sautet (2000) noted, many currently accepted theories how effective New Zealand firms and of the firm cannot provide insights into research institutes are in bringing important market phenomena such as entrepreneurship. The conceptual insights innovations to market ... as well as whether generated will then, in turn, lead to further empirical questions, some of which may the market rewards more innovative firms be suited to the LBD, and some of which with more resources ... may require other approaches (such as case studies). This iterative process of data analysis and theory-building will help researchers move beyond simply had to be tighter than otherwise) (Brook, The projects will make use of a identifying problems to more closely 2012). partnership with Motu Economic and identifying which policy changes could Public Policy Research to exploit Statistics be most effective in lifting New Zealand’s A Forward Looking Agenda for Research New Zealand’s Longitudinal Business productivity. The objective of FLARE is to provide a list Database (LBD). The LBD is a rich The remaining questions can be of relevant research projects which would resource for understanding New Zealand grouped into four key themes. The advance understanding of New Zealand’s firms and can provide a uniquely detailed first relates to the efficiency of resource productivity issues and ultimately view of their behaviour and performance allocation in New Zealand. As Restuccia improve policy. A short-list of proposed across a broad range of topics (Fabling, (2014) and Bertelsman and Doms (2000) projects for the next two years is shown 2009). The aim is to not only produce have shown, the systematic reallocation of in Figure 2. A short-list has been chosen new research reports but, more generally, employment and hours can explain many because, although lifting productivity to build broader practitioner capability countries’ experiences of productivity requires action across a range of fronts, with these data: a primary objective is to catch-up, slow-down or stagnation. It longer lists fail to illustrate priorities ensure that more people can work with appears also worth considering this in and can distract from difficult questions. these data and, as a result, expand the the New Zealand context, as the firm- Further, as is common in research, this set of research projects undertaken with level distribution of productivity appears agenda will evolve as progress is made them. This approach should also help to to be wide and so the potential benefits and new knowledge generated (or as the contribute to efforts to improve measures of improved resource allocation could military adage goes, ‘no plan survives of productivity and understanding of be significant. There are also important contact with the enemy’). The projects on their limits, including the differences regional economic questions, with there this short-list have been prioritised based between firm-based and economy-wide being a sizeable productivity premium on judgements about their: (macro) measures. in Auckland, around half of which can • impact on policy outcomes: relevance One early output will be more detailed be attributed to industry composition to key government priorities and data on the demographic characteristics (Maré, 2008). It would thus be useful to direct potential to influence policy of firms in New Zealand. Key questions know what factors influence the speed and/or practice; include: with which low-productivity firms can

Page 26 – Policy Quarterly – Volume 10, Issue 2 – May 2014 catch up to high-productivity firms. This, Figure 2: Proposed priority projects for the next two years in turn, highlights the importance of how innovation, technology and management 2. Efficiency of 3. Innovation practices are diffused across firms, and the potential roles that small markets, resource allocation ecosystem limited international connections and a) What is the firm level distribution of a) Who receives government assistance competition (or collaboration) could productivity and diffusion of practices? and does it make a difference in the play. Reallocation can also raise important Do more productive firms attract rate of innovation? resources over time? political economy issues (Grennes, b) What do the public-private links look 2003). b) What is the downstream impact of like and how effective is collaboration The second theme relates to the poor upstream performance? in New Zealand? innovation ecosystem. This is a topic of c) What is the optimal stance of c) How effective are New Zealand firms perennial concern but also substantial regulation (esp. competition) given and research institutes at commercial- government activity over many years. economic geography? ising innovation? We need to better understand not only who receives government assistance, but d) How can firms maximise returns from d) What is the position of New Zealand infrastructure and/or ICT? firms in global value chains? What what difference this makes to the rate of risks does this pose? innovation and productivity growth. The case for any intervention needs to be made, and, as the OECD has noted (Warwick, 2013), more monitoring and evaluation 1. Theory of the firm of industrial policy initiatives is likely to and firm-level be valuable. The right mechanisms for productivity and approaches to support (for example, direct grants versus tax relief, or targeted a) Demographic picture versus horizontal approaches) must be b) Iterative conceptual framework chosen.2 There is also growing interest in how New Zealand researchers and organisations (including business, iwi and other community groups) collaborate 4. Skills, migration and 5. Natural and with each other. A better understanding demographic change intangible assets of these science-to-business links, along a) What is the skill make-up of firms and a) How significant are natural resources with the role that the public sector does managers and how is this reflected in to total input use in New Zealand and and should play in these, would be workplace productivity? are missing natural inputs affecting valuable (Mäori Economic Development our understanding of productivity? Panel, 2012). There would also be value b) What strategies do firms with b) How do industries perform in relation in understanding how effective New recruitment difficulties use? E.g., does to eco-efficiency measures and what Zealand firms and research institutes migration play a role in increasing labour market density? barriers are there to adoption of are in bringing innovations to market environmentally sustainable (both domestic and international) and c) How will population ageing affect technologies? capturing the value from innovations, as productivity growth? well as whether the market rewards more c) How should intangible assets be d) What relationship is there between measured and what role do they play innovative firms with more resources productivity and real wage growth? in productivity and market power? (and, ultimately, whether such firms are more likely to survive). The third theme brings together Source: Productivity Hub important questions regarding skills, migration and demographic change. This shows the importance of the ‘race market, this could (along with capital Like many other countries, New Zealand between education and technology’ and deepening) help offset a shrinking labour has to adjust to demographic change. of educational infrastructure evolving force: the strategies that firms use in this Not only is the population getting so that the supply of skills more closely area are crucial. It would also be useful older, but the ethnic composition of the matches changes in demand (Goldin and to better understand the relationship population is changing too. As a result, Katz, 2008). It also shows the importance between productivity growth and real it will be more important for firms to of improving management practices. wage growth, including the effect this may utilise the skills of all population groups Further, while migration already plays have on different population groups. (people of different ages, for example). a key role in the New Zealand labour

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 27 Lifting New Zealand’s Productivity – a research agenda

The fourth theme highlights the (Andrade, 1964). This gets to the heart Acknowledgements importance of natural and intangible of New Zealand’s economic challenge. This article has drawn on previous work assets. While New Zealand has abundant Productivity is important everywhere, of and comments from a large number natural resources, continuing to manage but even more so for a small and remote of people, including Paul Conway, Geoff these effectively will be essential. country like New Zealand. And this is a Lewis, Murray Sherwin, Graham Scott, These assets are not only valuable as challenge for economic research too. Many Sally Davenport, Simon Wakeman, Lisa traditional factors in production, but of the conventional drivers (e.g. physical Meehan, Guanyu (Fish) Zheng, Judy play a key role in shaping New Zealand’s capital investment; years of schooling) do Kavanagh, Dave Heatley, Camilla Lundbak, intangible assets (such as the benefit not adequately explain our productivity Mayuresh Prasad and Athene Laws at the from New Zealand’s ‘clean and green’ performance. Further, not only does the Productivity Commission; Roger Procter reputation). Intangible assets (brands, question appear more complex here, and Jason Timmins at the Ministry of patents, franchises, software, research but the domestic capacity to undertake Business, Innovation and Employment; programmes, ideas and expertise) have research is small and spread across a Girol Karacaoglu and John Jenssen at the become an increasingly important factor number of organisations. This article has Treasury; Peter Gardiner and Adam Tipper in production, but are not measured or thus outlined efforts by the Productivity at Statistics New Zealand; Matt Nolan understood particularly well in New Hub to develop a shared agenda for at Infometrics; Ruth Richardson; Peter Zealand. While these questions raise research on understanding and improving Conway and Bill Rosenberg at the New significant measurement challenges, this New Zealand’s productivity, particularly Zealand Council of Trade Unions; Brent does not mean that robust measurement at the level of the firm. The objective is to Layton and Doug Watt at the Electricity should not be attempted. As the Austra- move beyond simply identifying problems Authority; Mark Ross and David Cooper lian Productivity Commission has noted, and to, in turn, more closely identify which at Federated Farmers; Geoff Simmons at valuing ‘environmental outcomes in these policy changes would be most effective in the Morgan Foundation; and Peter Bailey types of situations, while difficult and lifting New Zealand’s productivity. at the Ministry of Foreign Affairs and sometimes contentious, may assist with Trade. All errors and omissions are the 1 Readers are welcome to direct questions or comments on making trade-offs in a more considered the FLARE process or on this article to the author at patrick. responsibility of the author. way’ (Baker and Ruting, 2014, p.11). [email protected] or on 64 4 903 5172. 2 When it comes to government support for business, the OECD has distinguished between ‘targeted’ and ‘horizontal’ approaches (foundational policies) (Warwick, 2013). Conclusion Targeted approaches are restricted to particular firms or sectors, while horizontal approaches apply more generally There is a line attributed to Ernest and can include improving the regulatory environment and Rutherford which goes: ‘we’ve got the performance of regulatory institutions. On targeted policies, there is a question of whether firm size or age no money, so we’ve got to think’ should be seen as the main driver of innovation and growth.

References Andrade, E. (1964) Rutherford and the Nature of the Atom, New York: Clough, P., M. Hickman and J. Stevenson (2013) Valuing Natural Assets: Anchor Books essential for decision making, working paper 2013–03, Wellington: Baker, R. and B. Ruting (2014) Environmental Policy Analysis: a guide New Zealand Institute of Economic Research to non-market valuation, staff working paper, Canberra: Australian Conway, P. (2011) How to Move Product Market Regulation in New Productivity Commission Zealand Back Towards the Frontier, OECD Economics Department Barnes, M. and S. Dixon (2010) Employer-funded Education and working paper 880, Paris: OECD Training: who receives it?, Wellington: Department of Labour Conway, P. and L. Meehan (2013) Productivity by the Numbers: the Bertelsman, E. and M. Doms (2000) ‘Understanding productivity: lessons New Zealand experience, research paper, September, New Zealand from longitudinal microdata’, Journal of Economic Literature, 38, Productivity Commission pp.569-94 Crawford, R., R. Fabling, A. Grimes and N. Bonner (2007) ‘National R&D Blyth, C. (1961) Economic Growth, 1950–60, research paper 1, and patenting: is New Zealand an outlier?’, New Zealand Economic Wellington: New Zealand Institute of Economic Research Papers, 41 (1), pp.69-90 Boston, J., P. Callister and A. Wolf (2006) The Policy Implications of Dupuy, M. and J. Beard (2008) Investment, Productivity and the Cost Diversity, Wellington: Institute of Policy Studies of Capital: understanding New Zealand’s ‘capital shallowness’, Brook, A. (2012) ‘Making fiscal policy more stabilising in the next productivity paper 08/03, Wellington: Treasury upturn: challenges and policy options’, Rules and Institutions for Edwards, S. (2013) ‘New Zealand’s international competitiveness Sound Fiscal Policy after the Crisis: workshops and conferences, challenges and the Woody Allen syndrome’, New Zealand Economic proceedings of the Banca d’Italia workshop, Perugia, 31 March–2 Papers, 47 (1), pp.8-26 April, pp.653-96 Fabling, R. (2009) A Rough Guide to New Zealand’s Longitudinal Cameron, L., B. Chapple, N. Davis, A. Kousis and G. Lewis (2007) Business Database, Global COE Hi-Stat discussion paper series, 103, New Zealand Financial Markets, Saving and Investment, policy Tokyo: Institute of Economic Research, Hitotsubashi University perspectives paper 07/01, Wellington: Treasury

Page 28 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Frances, J. (2004) Institutions, Firms and Economic Growth, working McDermott, J. (2013) ‘Bringing it all together: where does this leave us, paper 04/19, Wellington: Treasury and where to from here?’, presentation to the exchange rate policy Goddard, D. (2002) ‘Business laws and regulatory institutions: forum Issues and Policy Implications, Reserve Bank of New Zealand, mechanisms for CER coordination’, in A. Grimes, L. Wevers and G. 26 March Sullivan (eds), States of Mind: Australia and New Zealand 1901– McGuiness, W. (2013) ‘Editorial’, Talent NZ: creating a place where 2001, Wellington: Institute of Policy Studies talent wants to live, McGuiness Institute Goldin, C. and L. Katz (2008) The Race between Education and OECD (2013) Comparative Performance of National Science and Technology: the evolution of U.S. educational wage differentials, Innovation Systems, Paris: OECD 1890 to 2005, Cambridge, MA: Harvard University Press Productivity Commission (2012) Strengthening trans-Tasman Economic Green Growth Advisory Group (2011) Greening New Zealand’s Growth, Relations: a joint study – final report, Wellington: Productivity Wellington: Ministry of Economic Development Commission Green, R., R. Agarwal, P. Brown, H. Tan and K. Randhawa (2011) Productivity Commission (2014) Boosting Productivity in the Services Management Matters in New Zealand: how does manufacturing Sector: second interim report – competition and ICT topics, measure up?, occasional paper 11/03, Wellington: Ministry of Wellington: Productivity Commission Economic Development Restuccia, D. (2014) ‘Reallocation and productivity’, public lecture, Grennes, T. (2003) ‘Creative destruction and globalisation’, Cato Journal, Productivity Commission, Wellington, 4 March 22 (3), pp.543-58 Sautet, F. (2000) An Entrepreneurial Theory of the Firm, New York: Guerin, K. (2005) Regulatory Harmonisation: issues for New Zealand, Routledge working paper 01/01, Wellington: Treasury Skilling, D. (2012) ‘Perspective: there is no such thing as domestic Guest, R. (2013) Population Ageing and Productivity: implications and policy’, Landfall Strategy Group policy options for New Zealand, working paper 13/21, Wellington: Smith, K. (2006) Public Policy Framework for the New Zealand Treasury Innovation System, occasional paper 06/06, Wellington: Ministry of Guillemette, Y. (2009) Structural Policies to Overcome Geographic Economic Development Barriers and Create Prosperity in New Zealand, OECD Economics Statistics New Zealand (2011) ‘National population projections: 2011- Department working paper 696, Paris: OECD base to 2061’, median projected probability distribution Hall, J. and G. Scobie (2005) Capital Shallowness: a problem for New Statistics New Zealand (2013) Information Technology’s Contribution to Zealand, working paper 05/05, Wellington: Treasury Labour Productivity Growth, Wellington: Statistics New Zealand Helm, D. (2012) Keynote speech, Building Confidence in Infrastructure Timmins, J., G. Mason, P. Mok, P. Nunns and P. Stevens (2012) conference, Reform, 14 June To Make or Buy (Skills): an analysis of training decisions using Kerr, S., A. Coleman and J. Pemberton (2013) ‘Water: commodity or microdata, occasional paper 12/6, Wellington: Ministry of Economic commons’, Wellington: Motu Development Knuckey, S. and H. Johnston (2002) Firm Foundations: a study of New Treasury (2013) Affording our Future: statement on New Zealand’s long Zealand business practices and performance, Wellington: Ministry of term fiscal position, Wellington: Treasury Economic Development Upton, S. (2013) ‘Fiscal and other risks over the long term’, Policy Krugman, P. (1994) The Age of Diminished Expectations, Cambridge, Quarterly, 9 (4), pp.9-14 MA: MIT Press Warwick, K. (2013) Beyond Industrial Policy: emerging issues and new Lewis, G. (2008) Innovation and Productivity: using bright ideas to work trends, OECD science, technology and industry policy papers 2, smarter, productivity paper 08/05, Wellington: Treasury Paris: OECD Mäori Economic Development Panel (2012) He kai kei aku ringa – the Wheeler, G. (2013) ‘Improving New Zealand’s economic growth’, Crown–Mäori Economic Growth Partnership: strategy to 2040, Mäori speech delivered to Canterbury Employers’ Chamber of Commerce, Economic Development Panel Christchurch, 1 February Maré, D. (2008) Labour Productivity in Auckland Firms, Motu working Wilkinson, B. (2013) New Zealand’s Global Links: foreign ownership and paper 08-12,Wellington: Motu the status of New Zealand’s net international investment, Wellington: Maré, D. (2013) ‘Lessons for New Zealand from spatial economics’, New Zealand Initiative presentation to the Productivity Hub symposium Unpicking New World Bank (2013) Table 4.10: World Development Indicators: towards a Zealand’s Productivity Paradox, Wellington broader measure of national income, World Development Indicators, Mason, G. and M. Osborne (2007) Productivity, Capital-intensity and Washington: World Bank. Labour Quality at Sector Level in New Zealand and the UK, working paper 07/01, Wellington: Treasury Mazur, E. and R. Alexander (2001) ‘Financial sector development and economic growth in New Zealand’, Applied Economics Letters, 8 (8), pp.545-9

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 29 Liz Brown

Overview of the New Zealand National Integrity System The year 2013 seemed particularly appropriate for the assessment as it was ten Assessment 2013 years since TINZ’s first NIS assessment, and was also the centenary of the Public In 2012 Transparency International New Zealand (TINZ) Service Act 1912 (which came into effect in 1913). Sadly, it also marked the death of decided that during 2013 it would conduct a National Jeremy Pope in 2012, a New Zealander who was one of the founders of Transparency Integrity System (NIS) assessment for New Zealand. International and the pioneer of the New Zealand has always rated highly on the Corruption concept of a national integrity system. The 2013 report is dedicated to his memory. Perceptions Index (CPI) published by Transparency While the assessment found that current perceptions of New Zealand’s International, and in recent years has consistently ranked integrity are generally warranted, its first or first equal. However, the CPI is precisely what its core message is that it is beyond time for serious and urgent action to protect and name suggests, an index based on perceptions of a country’s extend integrity in New Zealand. corruption status, the perceptions being those of a number The National Integrity System of international agencies. TINZ considered the time was A good working definition of a National Integrity System is ‘the institutions, laws, ripe to test the reality behind the perceptions and assess the procedures, practices and attitudes that strengths and weaknesses of New Zealand’s system. encourage and support integrity in the exercise of power’ (Brown, 2005, p.1).

Liz Brown, ONZM, MA (Oxon), MPP (VUW) is a former Banking Ombudsman and was the project An assessment of it is an evaluation of manager for the New Zealand Integrity plus NIS Assessment. In addition, Liz also authored the the principal governance systems in the chapter on the ombudsman NIS pillar. relevant country that, if they function well

Page 30 – Policy Quarterly – Volume 10, Issue 2 – May 2014 and in balance with each other, constitute NATIONAL INTEGRITY SYSTEM an effective protection against the abuse of power. Those governance systems form t the pillars of the ‘temple’ that is used as t s a graphic representation of an NIS. The s pillars rest on foundations, which are the Media Media Executive Executive Business Judiciary Business Judiciary Ombudsman Legislature Ombudsman key norms, ideals and ethics of the various Legislature Civil Society Civil Society Public Sector Public Sector Political Partie Political Partie Audit Institution Audit Institution Law Enforcement aspects of society. If the foundations are Law Enforcement Electoral Managemen Electoral Managemen sound, then they are capable of supporting a sound NIS. In an NIS assessment, the foundations are assessed along with the Political, Social, Cultural, Economic, Environmental, Treaty of Waitangi pillars. • its governance: its accountability and economic inequality is a threat to social Adapting the assessment methodology transparency, along with the means cohesion, and there are perceptions of the The methodology developed by by which its integrity and that of its level of fraud and corruption that suggest Transparency International for the members or employees is assured; public recognition of the need for a more assessment of an NIS is intended for use • its role: the extent to which it can proactive approach to the protection of by any country at any level of development and does contribute to the integrity New Zealand’s integrity. and is focused on corruption and on of the system as a whole. anti-corruption activity. It needed some Each pillar was also assessed for Political-institutional adaptation to reflect the particular compliance with any specific obligations In general, democracy in New Zealand characteristics of New Zealand’s NIS, under the Treaty of Waitangi, and in is consolidated and stable. Most political and also to make it more relevant to an more general terms for activities relevant institutions function effectively and environment in which corruption, though to the Treaty. This part of the assessment the political and civil rights of citizens undoubtedly present, is not endemic. used indicators developed by TINZ after receive adequate protection. International Accordingly some changes and additions much discussion and consultation with surveys generally give New Zealand a were made: interested parties. high ranking. However, there is a decline • The Treaty of Waitangi, as one Similarly, each of the pillar found- in confidence in political parties and in of New Zealand society’s key ations was assessed using either the politicians generally. foundations and a major safeguard indicators developed by Transparency against the abuse of majority power, International (political, social, cultural Sociopolitical was included among the foundations and economic foundations) or indicators While social divisions exist in New and also integrated across the developed by TINZ (Treaty of Waitangi Zealand, especially along economic and individual pillar assessments. and environment). ethnic lines, diversity is generally accepted. • A further additional foundation was The assessment process involved desk Divisions and differences seldom result in the environment. A high-integrity research and more than 100 interviews significant conflict. There is a weakness in society needs to be underpinned and consultations. A public workshop at the link between society and the political by sound environmental values the launch of the project in November system, due in part to the weakness of and governance practices to avoid 2012 helped to identify issues that political party organisations and unions, the exploitation of power over the were likely to arise and also to identify and in part to a civil society that is healthy environment to the detriment of potential interviewees. Further workshops and active but generally focused on non- society as a whole. to present and discuss emerging findings political functions. A strong history • Selected issues were examined and were held in Wellington in May 2013 of Mäori political activism and a well- analysed in depth, and some were and in Auckland in August 2013. A final organised environmental movement the subject of supplementary or workshop in Wellington in September stand out as exceptions. additional papers. 2013 considered the draft report. Socio-economic Assessing the NIS The foundations of the NIS New Zealand generally has a high standard Each pillar of the NIS was assessed using The foundations of New Zealand society of living, low inflation, and good access to a set of indicator questions developed by were generally found to be sound and to housing and public services. It is still seen Transparency International to measure support a high-trust society, economy and as a good place to bring up children and the following aspects of its functioning, polity, with a general culture that does to form new businesses. There is evidence both in law and in practice: not tolerate overt corruption. Political that these qualities are currently fragile, • its capacity: the extent of its and civil rights are assured, elections are especially taking into account the growth in resources and its independence from free and fair, and there is wide support economic inequality since 1985. The need unwarranted external interference; for democratic institutions. However, for business innovation is recognised, but

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 31 Overview of the New Zealand National Integrity System Assessment 2013

the parliamentary culture to the detri- NATIONAL INTEGRITY SYSTEM ment of other important functions. There is a need to strengthen Parliament by giving more attention to the quality and constitutionality of law-making and to the effectiveness of public spending. Legislative processes are generally transparent and there are excellent opportunities for the public to participate in the work of select committees. Parliamentary administration is less t t transparent and the Official Information s s Act should be extended as recommended by the Law Commission (New Zealand Law Commission, 2012). Judiciary Legislature Executive Public Sector Law Enforcement Electoral Managemen Ombudsman Supreme Audit Institution Political Partie Media Civil Society Business Judiciary Legislature Executive Public Sector Law Enforcement Electoral Managemen Ombudsman Supreme Audit Institution Political Partie Media Civil Society Business Parliament’s integrity systems lack formal regulation, but the rules about Political, Social, Cultural, Economic, Environmental, Treaty of Waitangi integrity are clear, fairly applied and effective. There is a reluctance to Role Governance Capacity address new risks or respond to rising expectations of integrity: there is no there has been limited commercial success the government and Mäori, although it is formal code of conduct, and Parliament in this area and private investment is low. not enforceable in law unless specifically has declined proposals for the regulation incorporated into legislation. Mäori of lobbying and for independent oversight Socio-cultural rights are still vulnerable to majoritarian of members’ travel expenses. New Zealand’s cultural identity is pre- will. The Waitangi Tribunal and the Assorted mechanisms give Parliament dominantly bicultural, with some multi- Treaty settlement process go some way to adequate powers for holding the cultural characteristics. Egalitarianism is addressing Mäori grievances and historic executive to account. Its oversight of fiscal important, though decreasingly so. There injustices. management is only moderate by the is general confidence in the public service, standards of international good practice in the way democracy has developed and The pillars of the NIS and there is a low level of direct public in the trustworthiness of individuals. None of the pillars of the NIS was found to engagement on the budget process. be weak, and some, especially among the Parliament is directly and continuously Socio-environmental watchdog agencies such as the Office of the engaged in Treaty of Waitangi matters Allocation of access to natural resources Auditor-General, were found to be very and appears to give effect to its spirit and and the control of pollution do not strong. Nor were there gross disparities principles. appear to have been subject to corrupt between pillars, although the media and practices, although compliance with the the political parties were distinctly weaker The political executive – Cabinet relevant regulations is variable. More than the average. The Cabinet has great power to make needs to be done to ensure the integrity The diagram above shows the com- policy decisions and the prime minister is of New Zealand’s claim to be ‘clean and parative performance of the pillars in powerful within it because of the right to green’. Some important environmental the three aspects of capacity, governance allocate and change ministerial portfolios. issues are not being addressed effectively and role. In order to enable international It has some powers that in other and the quality of environmental comparisons of relative pillar rankings, countries have constitutional or statutory governance is variable. The system is the Treaty of Waitangi aspect was not protection, such as the power to appoint generally appropriate for local issues, included. board members to most statutory bodies. but inadequate for addressing national, There has been public concern over some systemic and cumulative issues. There are The legislature appointments that were seen as political active civil society organisations, including The introduction of proportional re- patronage. iwi organisations, and some recognition of presentation has increased Parliament’s There is a tradition of effective the legitimacy of Mäori values in resource effectiveness as a check on the execu- self-regulation through the Cabinet management. tive (although the executive continues to Manual, reporting of public sector dominate), and it is more representative activity to Parliament, the independent Treaty of Waitangi of the community. A backlog in the leg- scrutiny of officers of Parliament, the The Treaty forms a general framework islation process is being addressed. How- Official Information Act and the use of for the approach to relations between ever, inter-party contestation dominates parliamentary questions. This generally

Page 32 – Policy Quarterly – Volume 10, Issue 2 – May 2014 provides a high level of transparency recommendations on claims relating to While procurement processes have and accountability for decision-making the practical application of the Treaty, improved considerably, specific enhance- and implementation, and also promotes though there is a weakness in that its ments are still needed, especially in ministers’ integrity. powers are recommendatory only. Judicial record-keeping. The public sector has In other respects the power of Cabinet education includes awareness of the been helpful in promoting integrity is not effectively balanced, and there are promotion of the Treaty in the context among exporters, but could do more to concerns about the relative dominance of of New Zealand’s conditions, history encourage integrity-focused education the executive. In making appointments, and traditions. There are Mäori judges, and training in wider civil society. Cabinet may introduce candidates outside especially in the district courts, but only The public sector complies with its the normal assessment process; ministers three with acknowledged Mäori heritage legal responsibilities under the Treaty may resist the appropriate independence in the High Court. of Waitangi, but little priority is given of the public sector by failing to encourage to oversight and policy development or listen to free and frank advice; local The public sector in this area. Mäori are reasonably well government roles may be shifted to central Of all the pillars, the public sector was the represented among public service government; and Cabinet (and individual one most intensively studied. Specialist employees, but much less so on Crown ministers) may resist the spirit and intent researchers contributed in the fields of entities. of the Official Information Act in dealing with requests for information. Ministerial accountability for the collective coherence ... one reason why the law enforcement agencies did and effectiveness of policies is relatively weak. The Cabinet Manual acknowledges not rate particularly highly: they are multi-purpose the status of the Treaty of Waitangi as a founding document of government in New bodies and there is no agency with a close focus Zealand. In general Cabinet appears to be meeting its Treaty-related responsibilities. on the prevention, detection, investigation and prosecution of bribery and corruption. The judiciary The judiciary is one of the strongest pillars of the NIS and has high standards of Crown entities, environmental governance, Law enforcement agencies accountability, transparency and integrity. fiscal transparency, local government and While New Zealand has a number of It is an important check on executive public procurement. Their work was used agencies with law enforcement functions, decision-making. There are some in writing this section of the report and the relevant agencies for the purposes of specific transparency issues in relation was also published as supplementary or the NIS assessment were the Police and to the judicial appointment process (the additional papers. the Serious Fraud Office. Both were found government has announced changes to At a general level, the institutional and to be adequately resourced and generally this process), the absence of a requirement governance arrangements strongly support independent and accountable, with, by for financial disclosure, a lack of regular ethical behaviour, suppress corruption, international standards, low levels of public reporting on the activities of the and promote transparency and high levels internal corruption. judiciary, and some weaknesses in public of operational accountability. There are, In a standard NIS assessment there is access to court information. however, pressures (including from chief one pillar for law enforcement agencies There have been recent reviews of executive appointment policies and heavy and another for anti-corruption agencies. the administration of justice from the use of organisational restructuring) As New Zealand has no dedicated anti- perspective of value for money and that have promoted fragmentation and corruption agency, the two pillars were ‘customer satisfaction’. The effects on the affected the capacity of the public service combined for this assessment. This is judiciary of resultant changes are not yet to provide free and frank advice and to one reason why the law enforcement apparent, but there is the potential for assure high-quality regulatory processes. agencies did not rate particularly highly: the perception of some conflict between Evidence of the impact of public sector they are multi-purpose bodies and there measures intended to improve efficiency, policies is insufficient to ensure that they is no agency with a close focus on the on the one hand, and the need to preserve are fit for purpose. Local government’s prevention, detection, investigation and the rule of law and rights of access to important role in implementing national prosecution of bribery and corruption. justice on the other. regulations is impaired by an incoherent The Serious Fraud Office prioritises The judiciary recognises the interface with central government. bribery and corruption cases, but it has constitutional status of the Treaty of At a practical level, there has been no statutory obligation to do this, and no Waitangi. There is a separate legal resistance to the obligations established formal role in prevention or education. regime concerned with Mäori land, by the Official Information Act. Another reason for the rating is that, and the Waitangi Tribunal makes in considering the role of the agencies,

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 33 Overview of the New Zealand National Integrity System Assessment 2013 the assessment considers the law that The ombudsman their membership low and their relation- they enforce as well as the scope of The Office of the Ombudsman meets high ship with voters weak. However, they do their activities. The most relevant law standards of independence, accountability play a strong role in highlighting and in New Zealand is found in the Secret and integrity. It is an important check combating impropriety and potentially Commissions Act 1910 and the Crimes on the exercise of administrative power corrupt practices in public life. Act 1961, both of which are recognised to and on the proper use of the official Political parties have no legal or be outdated and in serious need of review information legislation. special obligations under the Treaty of and revision. In addition, New Zealand Funding has not kept up with an Waitangi, but most parties take the Treaty has yet to ratify the United Nations increase in complaints and with the allo- seriously and pay special attention to its Convention against Corruption, and a cation of new functions, and a substantial ramifications for public policy.ä M ori recent review by an OECD working group backlog was found to have developed. institutions are generally strong and found slow progress in complying with It is not clear whether a recent increase in support political activism. some of the requirements of the OECD funding will be sufficient to eliminate the Convention on Combating Bribery of backlog, and there is no funding for edu- Media Foreign Public Officials. cational and oversight activities. The media is generally free and indepen- dent. It is active and successful in in- forming the public about the activities of In the past two decades mainstream media has government and in investigating and exposing cases of corruption, although become more bicultural, but it still lacks some there is little investigative journalism and - reporting is often superficial and focused proficiency in its relationship with Maori and its on the sensational. Transparency and coverage of Ma-ori issues. accountability are adequate. The media is not diverse in terms of ownership or content, and it is doubtful Both the Police and the Serious Fraud Ombudsman staff receive training in whether the mainstream media adequately Office have taken action to improve their the Treaty of Waitangi and information reflects the entire political spectrum. The relationship with Mäori and the Police is available in te reo. There are some main barriers to greater diversity are actively recruit Mäori, but Mäori remain outreach programmes in areas with a economic. The commercial environment over-represented in the criminal justice high Mäori population. does not encourage the development of system. public- and community-oriented media Supreme audit institution and the state plays only a limited role. Electoral management body The Office of the Auditor-General is highly In the past two decades mainstream The Electoral Commission has a repu- rated for transparency, accountability media has become more bicultural, tation as an impartial and trust-worthy and integrity. It is independent and well but it still lacks some proficiency in institution, with particular credibility in resourced. It is effective in its role of its relationship with Mäori and its administering general elections. It is ade- financial auditing, but could do more coverage of Mäori issues. However, a quately resourced, accountable, and trans- to evaluate the effectiveness of public genuine attempt is being made to work parent in most aspects of its activities, and spending. It has made significant efforts in partnership, respect and participation there are no concerns about its integrity. to improve its responsiveness to Mäori. with Mäori. The recent development of There is some concern about Mäori media has been significant. the performance of the Electoral Political parties Commission’s function in distributing While political parties are not public Civil society election broadcast advertising, and in institutions, they play a significant part in The groups that make up civil society are some areas, particularly the regulation the operation of several other pillars and highly diverse, representing a wide range of political party financing, it has limited they receive significant public funding. of non-government and non-business powers. Most of the perceived problems It is therefore of concern that they form aspects of society. The NIS study did with the electoral system, such as a the weakest pillar, with only moderate not cover the entire range, and generally decline in voting, fall outside its area of levels of accountability and transparency. excluded religious and sporting bodies responsibility. There are problems with the financing of and professional associations. The Electoral Commission has a political parties, and especially with the Civil society organisations vary special role in administering the Mäori opacity of their finances, both as regards widely in their degree of transparency vote and intends to reduce barriers to the donations and as regards indirect public and accountability. Registered charities participation of Mäori in elections. Mäori funding. and incorporated societies generally meet voters have a high level of satisfaction The representational and engagement reasonable standards, but it is not always with the election process. abilities of political parties are limited, clear who benefits from an organisation’s

Page 34 – Policy Quarterly – Volume 10, Issue 2 – May 2014 activities, nor do the public generally they may have little or no control. The there has been continued passivity and know what level of information they business community generally is not well complacency. This is exemplified by should expect. Some organisations informed about the criminalisation of New Zealand’s failure to ratify the United take on advocacy and policy reform bribery of foreign public officials. Nations Convention against Corruption initiatives, but there is little focus on anti- The Mäori economic base has increased more than ten years after signing the corruption. significantly in recent years. Tribal asset- convention, and its failure to fully comply Organisations that are funded by owning bodies are generally registered, with the legal requirements of the OECD the government to provide services with constitutions and associated report- Anti-Bribery Convention more than 14 sometimes experience a mismatch ing and fiduciary requirements which years after signing it. The core message between their need to provide services govern collective Mäori land ownership, of the report is that it is beyond time for on a long-term basis and the short- Treaty settlement assets, and commercial serious and urgent action to protect and term nature of government funding. ventures undertaken under tribal or sub- extend integrity in New Zealand. Some are concerned about restrictions tribal entities. There is some evidence The analysis of the individual parts of on their advocacy activities. There is that asset-holding companies are better the NIS resulted in the findings outlined also a question about the timeliness of advanced than tribal incorporations in above, but also identified six broader government consultation exercises. Civil society generally gives effect to and recognises the spirit and principles By international standards there is very little of the Treaty of Waitangi, but there is wide variation across the range corruption and New Zealand remains legitimately of organisations. There is also some uncertainty about the appropriate action highly rated against a broad range of international to take in order to reflect Treaty principles and Mäori tikanga generally. indicators of transparency and quality of governance. Successive governments have taken further actions Business sector Businesses enjoy a high degree of freedom to increase transparency and accountability since from unwarranted interference. After the collapse of many finance companies the 2003 NIS assessment. in recent years, regulatory frameworks in the financial services sector have been significantly strengthened to the establishment of new, legally-binding themes which cut across the pillars, with include stronger disclosure measures, but culturally-appropriate structures to effects found in several or all pillars. enhanced licensing, prudential oversight manage and govern Treaty settlement These were: and governance requirements. There assets. • a strong culture of integrity, with is still some lack of transparency and most decisions conforming to a high accountability in other parts of the Conclusion ethical standard, but this culture is business sector, especially in permitting The overall conclusion is that New Zea- coming under increasing pressure; non-disclosure of beneficial ownership land’s NIS remains fundamentally strong. • the relative structural dominance of and other financial matters in respect By international standards there is very the executive branch of government; of companies and trusts. Some ‘shell little corruption and New Zealand • a lack of transparency in a number companies’ involved in questionable remains legitimately highly rated against a of areas; activities have incorporated in New broad range of international indicators of • considerable variations in the degree Zealand. transparency and quality of governance. of formality in the frameworks that There appears to be a low level of Successive governments have taken fur- regulate the pillars of New Zealand’s anti-corruption awareness and behaviour ther actions to increase transparency and NIS; both domestically and in dealings in accountability since the 2003 NIS assess- • at times, poor management of offshore markets, and some exporters ment. conflicts of interest; appear to view potentially corrupt or A number of areas of concern, weakness • a need for greater emphasis on the unethical practices as acceptable if and risk highlighted in 2003, however, prevention of fraud and corruption. carried out by agents who do not inform remain, in the face of ongoing and new The report makes a large number of them of their practices and over whom challenges to integrity. In some key areas detailed recommendations.

References Brown, A.J. (2005) Chaos or Coherence? Strengths, opportunities and New Zealand Law Commission (2012) The Public’s Right to Know: challenges for Australia’s integrity systems, Blackburn South, Vic: review of the official information legislation, NZLC R125 Transparency International Australia

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 35 Michael Macaulay

The Open Government Partnership: what are the challenges and opportunities for New Zealand?

Introduction sharing best practices In November 2013 New Zealand signed up to the Open and expertise with our Government Partnership (OGP), which was established overseas partners … in 2011 and comprises 63 nations. The OGP operates as The government has a partnership on two levels: nationally, as a partnership established a number between governments and civil society organisations to effect of initiatives which reforms in various areas; and internationally between nations deliver more open and sharing ideas and good practice and collaborating in areas of accountable government transparency, integrity and public safety. Upon announcing to New Zealanders. The New Zealand’s participation the state services minister, Better Public Services Jonathan Coleman, declared: programme shows In joining the Open Government Partnership, New how the government Zealand is showing we are committed to promoting open is tracking on its and transparent government, and we look forward to commitment to delivering better public services. Michael Macaulay is the Deputy Director of the Institute for Governance and Policy Studies.

Page 36 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Through the Kiwis Count survey, Table 1: OGP membership September 2011–March 2014 the government publishes up to date Members of the Open Government Partnership information on the quality of service Cohort 1 Brazil, Indonesia, Mexico, Norway, the Philippines, South Africa, United New Zealanders are receiving from Kingdom, United States public services. (Coleman, 2013) Cohort 2 Albania, Armenia, Azerbaijan, Bulgaria, Canada, Chile, Colombia, Croatia, The conflation of initiatives such as Czech Republic, Denmark, Dominican Republic, El Salvador, Estonia, Better Public Services with OGP is very Georgia, Greece, Guatemala, Honduras, Italy, Israel, Jordan, Kenya, Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro, Netherlands, interesting as it arguably broadens the Paraguay, Peru, Romania, Slovak Republic, Spain, South Korea, Sweden, already wide OGP remit, which, as will Tanzania, Turkey, Ukraine, Uruguay be shown, is divided into five ‘grand challenges’. However, this article will Cohort 3 Argentina, Costa Rica, Finland, Ghana, Hungary, Liberia, Panama argue that creating such links allows for a Cohort 4 Australia, Ireland, Malawi, Mongolia, New Zealand, Sierra Leone, Serbia, potentially more sophisticated discussion Trinidad and Tobago than the common academic approach of seeing integrity and transparency as an 3. develop country action plans through Within these challenges there is scope additional component to public policy. a multi-stakeholder process, with the for member countries to implement any I will begin by offering a brief history active engagement of citizens and specific initiatives that each feels are of the OGP and outlining its goals and civil society; necessary, with the only stipulation being targets. I will then look at some of the 4. commit to a self-assessment and that action plans must include concrete challenges New Zealand faces in meeting independent reporting on the initiatives that can be readily measured. its OGP obligations, as well as identifying country’s progress in implementing These are all laudable aims, but it a selected number of areas in which its action plan; may be tempting for one to exercise reform may be realised. Finally, the article 5. contribute to the advancement of a degree of scepticism, if not outright will turn to the ambition above and open government in other countries cynicism, about the OGP in light of the discuss some of the implications of through sharing of best practices, myriad examples of government mass- Coleman’s statement. The OGP is still expertise, technical assistance, surveillance and misuse of data in recent very much in its infancy, and this article technologies and resources, as months. Open government seems a long is not meant to be any kind of evaluation, appropriate. (taken from OGP, 2014, way from the revelations of Edward but rather hopes to point the way to areas p.3) Snowden and others. However, putting of future discussion, and, more It is intended that, by adhering to these that debate to one side for a moment, importantly, future policy initiatives. goals, national governments will promote there are a number of initiatives that have transparency, accountability and citizen developed under the auspices of the OGP What is the Open Government Partnership? engagement, all of which contribute to that give cause for cautious optimism. The Open Government Partnership improvements in good governance. The Perhaps most encouraging is that was launched on 20 September 2011. In OGP itself provides a support unit and many participating states (both OECD order to gain membership of the OGP, an independent reporting mechanism to and non-OECD countries) appear to be each country must do three things: sign enable country evaluation, which is done working in authentic collaborations with up to the OGP Declaration of Intent; through OGP progress reports. In joining civil society. While Mexico’s first iteration develop an initial two-year action plan; the OGP, countries commit to ‘foster[ing] of its action plan contained comparatively and implement that plan. Currently, 63 a global culture of open government little civil society collaboration, it has countries have signed up to the OGP that empowers and delivers for citizens, subsequently consulted with civil society in four cohorts (see Table 1). Cohort 4 and advances the ideals of open and by including representatives on its countries, including New Zealand, are participatory 21st century government’. Technical Tripartite Secretariat, a forum in the process of joining the forum and The scope of OGP is thus, necessarily, comprising representatives from the are currently drafting their initial OGP very broad, and the general goals of Ministry of Public Administration, the national action plans. increased transparency, accountability Federal Institute for Access to Information There are a further five ‘expectations’ and engagement have been translated and Data Protection and the Civil Society attached to OGP membership. All into five ‘grand challenges’. These seek to: Coordinating Committee, to advance its signatories are expected to: 1. improve public services; action plan (OGP Mexico, 2014). Due to 1. endorse the high-level Open 2. improve public integrity; the initial low levels of engagement with Government Declaration; 3. more effectively manage public civil society, Mexico’s action plan (2011– 2. make concrete commitments, as part resources; 13) went through a second iteration, of a country action plan, that are 4. create safer communities; and which developed 36 proposals relating ambitious and go beyond a country’s 5. increase corporate accountability. to civil society, of which 20 have been current practice; achieved: these include open access to

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 37 The Open Government Partnership: what are the challenges and opportunities for New Zealand? official document archives (proposal 34), to build on existing initiatives),2 but it issues rather than on the action plan improvements to electronic procurement pointed towards a specific issue for which itself, and too heavily weighted towards (proposal 17), and development of the UK OGP was heavily criticised. In an exclusive and narrowly selected civil society innovation tools (proposal giving priority to ongoing commitments, group of stakeholders. In conclusion two) (OGP Mexico, 2013). Several the engagement process was severely the progress report suggested that this other key commitments, including a restricted, and engagement with civil approach demonstrated ‘risks attached to criminal investigation website, better society in particular was negligible. The exclusivity and of representing only those environmental reporting and a climate UK 2012–13 progress report noted that: selected by government’ (ibid., p.21). change website, are still being developed. What has been heartening to Mexico is currently developing its The UK Government proposed supporters of the OGP is the way in which second (2013–15) OGP action plan and public consultations on its action the UK coalition government has reacted is engaging with over 200 participants plan after submitting it to the OGP. to this criticism. Refreshingly, it has (drawn from civil society and a number It said consultations would be made openly acknowledged these criticisms and of other areas) working in nine thematic via its Public Sector Transparency has recognised that engagement with civil groups. Not only, therefore, has Mexico’s Board and also by convening and society organisations requires a significant commitment, both temporal and financial. As a result the UK government It would be fair to say that relationships between has made a much more concerted effort at engagement. A Civil Society Network some [civil society organisations] and the has been established, reporting to the Cabinet Office, which gives civil society government have not always been cordial: indeed, organisations direct representation in the it was only in September 2011 that Prime Minister action plan process, both broadening and deepening their level of participation. The David Cameron responded to Transparency government’s new commitments, such as a commitment to open procurement, are International UK’s research into corruption in the ambitious and levels of engagement are UK ... considerably higher. An immediate example of this more proactive approach is the new OGP met nearly two-thirds of its consulting with a wider group of commitment to developing a national proposals, but it has managed to engage stakeholders specifically to consider anti-corruption strategy, which will co- positively with an increasingly broad the country plan. However, it is ordinate cross-government activities network of civil society respondents. not clear to what extent structured into one area. As the United Kingdom’s A similar story can be found in the UK, external consultation took place, approach to anti-corruption work has which has recently published its second if at all. It seems doubtful that any previously been identified as a ‘patchwork OGP action plan. Of the 37 proposals1 put written submissions regarding the quilt’3 of important but uncoordinated forward in the original, 2011–13 action 2011 action plan were received as activities, this commitment is extremely plan, all had been completed or were in part of a consultative process; none welcome. What is perhaps even more progress, including creating an online were available online. At the time welcome, however, is both the number data monitoring process (proposal 8), of research, no record could be and range of civil society organisations establishing a single domain for all online located as to which private sector and that are involved in developing and government services (proposal 33), and non-profit organizations or private implementing the commitment, including putting all consultation processes online citizens had made contributions. the BOND Anti-Corruption Group, (proposal 35). However, many of the (Officials who may have known made up of Article 19, CAFOD, Christian actions that have been completed were were either no longer in their Aid, Corruption Watch, Global Witness, already part of the coalition government’s positions or were unavailable. There Integrity Action, ONE, Public Concern prior commitments to increasing was no online material regarding at Work, Tearfund, the Corner House transparency and expanding online consultations.) In interviews, officials and Transparency International UK.4 It services: in other words the original OGP accepted that forewarning notice and would be fair to say that relationships action plan was to a significant degree prior consultation were not adequate. between some of these organisations and tailored around existing policies rather (Dunion, 2013, p.19) the government have not always been than bringing anything new to the table. cordial: indeed, it was only in September In essence there is nothing particularly Elsewhere the consultation process was 2011 that Prime Minister David Cameron problematic about this approach (indeed, criticised as being too London-centric, responded to Transparency International OGP member nations are encouraged too heavily focused on implementation UK’s research into corruption in the UK

Page 38 – Policy Quarterly – Volume 10, Issue 2 – May 2014 by stating: ‘I am concerned that it [the Transactions into part 6 of the Crimes Act In terms of ownership, the OGP research] reflects a view that corruption 1961 (see Newman and Macaulay, 2013). action plan is currently being developed is a growing threat but I do not accept Decisions over joining the OGP may be by the State Services Commission, and that there is a complacency or lack of seen in a similar light: New Zealand was while there is no doubt that this is an coherent approach for dealing with the invited to join (along with a number eminently sensible choice, there needs to issue’ (Cameron, 2011). of other countries) and representatives be genuine support and an infrastructure These are only two country examples, attended the initial working-level OGP of collaboration to ensure that the OGP of course, but progress reports and action meeting in Brazil in December 2011, yet it team attains maximum impact. Of chief plans across the OGP nations frequently took two further years for New Zealand to importance is the need for a clear sense tell a similar story: although OGP make the commitment. of New Zealand’s OGP commitments commitments are a work in progress they Such an accusation may have greater to be communicated to all relevant are at least progressing – demonstrably merit, however, if the government had departments to enable a free and frank so – and they are doing so through shown no inclination at all to engage in flow of information. The risk for the OGP serious engagement with civil society OGP-type activities. Yet several initiatives action plan is not necessarily that it will organisations and other stakeholders. were announced around the time of lack teeth, but rather that there may be a

The challenges for New Zealand’s membership ... the outcomes-based focus of Better Public In many respects New Zealand starts from a position of strength in terms of the OGP. Services fits in very neatly with the OGP philosophy Some may argue that it seems slightly unusual that it joined comparatively later of measurable and deliverable results, which means than other countries, given New Zealand’s that the New Zealand OGP team are working within a international reputation for good governance and anti-corruption work. familiar paradigm. Although debate will continue over issues such as New Zealand’s standing as the least corrupt country according to Transparency International’s Corruption Perception the OGP being founded, particularly range of initiatives and policies currently Index, it is fair to say that New Zealand has in relation to greater transparency in being carried out are not fully recognised long been recognised as a world leader in public data. Chief among these initiatives by the OGP team. If this happens, then transparency, integrity and accountability was the 2011 Declaration on Open it cannot be the fault of one team: the of government. (For an excellent recent and Transparent Government, which OGP is a very broad-ranging initiative analysis of this debate, and the merits of heralded the creation of a number of and needs to be consciously recognised the Corruption Perception Index and other working groups, new principles for as such. As ever, cross-departmental corruption measures, see Gregory, 2014.) data and information management,5 communication is critical and it is hoped Perhaps a more stinging accusation is and an annual evaluation which charts that, although SSC are spearheading the that a growing sense of complacency has implementation progress. A number action plan, they are being assisted by entered the New Zealand outlook, possibly of other key initiatives have also been other departments which are ensuring even as a result of its high international developed, such as the Data Futures that information is shared freely. standing. A recent report argued that there Forum (which reports to the ministers of Clearly this is also an engagement may be a sense that New Zealand’s overall finance and statistics) and the Community risk: to what extent have all relevant governance was already considered to be of Practice for Online Engagement (co- departments been given the information robust enough, and that as a result ‘in hosted by the Department of Internal and capacity to engage with the lead some key areas there has been continued Affairs and Victoria University). In terms team and action plan process? This passivity and complacency’ (TINZ, 2013, of accessibility and transparency of risk applies equally to broader public p.333). Examples of this include New information at least, therefore, any charge consultation. As has been seen in the UK, Zealand’s continued delay in ratifying the of complacency seems premature. consultation must be an active process United Nations Convention on Corruption In OGP terms, however, openness of and not one that is seen to be done as an (UNCAC), which was originally signed data is only one element of the five grand afterthought. There has not been a great over a decade ago, and the lack of challenges, albeit one that has figured deal of publicity around the OGP since investigations (or even allegations) around highly on many countries’ agendas. the initial announcement in 2013, and bribery overseas, despite New Zealand The effectiveness of New Zealand’s the extent to which the project is known, incorporating the OECD Convention first action plan arguably rests on three let alone understood, by the public is on Combating Bribery of Foreign Public key, interrelated challenges: ownership; open to question. Officials in International Business engagement; and ambition.

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 39 The Open Government Partnership: what are the challenges and opportunities for New Zealand?

Table 2 a number of areas that have recently been OGP Grand Challenges NIS Recommendations identified as possibly dovetailing with OGP, most clearly by the Transparency Improving public services • Strengthen role of permanent public sector in regard to procurement, etc. International New Zealand’s 2013 National • Strengthen governance arrangements, executive and Integrity System assessment. Transparency Parliament International made seven high-level • Publishing a Citizen’s Budget recommendations in its report, and well over 50 more specific recommendations, Improving public integrity • Ratification of UNCAC chief among which was for New Zealand • National New Zealand anti-corruption strategy • Support and reinforce roles of Electoral Commission, to fully embrace its OGP commitments. judiciary and ombudsman Some of its recommendations are clearly long-term: for example, revising the More effectively managing • Strengthen role of permanent public sector in regard to Official Information Act 1982 (TINZ, public resources procurement, etc. 2013, p.341) is clearly beyond the scope • Support and reinforce roles of Electoral Commission, judiciary and ombudsman of the two-year OGP action plan. Others • Greater transparency over public appointments to boards are far more realistic, however: the of Crown entities and other public bodies development of a comprehensive national anti-corruption strategy, for example, Creating safer communities • Strengthen governance arrangements between central would clearly tie into the grand challenge and local government of improving public integrity, and • Enhance transparency of the judiciary and court system, including information over judicial appointments would also provide a number of specific, measurable commitments (ibid., p.332). Increasing corporate • Ensure adequate training on and awareness of corruption Some examples from the TINZ assessment accountability and integrity risks in business have been mapped against the OGP grand • Investigate and evaluate the costs and benefits to challenges in Table 2. business of continual vigilance around maintaining and strengthening integrity systems. Obviously such ideas are outside the scope of Better Public Services, and therefore may not fit into the current Yet both of these issues are dependent and deliverable results, which means that OGP agenda, but it is worth considering on what the ambition for the OGP action the New Zealand OGP team are working that even in a two-year action plan, plan is. Jonathan Coleman’s announce- within a familiar paradigm. There are, commitments can be made to ensuring a ment clearly links it to Better Public therefore, some interesting opportunities firm infrastructure for continuing reform. Services, and, as has been mentioned to anchor OGP within Better Public Developing such an infrastructure would previously, there are numerous existing Services, which could well provide quite deal directly with the issue of engagement, initiatives that would lend themselves to a sophisticated way of synthesising New which can build public engagement OGP activities. In adopting such an out- Zealand’s domestic policies with global through online discussion forums and look, the New Zealand government can at reforms. Obviously there are limits: it other forms of consultation. There are least be assured of creating objectives that would not be helpful to simply replicate many important links and networks that can, and are, being met. Yet such an ap- Better Public Services reforms directly have already been developed through the proach equally opens up the action plan in the OGP Action Plan, as was the case consultation process over Better Public to the same criticisms as made in the UK: in the UK. Eyebrows arguably would Services, and these should be reopened. that by leaning on pre-existing arrange- also be raised if the reference to Better Others will need to be developed, but again ments, the risk is that New Zealand’s Public Services were limited to one or two there are time and resource constraints. action plan offers very little that is new BPS result areas. In principle, however, What is essential for New Zealand’s OGP or innovative, and even less that could be conflating the two programmes is by no development is to maintain a sense of a product of new engagement with stake- means a retrograde step. Yet, as the action realism about what can be done in the holders. plan remains an unknown quantity, the first year of membership. As the case Better Public Services itself, however, question which goes repeatedly begging studies above have demonstrated, even covers at least three of the OGP grand is, what will be in it? after a relatively slow start engagement challenges (improving public services, can be created in a meaningful and more effectively managing public What can New Zealand do? sustained way, and perhaps the New resources, and creating safer communities) It is important to recognise that this article Zealand OGP team might consider the and arguably covers aspects of all five of is not intended to offer policy advice, and creation of such consultative groups them. Moreover, the outcomes-based focus it would be unproductive to provide a (a corporate governance group; a civil of Better Public Services fits in very neatly wish-list of initiatives that could be asked society group) an end in itself, ready for with the OGP philosophy of measurable of the OGP project. Nonetheless, there are the action plan.

Page 40 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Creating a balance of short-, medium- nance. Furthermore, it presents an avenue and should not be tackled in the first OGP and long-term commitments appears to for New Zealand to take a leading role on action plan. They can and should, howev- be the key to moving forward. Too few the world stage in an area in which it al- er, be addressed as a long-term OGP view, commitments, or using a very narrow ready commands a great deal of respect. one which fits in neatly with the outcomes focus for commitments, could lead to the The challenge now is to balance ambition and spirit of Better Public Services, and charge of lacking ambition. Yet the initial with realism. The OGP action plan should one which will hopefully lead to lasting action plan can lay the groundwork for contain some headline reforms in order to and positive reform. the future by committing to developing demonstrate New Zealand’s commitment 1 The UK OGP initially put forward 41 proposals but four were the networks and engagement processes to the programme. Yet it does not need to withdrawn. It should also be noted that despite its UK focus, to take it forward, beyond Better Public promise too much too soon. The initial there are specific commitments from the Scottish government contained within the UK OGP action plans. Services and towards a broader remit still. action plan can be used to instigate quick 2 See http://www.opengovpartnership.org/how-it-works/action- plans#sthash.PIUJmEFu.dpuf (accessed 6 April 2014). wins (such as ensuring the ratification of 3 National Integrity System studies. Conclusion UNCAC) and provide the infrastructure 4 Details of the commitment can be found at http:// www.opengovpartnership.org/country/united-kingdom/ The Open Government Partnership for future reform (through developing commitment/anti-corruption (accessed 6 March 2014). presents an excellent opportunity for civil society groups, business consultation 5 See http://ict.govt.nz/programmes/open-and-transparent- government/new-zealand-data-and-information-management- New Zealand to tackle concerns about groups, etc.). There are areas that need a princi/ (accessed 20 March 2014). complacency over issues of good gover- long-term perspective, and these cannot

Appendix 1: The Open Government Partnership Declaration September 2011 of people, and citizens have a right to seek information about governmental activities. We commit to promoting increased As members of the Open Government Partnership, committed to access to information and disclosure about governmental the principles enshrined in the Universal Declaration of Human activities at every level of government. We commit to increasing Rights, the UN Convention against Corruption, and other our efforts to systematically collect and publish data on applicable international instruments related to human rights and government spending and performance for essential public good governance: services and activities. We commit to pro-actively provide We acknowledge that people all around the world are high-value information, including raw data, in a timely manner, demanding more openness in government. They are calling in formats that the public can easily locate, understand for greater civic participation in public affairs, and seeking and use, and in formats that facilitate reuse. We commit to ways to make their governments more transparent, responsive, providing access to effective remedies when information or accountable, and effective. the corresponding records are improperly withheld, including We recognize that countries are at different stages in their through effective oversight of the recourse process. We recognize efforts to promote openness in government, and that each of us the importance of open standards to promote civil society pursues an approach consistent with our national priorities and access to public data, as well as to facilitate the interoperability circumstances and the aspirations of our citizens. of government information systems. We commit to seeking feedback from the public to identify the information of greatest We accept responsibility for seizing this moment to strengthen value to them, and pledge to take such feedback into account our commitments to promote transparency, fight corruption, to the maximum extent possible. empower citizens, and harness the power of new technologies to make government more effective and accountable. Support civic participation. We value public participation of all people, equally and without We uphold the value of openness in our engagement with discrimination, in decision making and policy formulation. citizens to improve services, manage public resources, Public engagement, including the full participation of women, promote innovation, and create safer communities. We increases the effectiveness of governments, which benefit from embrace principles of transparency and open government with people’s knowledge, ideas and ability to provide oversight. a view toward achieving greater prosperity, well-being, and We commit to making policy formulation and decision human dignity in our own countries and in an increasingly making more transparent, creating and using channels to interconnected world. solicit public feedback, and deepening public participation in Together, we declare our commitment to: developing, monitoring and evaluating government activities. Increase the availability of information about governmental We commit to protecting the ability of not-for-profit and civil activities. Governments collect and hold information on behalf society organizations to operate in ways consistent with our

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 41 The Open Government Partnership: what are the challenges and opportunities for New Zealand?

Appendix 1: The Open Government Partnership Declaration (continued) commitment to freedom of expression, association, and identifying and promoting the use of alternative mechanisms opinion. We commit to creating mechanisms to enable for civic engagement. We commit to engaging civil society greater collaboration between governments and civil society and the business community to identify effective practices organizations and businesses. and innovative approaches for leveraging new technologies to empower people and promote transparency in government. Implement the highest standards of professional integrity We also recognize that increasing access to technology entails throughout our administrations. supporting the ability of governments and citizens to use it. We Accountable government requires high ethical standards and commit to supporting and developing the use of technological codes of conduct for public officials. We commit to having innovations by government employees and citizens alike. robust anti-corruption policies, mechanisms and practices, We also understand that technology is a complement, not a ensuring transparency in the management of public finances substitute, for clear, useable, and useful information. and government purchasing, and strengthening the rule of law. We commit to maintaining or establishing a legal framework to We acknowledge that open government is a process that make public information on the income and assets of national, requires ongoing and sustained commitment. We commit high ranking public officials. We commit to enacting and to reporting publicly on actions undertaken to realize implementing rules that protect whistleblowers. We commit to these principles, to consulting with the public on their making information regarding the activities and effectiveness implementation, and to updating our commitments in light of of our anticorruption prevention and enforcement bodies, as new challenges and opportunities. well as the procedures for recourse to such bodies, available We pledge to lead by example and contribute to advancing to the public, respecting the confidentiality of specific law open government in other countries by sharing best practices enforcement information. We commit to increasing deterrents and expertise and by undertaking the commitments expressed against bribery and other forms of corruption in the public and in this declaration on a non-binding, voluntary basis. Our goal private sectors, as well as to sharing information and expertise. is to foster innovation and spur progress, and not to define Increase access to new technologies for openness and standards to be used as a precondition for cooperation or accountability. assistance or to rank countries. We stress the importance to New technologies offer opportunities for information sharing, the promotion of openness of a comprehensive approach and public participation, and collaboration. We intend to harness the availability of technical assistance to support capacity- and these technologies to make more information public in institution-building. ways that enable people to both understand what their We commit to espouse these principles in our international governments do and to influence decisions. We commit to engagement, and work to foster a global culture of open developing accessible and secure online spaces as platforms government that empowers and delivers for citizens, and for delivering services, engaging the public, and sharing advances the ideals of open and participatory 21st century information and ideas. We recognize that equitable and government. affordable access to technology is a challenge, and commit to seeking increased online and mobile connectivity, while also

References Cameron, D. (2011) Letter from the prime minister on corruption in the Newman, C. and M. Macaulay (2013) ‘Placebo or Panacea: Anglo-New UK report, http://www.transparency.org.uk/our-work/publications/131- Zealand experiences of legislative approaches to combatting bribery’, letter-from-the-prime-minister-on-corruption-in-the-uk-report, accessed Journal of Criminal Law, 77 (6), pp.482-96 17 March 2014 OGP (2014) Open Government Partnership: articles of governance, Coleman, J. (2013) ‘NZ to join Open Government Partnership’, press http://www.opengovpartnership.org/node/1329, accessed 27 March release, 1 November, http://www.beehive.govt.nz/release/nz-join-open- 2014 government-partnership, accessed 5 March 2014 OGO Mexico (2013) Progress Report 2011–13, available at http://www. Dunion, K. (2013) United Kingdom Progress Report 2011–2013, OPG opengovpartnership.org/country/mexico, accessed 16 March 2014 Independent Reporting Mechanism, http://www.opengovpartnership. OGO Mexico (2014) Open Government Partnership: action plan, http:// org/country/united-kingdom/progress-report/report, accessed 17 March www.opengovpartnership.org/country/mexico/action-plan, accessed 2 2014 April 2014 Gregory, R.W. (2014) ‘Assessing “good governance”: “scientific” TINZ (2013) Integrity Plus 2013: New Zealand National Integrity measurement and political discourse’, Policy Quarterly, 10 (1), System Assessment, Wellington: Transparency International New pp.15-25 Zealand

Page 42 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Al Morrison

Picking up the Pace in Public Services

Introduction through the various periods of activity. Following the reforms of the public management system The objective is to bring to the surface the continuity of thought and action that in the 1980s, legislative change and programmes of work is the basis for a smooth and continuous to develop and shape the system have occurred at various pathway to enduring reform. times. The work programmes have tended to come and go, The spirit of reform with mixed success, each designed around maintaining the In 2013 Parliament passed some significant changes to the State Sector, Public Finance strengths that accountability for outputs has brought to and Crown Entities acts. The two major parties supported the state sector changes, public sector agencies while increasing the focus on achieving and minor party objections did not run outcomes. counter to the fundamental direction of change. All parties supported the public The Better Public Services programme 1980s is to be avoided, then the task for finance and Crown entities changes. The currently under way is the latest manifes- the public sector is to build continuity and direction of change was to strengthen the tation. In essence, it is about the system momentum around the current reform and accountability of state sector agencies to reform required to get the public services embed it into the whole-of-government work better together on problems and to think and operate across the whole system. This means a state services system opportunities that required collaborative government system and beyond to that is widely recognised as supporting the effort, and to make it easier for them to effectively address complex issues that government of the day, meeting agency do so. The cross-party support may have have been holding New Zealand back accountabilities, and being an excellent defined the common position without from continuing prosperity, and to create steward of public resources for the benefit meeting the full appetite for change, but it opportunities through collaborative of present and future generations of New was a good indication of the agreed broad endeavour. As with past efforts, it is about Zealanders. direction of change. retaining the strengths of individual agency This article traces aspects of the The legislative changes were designed accountability within a system which state sector management system from to support the government’s Better Public encompasses collective responsibility. If the 1980s to the present day with a view Services programme. That programme the stop-go history of reform since the to identifying the threads that weave continues a reform pathway that has been developing through successive Al Morrison is the Deputy Commissioner, State Sector Reform, in the State Services Commission. He governments since the reforms of the previously served as the Director-General of the Department of Conservation. 1980s. The reform pathway has not been

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 43 Picking up the Pace in Public Services

The challenge we face is to retain ‘The decision-making processes themselves constrain the the prevailing strengths of vertical 1984 Government’s ability to act in the community’s collective accountability, and build on to it a greater interest.’ sense of horizontal accountability. That is Economic Management, briefing to the the system change required to tackle the incoming government thorny issues successfully and create the ‘Improved management outcomes will only be possible if the system opportunities that arise from thinking 1987 is treated as a whole.’ and operating collaboratively. This is not Government Management, briefing to the a revelation. incoming government Clear action points have been designed to improve the system since the ‘The next steps in New Zealand states sector reform...will have to do reforms of the 1980s. Legislative change for outcomes what has been accomplished for outputs.’ 1996 to support the direction of reform has Allen Schick, The Spirit of Reform: managing the been developed consistently by successive New Zealand state sector in a time of change governments. That is not quite the case ‘Weaknesses include the lack of a systemic approach to setting with work programmes and projects for 2001 outcome goals and priorities.’ change, which have been started, stalled Report of the Advisory Group on the Review of the Centre and reinvented in new forms by successive ministers, governments and public service ‘Getting better outcomes for New Zealanders – within appropriate 2011 and constitutional settings – is the highest calling for government leaders. The different approaches have and the state services.’ caused the implementation of system Better Public Services Advisory Group Report improvement to be patchy. Even so, the direction of travel has been consistent. This has been most evident in the 2000s, smooth, but underlying the fits and starts these are all good in themselves and with the Report of the Advisory Group on there is a broad direction of change that achieving worthwhile results, there is the Review of the Centre (Advisory Group has clear and consistent objectives: little evidence that they are transforming on the Review of the Centre, 2002) and • to create a state sector that is the way agencies think about their work the Better Public Services Advisory Group increasingly responsive to the needs and operate within a public services Report a decade later (Better Public Services of New Zealanders in a fast-changing system as a matter of course. For the Advisory Group, 2011) in many respects a and technological world; most part agencies have been able to mirror image of each other. That a decade • to deliver the support and services comply without fundamentally changing separates two clearly compatible reports needed for the present and future the way they operate or giving significant recommending similar change is evidence well-being of New Zealanders and benefit and recognition as contributors that little happened to shift the system. prosperity of New Zealand efficiently to a wider public services cause. The key elements of the directional change and effectively; and The quick wins from simple forms of in both reports are a state sector that: • to work together across the state collaboration are important and relevant. • effectively serves the government of sector and beyond to address But the real challenge lies at the ambitious the day, supporting it to achieve its difficult and complex issues and end of the spectrum, where complex priorities; create the opportunities that arise social, environmental and economic • meets the developing and changing from thinking and operating issues demand levels of collaboration that needs of citizens and prioritises the collaboratively. confront the institutional culture and things that matter most to them and It is the last objective of the three that arrangements of the last two-to-three makes the most difference for New has proved particularly elusive, and the decades. The issues are longstanding and Zealand; and Better Public Services Advisory Group’s symptomatic of a reform process that has • efficiently and effectively executes its report of December 2011 focused on yet to achieve its full objective. The Better stewardship role within each agency meeting that challenge in particular. Public Services Advisory Group described and across the system. The present government and the state those issues as ‘thorny’. They include sector agencies have picked up the report’s New Zealand’s relatively poor export We have reached a point where the recommendations through a number of performance, education failure, the health need for the state sector agencies to exercise projects and initiatives. These include the and safety of children, management and individual stewardship accountabilities ten result areas; functional leads; heads protection of our natural environment, while taking responsibility as stewards of profession; shared services; sector generational welfare benefit dependency, across the whole system is urgent. What it group cross-cutting initiatives; a stronger social housing and other issues that no will take is momentum around a reform focus on leadership development; and state sector agency working alone can programme which endures beyond agency and chief executive performance successfully turn around. changes of government and state sector monitoring and management. While leaders.

Page 44 – Policy Quarterly – Volume 10, Issue 2 – May 2014 The problem of reform continuity The focus on outputs was not an that no other country had accomplished, in a democratic political system is well oversight. Typically, outcomes sit across but he drew a distinction between highlighted in a recent study carried out a spectrum and require connected-up accountability and responsibility: by the Institute for Government in the activity across a broad system to achieve. United Kingdom. The study reviews four They were seen as the business of The words lead down very different distinct reforms between 1987 and 2012. ministers. The combination of ministers managerial paths. Responsibility In a foreword to the study, the director of being held accountable for their portfolio is a personal quality that comes the institute, Peter Riddell, states: responsibilities and agencies similarly from one’s professional ethic, a working to their siloed accountabilities commitment to do one’s best, a sense The authors make the key point meant that many issues requiring cross- of public service. Accountability is an about the dangers when senior cutting collective action were inadequately impersonal quality, dependent more officials and ministers move on, and addressed. on contractual duties and informal their successors do not see the need The impact of putting outcomes in flows. Ideally, a manager should act to back a reform agenda associated the too-hard basket was a matter of much responsibly, even when accountability with their predecessors. This applies discussion through the 1990s; in 1995 the does not come into play. As much not only to ministers of the same State Services Commission and Treasury as one might wish for an amalgam party but even more when there is commissioned Allen Schick, a professor of the two worlds, the relentless a change of government and new of public policy at the University of pursuit of accountability can exact ministers likely to be unfamiliar with Maryland, to review where the reform a price in the shrinkage of a sense Whitehall reforms. (Panchamia and process was up to and recommend the of responsibility ... In the new world Thomas, 2014, p.1) way ahead. In setting the context, Schick of New Zealand management, it is reported: urgent to uphold the old-fashioned The economic and management tenets of managerial responsibility, theories and principles underpinning the The organisational cocoon of the old while strengthening the modern New Zealand reforms of the 1980s are State sector has been broken open instruments of managerial well documented, and need no recounting and structures reshaped through the accountability. (ibid., pp.84-5) for the purposes of this article. What application of the reforms’ overriding those reforms confronted was a public principles. The State sector is This is at the heart of the balance service focused on what it took to run more efficient, productive and the current system reform process needs the public service, rather than what it responsive, and there generally has to achieve: that chief executives are took to efficiently and effectively benefit been significant improvement in the accountable for the stewardship of the New Zealand and New Zealanders. While quality of services provided to New people, assets and resources entrusted the success of those reforms is also well Zealanders. However, as with any to their agency’s care, but they also have recognised, the main weakness to emerge leading technology, it may now be a responsibility for stewardship of the is around the way agencies have developed time to ‘debug’ elements which have whole public services system. into silos and become overly protective of not worked as well as anticipated. This is a difficult balance that has their policy, information and operations. (Schick, 1996, executive summary) significant leadership impacts. The chief What gets lost in the fragmentation is executive must be able to judge when the collective action required to deliver Maintaining momentum around the agency needs to contribute to a the common good. The incentives and reform is a challenge. Inevitably the collaborative exercise, and be prepared accountabilities push agencies towards new becomes the old, shortcomings to reprioritise agency work to free up the protecting their resources and capability and unintended consequences emerge, resources so it can do so. In effect, they from being diverted into endeavours that and, unless refreshed, the reform agenda need to ‘take one for the team’ when the compromise their ability to show up well. withers on the vine. Reframing is benefits from collaborative activity come Over time, an organisational culture is therefore important to the long game of at some cost to their agency activity. The built which makes it very difficult to deal transformational change. As Schick states, system needs to acknowledge and reward with complex issues that need collective ‘When it comes to culture, staying power that approach. Likewise, ministers need action to resolve. is the all-important indicator. Only after a to sanction the collaborative approach In essence, this is the failure of the lapse of years can one ascertain whether the and work within it. Shifting the system almost singular focus on outputs that reforms have become the new operating in that direction is a challenge to the was entrenched through the legislation culture or merely the passing fashion of cautious, risk-averse and compliant supporting the 1980s reforms. While the public management’ (ibid., p.51). culture that a singular focus on output focus on outputs did create managerial One of the issues Schick identified accountability encourages. That is a accountability, it came at the price of too as requiring reframing was the issue of culture that restrains the passion and little attention being paid to the outcomes accountability. He complimented New commitment of state servants to make they were designed to achieve. Zealand on building accountability into a difference. That, in turn, constrains the framework of government to an extent the innovative, experimental approaches

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 45 Picking up the Pace in Public Services required to work on the important issues senior management, and a programme of assessment of their current capability to that require the public services to work innovation.2 achieve it. (PIF is now evolving into being across the system. Cabinet signed off on the State the lynchpin of a process to set the four- During the 1990s the government’s Services Commission’s Managing for year strategic horizon and create a plan approach to the reform process was to Outcomes programme in August 2002, to show how that will be accomplished introduce strategic result areas (SRAs). effectively endorsing an approach that within budget, and performance measures SRAs were designed to link the govern- had been designed earlier. The approach for the chief executive out of that.) While ment’s long-term objectives with the became bogged down in the complexity many positive aspects endured in the department’s operational activities. The of linking outputs directly to outcomes. It wake of this review, they fell well short of approach continued to locate account- revealed the weakness of fragmentation, transformational system reform. But they ability for outcomes with ministers, because typically the outcomes to which did provide a platform for change. while agencies worked to key result areas an agency’s outputs contributed could The change of government in 2008 (KRAs), which in effect meant outputs. only be achieved by multiple agencies coincided with challenges on three fronts The approach had little impact in terms working together, and that wider front was which shifted the context: the global of system change. At the ministerial lev- not organised and operating. Some cross- financial crisis; disaster management; el, a change in prime minister brought cutting initiatives did emerge, including and heightened frustration around the the creation of ministerial teams around social sector and economic development continued failure of the state sector to particular projects, such as Strengthening theme teams, the justice pipeline and the effectively address major issues that were Families, which required departments to natural resource sector group. The State holding New Zealand back. The global financial crisis forced the efficiency agenda to new heights. The government Cabinet signed off on the State Services cut agency budgets and demanded that they do ‘more for less’. This forced Commission’s Managing for Outcomes programme agencies to work out how they could in August 2002, effectively endorsing an approach deliver their outputs with fewer resources. They received some support, with greater that had been designed earlier. flexibility to plan and budget on a four- year cycle and to move resources between outputs. work formally together. But that approach Services Commission designed a set of The disaster management came went out with a change in government in development goals around a trusted state about as a result of the Canterbury 1999. sector that attracted and developed top earthquakes, the Pike River Mine disaster The new government commissioned talent and made it easy and effective for and the grounding of the ship Rena on an advisory group to review the central New Zealanders to access services and the Astrolab Reef. All three not only agencies, which in reality meant a review work with government. But the goals challenged the state sector to collaborate of how well the public management did not seem to fit into any integrated and coordinate, but showed that at such system was responding to the needs and initiative to determine what that meant times it was willing and able to do so. expectations of ministers and citizens. at the system level and implement it. That begged the question: why is it so The advisory group’s report – the Report Change over this period tended to be ad difficult in ordinary times? of the Advisory Group on the Review of hoc rather than enduring and systematic. Part of the answer to that is, it the Centre (2002) – focused on three core This was in large part because the isn’t necessarily. There are numerous areas for change: relationship between the central agencies examples of agency cooperation. Regional • achieving better integrated, citizen- was too weak to provide the collective operational agencies, in particular, are focused service delivery; leadership required, which combined with typically no strangers to working together • fragmentation and new ways to get waning ministerial interest. and with their wider communities. But agency collaboration on key cross- Ministers reignited their interest it is difficult where organisations have cutting issues; and in 2006 and adopted a suggestion by to think and operate across the system • improving leadership and building the three central agencies to carry out when the benefits fall unevenly and workforce capability around a another Review of the Centre, which at the expense of their priorities and unifying sense of values. in effect was a performance review of resources. That brings into stark relief the The government responded with the public services system. That led to tension between an agency’s stewardship regional ‘circuit breaker’ teams focused the establishment of the Performance accountability and its responsibility to on specific issues,1 Crown entity Improvement Framework (PIF), which support stewardship of the government governance proposals, an executive began as a score-sheet of performance system as a whole. leadership programme to strengthen but has evolved into distilling agencies’ The third front was the heightened four-year strategic outlook and an level of frustration from ministers that

Page 46 – Policy Quarterly – Volume 10, Issue 2 – May 2014 public spending had risen significantly this context are effectively bite-sized pieces Zealanders. Those social, environmental in the 2000s but with little return for it. of an outcome (similarly to what were and economic outcomes have not The problems that were holding New previously called intermediate outcomes). changed greatly over time, although Zealand back and required collaboration And the government talked about wanting some issues have become worse and the across the system were not being solved, to see tangible progress towards its larger urgency to address them has become and in some cases getting worse. The objectives, which in effect was a renaming greater. The only area of reform where government introduced a number of of outcome indicators. policy has lurched is over the ownership changes, including social sector trials The open question is whether the of the state’s commercial assets. That is which aimed to address specific issues sum total of activity from the Better a defining political issue which sits on at the regional and community level, Public Services programme is doing more the edges of public management reform. functional leadership initiatives, a than extracting compliance that can be In respect to state services, there is a requirement for agencies to produce four- delivered without agencies changing their consistent desire to retain the strengths year strategic financial and capability operating model. A review of activity of agency accountability for outputs plans, and formalised sector groups with across the system which reported in while attempting to get a better balance designated programmes of cooperative February this year suggests that agencies between that and achieving outcomes. work. It sought new ways to broaden are increasingly attuned to the problem- Given over a quarter of a century policy advice through sector groups, solving and opportunities created from of reform effort, why have the public the establishment of a Productivity collaborative endeavour, but that we are services been prepared to live with the Commission to take a broad look at some distance yet from the system as a glaring results of failure for so long? pressing issues, one-off taskforces in tax and welfare reform, contracting social advice through the Families Commission, For the first time since the 80s, reform had the and new consultation processes through the Land and Water Forum involvement and backing of ministers and the The three central agencies formed a Corporate Centre (later clarified to public sector working in tandem. include the functional leads, and the government chief information officer in particular) to lead measure and whole operating that way as a matter of The roles and responsibilities of the monitor system change. Legislative course. The ambition extends well beyond central agencies, and the State Services change strengthened the powers of the that to a point where agencies continue Commission in particular, were signifi- state services commissioner, particularly to deliver their lead accountabilities, but cantly reduced by the decentralisation of around leadership for system change. think and operate innovatively across the accountabilities to individual agencies. The main focus for public sector system, taking collective responsibility This led to a sense of a weakened com- reform came with the appointment for common goods. That involves mission that has taken a long time to in May 2011 of the ministerial Better transformational change of the current redefine itself. Consequently, subsequent Public Services Advisory Group to report whole-of-government system and a reform after the 1980s was typically led on ways to shift the system. Its report significant shift in the current culture. by ministers, in bursts of activity followed clarified the two key objectives for change. by periods of inertia, each with little ref- The first is getting better outcomes for Overview erence to the previous activity. Agencies New Zealanders. This means mobilising It is possible to see a consistent direction of responded to what was required, without across the public service to tackle the reform in government management from embracing the spirit of ongoing reform complex and ‘thorniest’ issues (it cited the 1980s to the present day, particularly that would have required them to redress a list of lingering social, environmental so with the progressive evolution of the high degree of autonomy they enjoyed and economic issues). The second key legislative change to support system and deliver resources across the system at objective is to improve the quality, change. No government has turned the some cost to their own agency’s priori- responsiveness and value-for-money of clock back in any significant way in that ties. In short, the state sector did not take state services. respect. ownership of reform and design, nor lead The Better Public Services report was Programmes of change are another an integrated programme of change to in many respects a mirror image of the matter. They have been periodic, slow improve the system. Review of the Centre a decade earlier, and repetitive. Even so, underpinning the But there is reason to be optimistic. and it spawned a wealth of activity which repetition of thinking and activity and While ministers generated the Better had its nucleus in ten government result rebranding that has taken place in fits Public Services programme, the report areas. The urgency and pragmatism and starts there is a consistent ambition that crystallised the direction of reform around all this activity saw the language to achieve the outcomes that will make was led by the public sector, working with of outcomes replaced by results. Results in the most difference to the lives of New private sector advisers and engaging with

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 47 Picking up the Pace in Public Services the public sector chief executives. For the first time since the 80s, reform had the involvement and backing of ministers and THE BRACKENRIDGE DECLARATION the public sector working in tandem. WE are the leadership team of the State Services: The state services commissioner, Iain Our purpose is: Rennie, has stated that ‘this system wide Collective leadership for a better New Zealand change is the business of the commission, and the only business of the commission’ Towards this we will: (State Services Commission, 2014, p.4), • Be collectively ambitious for New Zealand, by focusing on the needs of and he has reorganised the way the our customers commission and the governance of system • Mobilise our people and resources to ensure those leading complex reform operates to align with that and system-wide issues are successful allow him to focus on leading that system • See past any barriers and make what needs to happen, happen change. This means that state services • Champion state sector reform in our organisations working co-operatively in the collective interests of New Zealanders is the lens • Support each other as a team ‘out together, back together’, pick up the for all the commission’s work. ‘The State phone Sector has the mandate from Government • Collectively and individually support and implement the work of and the opportunity to fundamentally functional leaders reshape how we work and deliver services. • Own and champion decisions of the State Sector Reform Leadership We are in the throes of the most significant Group changes the State Sector has seen for 25 • Prioritise our biannual State Services Leadership team meetings years.’ Achieving that level of reform is, says Rennie, ‘the most significant changes the State Sector has seen for 25 years, and will result in a fundamental reshaping of progress for New Zealanders. Reforming of a public services brief to the incoming how the State Sector works and delivers the public services system to operate government in an effort to build that services’ (ibid., p.2). this way will not only address historic support. It will set out reform progress to Public service chief executives problems, but create opportunities. date, and identify where effort and change affirmed their commitment to that The key to getting momentum around is needed to take the public services from reform at a meeting in March 2014 at such reform is for the public service to good to great. It will not, and should not, Brackenridge retreat, Martinborough, create and own a system that is better fitted surprise in that process. We have known where they crafted and signed their own to delivering the results that governments the problems for years, and the levers for Brackenridge Declaration. of the day are committed to delivering. It change. What we need to do is entrench must also identify and get traction on the the common understandings of the Conclusion long-term issues and opportunities that problem, and the commitment and effort There has been a consistent direction matter most to New Zealanders and will that is now evident to tackle it. That is of travel for state sector reform across make the most difference to present and what is required to demonstrate value for governments since the 1980s. The future generations. To endure, that has to money from the political–public service 2000s has seen a sharp focus on how attract broad support across the political system. a fragmented system makes it difficult system, so that it is not associated with to get traction on the big, intractable 1 There were three teams established, tasked with reducing a particular regime but is rather seen as the truancy rate, more rapid settlement of skilled migrants, cross-cutting issues that require multiple the way the public services need to think and reducing the fragmentation of funding to community groups dealing with domestic violence. agency collaboration. These are the issues and operate. 2 The only example cited subsequently was the Department of that, if unchecked, will continue to hold The State Services Commission is Conservation’s pest eradication programme which moved the mindset from controlling pests to eradicating them. back social, environmental and economic currently coordinating the preparation

References Advisory Group on the Review of the Centre (2002) Report of the Schick, A. (1996) The Spirit of Reform: managing the New Zealand state Advisory Group on the Review of the Centre, Wellington: State sector in a time of change, Wellington: State Services Commission Services Commission State Services Commission (2014) ‘Better Public Services – next steps. Better Public Services Advisory Group (2011) Better Public Services A discussion paper for New Zealand’s state sector chief executives’, Advisory Group Report, Wellington: Department of the Prime Minister February and Cabinet Panchamia, N. and P. Thomas (2014) Civil Service Reform in the Real World: patterns of success in UK civil service reform, London: Institute for Government

Page 48 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Adrian Macey

Climate Change towards policy coherence few decades, this implies that negative emissions technologies, such as combined biofuel and carbon capture and storage, The fifth assessment report of the Intergovernmental Panel will have to be used during the transition. on Climate Change, being released in sections from late The second insight is greater confidence in mainstream estimates of global warming 2013 through 2014, is rekindling public interest in climate provided by a combination of research, observational data and models. Extreme change. With controversies over the previous report (2007) estimates of warming, and catastrophic out of the way, advances in knowledge since then and some tipping points, while not discounted, seem less likely. improvement in procedures, the findings of the latest report The report of working group II appear more robust. Even though many uncertainties remain, on impacts and adaptation has more information on New Zealand than the evidence base for policy is compelling. previous reports. It describes the increased risk of flood damage from The report’s first instalment – from from fossil fuels, of course, but also some storms, and from coastal erosion due to working group I on the physical science others, including nitrous oxide, which is sea level rise. It has useful information on – has two highly relevant insights for a significant proportion of New Zealand adaptation strategies. The working group policy. First, limiting global warming emissions. At some point the net emissions III report updates mitigation options, and is at its centre a problem of cumulative of these gases will need to approach zero. importantly confirms that the pledges gases (those with a long lifetime in the Unless one believes that fossil fuels can through the United Nations climate atmosphere), principally carbon dioxide be eliminated completely in the next change negotiations so far on the table are insufficient to stabilise greenhouse Adrian Macey is Adjunct Professor at the New Zealand Climate Change Research Institute and a gas concentrations at the desired level. It Senior Associate of the Institute for Governance and Policy Studies. He was New Zealand’s first also assesses the global costs of different climate change ambassador. He was Vice-Chair then Chair of the Kyoto Protocol negotiations in 2010-2011. mitigation pathways. It demonstrates

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 49 Climate Change: towards policy coherence that the case for early action to reduce developed and developing countries). accompanied at home by a questionable emissions remains strong. Pressures to increase ambition, especially argument that abandoning Kyoto would Such insights are valuable and timely. on industrialised countries, will mean give New Zealand more influence in They coincide with the negotiation of a new attention has to be given to long- the negotiation of the new agreement. new climate change agreement under the term domestic policies, since they are the Apart from the fact that one could UN. This is to conclude at the end of 2015 basis for establishing and implementing argue precisely the contrary, this put and to take effect from 2020. In what may international commitments. New Zealand’s immediate negotiating become seen as the ‘post-Kyoto’ period, objectives at risk. negotiations have the potential finally to Abroad: New Zealand and international Despite having no target, New produce a truly universal climate change climate change policies Zealand sought access to the Kyoto regime – one where, in the language New Zealand has historically had a market mechanisms. Economically and of the negotiations, obligations and strong voice in the UN climate change environmentally this would make sense, commitments are ‘applicable to all’.1 The negotiations. It was prominent in the once New Zealand committed to a target. IPCC’s findings will help governments original negotiation of the Kyoto Protocol, Developing countries would stand to align their domestic and international and New Zealand ministers and officials benefit from offsets that they could climate change policies. have played influential roles at climate provide under the Clean Development The very slow progress of the change conferences since then. A high Mechanism. But politically this was always international negotiations, and other point of New Zealand influence was the going to be a hard ask. Many developing countries saw denial of access to Kyoto markets as ‘punishment’ for abandoning Kyoto and made this plain in the early New Zealand went to the Doha conference with days of the Doha conference, as indeed nothing to offer in return for access to Kyoto they had earlier in the negotiations. New Zealand went to the Doha markets: not only had it no target to inscribe in conference with nothing to offer in return for access to Kyoto markets: not only the annex of commitments ... but neither could it had it no target to inscribe in the annex commit to supporting the new Kyoto rules ... of commitments (‘qelros’), but neither could it commit to supporting the new Kyoto rules it had spent years negotiating. So New Zealand was rebuffed. It was pressures, have pushed climate change 2011 Durban conference, where New symptomatic of this loss of influence down the priority list for many Zealand had a major role in two of the that, in contrast with the year before, governments, New Zealand being no three key outcomes (Macey, 2012). New Zealand’s two ministers were almost exception. In New Zealand, the twin There has been one recent hiccup invisible at this conference. recoveries from the global financial in the otherwise positive story of New The result was to shut New Zealand out crisis and the Canterbury earthquakes Zealand’s influence on climate change of UN carbon markets from 2013,3 apart have meant that GDP growth and negotiations. Unusually, New Zealand from wash-up accounting for the Kyoto reducing business costs have dominated entered the Doha Conference of the Protocol’s first commitment period, which the government’s economic agenda. Parties in 2012 in a weak position. It extends to 2015. This leaves New Zealand Doubling the value of New Zealand’s received in return a reminder that a in the period after the expiry of the Kyoto agricultural exports and exploring oil small country will get results only so long Protocol’s first commitment period until and gas resources have served these policy as it is useful to others. On emissions the coming into effect of the new, yet needs, and have been pursued without reductions, New Zealand had – and to be negotiated agreement in potential attention to climate change implications, still has – a conditional target range to limbo. It is at odds with New Zealand’s perhaps because climate change measures reduce emissions,2 dating back to 2009. strong advocacy of markets in the may appear to serve neither goal. Climate But at Doha it was impossible to know negotiations, and has had consequences at change policies have accordingly been how far these conditions would be met, home and abroad. Among New Zealand’s more or less parked. But the international and, as New Zealand had no minimum negotiating partners there were reactions context now again requires states to or unconditional target, it had nothing of both irritation and puzzlement, all the front up with ‘contributions’ to the to put on the table. New Zealand could more so since Australia had decided to go international effort, well beyond 2020 only say that it intended to take up a with the Kyoto Protocol and had a firm and more likely to 2030 (‘contributions’ target under the UNFCCC – the United unconditional target. There was particular is the new word found at Warsaw in 2013 Nations Framework Convention on irritation within the EU that New Zealand in lieu of the politically-charged term Climate Change – rather than the Kyoto was walking away from the rules package ‘commitments’, in order to apply to both Protocol, an announcement that was on the land sector (LULUCF: land use,

Page 50 – Policy Quarterly – Volume 10, Issue 2 – May 2014 land-use change and forestry), where it Zealand also has a well-directed aid security concerns, push in the same was felt many concessions had been made programme on climate change to help direction, as is seen by China’s large towards New Zealand’s interests around Pacific Island countries, with a focus on deployment of renewable energies and plantation forestry. renewable energy. Finally, it is a tribute action to cap emissions from fossil fuel The root of New Zealand’s ill- to the international reputation of climate electricity generation plants. preparedness for Doha was less the change minister Tim Groser that New The domestic aspect of this shift is international policy settings per se than Zealand is invited to the ‘top table’ of not yet well reflected at government level neglect of domestic policy. New Zealand the Major Economies Forum on Energy in New Zealand, where the orientation of had not done the work to establish and Climate (MEF), a grouping of the climate change policy remains ‘neither lead an interim unconditional emissions world’s largest economies, and hence nor lag’ and ‘fair share’ (see, for example, reduction target, and had not decided largest greenhouse gas emitters.7 It is Smith, 2011; Groser, 2014b).9 Such which accounting rules it would adopt, self-evidently the countries in this group concepts are a signal about international notably on forestry. These two factors that will determine the success or failure burden-sharing, and give no sense of the precluded being part of the Kyoto of efforts to limit global greenhouse long-term direction of domestic policy Protocol’s second commitment period, gas emissions, so New Zealand is in an and the economy. There has been no which, from a practical point of view, excellent position to have influence. comprehensive statement on climate would have been the simplest option. Such initiatives outside the UN change since the current government Ironically, several months after the conference New Zealand came up with a modest unconditional 2020 target of 5% There has been no comprehensive statement on below 1990 levels, plus a decision to use the renegotiated Kyoto accounting rules. climate change since the current government was So, effectively New Zealand will subject itself to Kyoto disciplines up to 2020 re-elected (2011), certainly nothing comparable to with its target, but will receive none of the benefits of its flexibility mechanisms. US president Barack Obama’s June 2013 Climate This potentially limits the ambition of Action Plan ... New Zealand’s final 2020 commitment, if it is to move into the conditional range of 10–20% below 1990 levels. are one aspect of a shift in how many was re-elected (2011), certainly nothing The setback at Doha has thus had an governments are thinking about climate comparable to US president Barack impact at home, but it has not prevented change policies. First, they are looking at Obama’s June 2013 Climate Action Plan, New Zealand from working constructively international cooperation well beyond the which demonstrates a coherent approach in the international negotiations, as well UN agreements. The second and more across three components: emissions as on other initiatives. Current themes important aspect of the shift relates to reduction, adaptation to climate change that New Zealand pursues in the interna- domestic policies. Earlier, and especially and leadership of international efforts tional negotiations are carbon markets, before the Copenhagen conference in (Executive Office of the President, 2013). agriculture and rules for the land sector, 2009, the international negotiations were It should be noted that, while the UN as well as the structure of the agreement the impetus for domestic mitigation negotiations are no longer setting the and the form of commitments under it policies. Emissions reductions at pace, they are still a necessary part of the (New Zealand Government, 2013b). home were needed, it was explained, future solution on climate change, as the Outside the UN negotiations, New to meet future commitments abroad. latest IPCC report confirms. Common Zealand is promoting the removal of But the international negotiations are rules for reporting and accounting of inefficient subsidies on fossil fuels,4 and now much less the reference point for emissions are needed to underpin the has initiated the Global Research Alliance5 domestic mitigation policy. In the face of whole climate regime. Internationally- on agriculture and climate change, increasingly robust science, governments tabled commitments can provide the which now involves 40 countries, both and businesses are thinking more – and needed ‘stretch’ of mitigation ambition, developed and developing. New Zealand for diverse reasons – about how they and also ensure the effectiveness of also set up the Asia–Pacific Carbon engage in the global transformation contributions through other parts of the Markets Roundtable which is exploring away from reliance on fossil fuels: in climate change regime, such as finance the potential for a regional carbon other words, how they ‘decarbonise’ their and technology transfer. market (Ministry for the Environment, economies. South Korea, for example, 2013b, p.215). It has joined the Climate has seen economic advantages for itself At home: the state of play of New Zealand and Clean Air Coalition (CCAC),6 which in clean technologies, and is host to the climate change policy focuses on short-lived climate pollutants new Global Green Growth Institute.8 In the absence of a strong national such as methane and black carbon. New Other factors, such as health and energy policy statement, most of the recent

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 51 Climate Change: towards policy coherence government explanations on climate political parties on an ETS as a core of settings – for example, the continuation change have to be garnered from answers policy instrument, though increasing of the ‘one for two’ transitional measure15 to parliamentary questions, speeches and disagreement on its settings. The stated – compounded by the collapse in carbon op-eds. Taking the longer term first, New policy rationale of the ETS is as follows: prices. The fundamental design of the Zealand has a gazetted, non-binding, ETS is not the issue, with one exception. reviewable ‘responsibility target’10 of The Government has chosen the New The 100% exposure to the international reducing emissions by 50% below 1990 Zealand Emissions Trading Scheme market has allowed the cheapest carbon levels by 2050. This dates from 2011, and (ETS) as its primary tool to reduce units, of whatever quality, to enter the was depicted as meeting the ‘fair share’ emissions, as it is the least-cost way New Zealand system. Over 70% of the criterion, comparable with the targets set of reducing emissions. The NZ units surrendered in 2012 were ERUs by New Zealand’s major trading partners. ETS puts a price on emissions and (emission reduction units),16 and in all Bundled together with the announcement therefore creates a financial incentive 82% of the units that year were from of this target were elements of a broader, for all New Zealanders – especially offshore carbon markets. ERUs are long-term orientation to come. Some businesses and consumers – to certainly cheap: less than 10% of the other current measures were listed, and change our behaviour. The NZ ETS price of the already low New Zealand the recently-commissioned Green Growth provides an incentive to: units (NZUs). They are overwhelmingly of Russian and Ukrainian origin, and are of dubious environmental integrity, The rationale of carbon pricing in New Zealand is thus creating a potential risk to the New explained as: ‘we are committed to doing our fair Zealand brand – so much so that there is anecdotal evidence that some businesses share. That means working at not trying to have are opting not to use them.17 In the world of carbon markets the policy settings above the international price’ adage ‘a tonne is a tonne is a tonne’ does not hold. There is no single ‘international price’ because carbon is not a fully Advisory Group was to provide further • reduce emissions internationally traded single commodity, inputs into policies (Green Growth • invest in clean technology and like milk powder. There is a wide range Advisory Group, 2011). renewable power generation, and of prices, because neither all units nor all Since its introduction in March • plant trees.13 markets are comparable. In April 2014, 2011, however, the 50/2050 target has In addition to these policy objectives, for example, carbon prices in the main received no official follow-up, and indeed there are other claims, including that ‘the markets in Europe, the US and China is rarely even mentioned.11 It was not NZ ETS will strengthen the country’s were between $NZ5 and $12. Quality also included in New Zealand’s list of policies clean green brand’. varies, from units of high environmental in the Pacific Islands Forum’s Majuro With its current settings and in the integrity to those of an environmental Declaration in September 2013.12 Given current international context, the ETS is equivalent of junk bonds. It is notable that that latest emissions projections are for doing none of these things,14 and indeed by in the first biennial report required by the an approximate doubling of emissions 2013–14 was probably encouraging more UNFCCC the government is coy about from the international reference point tree felling than tree planting. While from the units in its registry, on the grounds of 1990 levels, even with the use of a pure accounting and compliance point that units held but not yet surrendered to markets achieving it would be a huge of view a low price is simply a market the UNFCCC do not need to be disclosed challenge. It would imply a much faster issue, achieving these policy objectives (Ministry for the Environment, 2013a). transformation of the New Zealand is not. Similarly, in the farming context, The unconstrained access to interna- economy than anything contemplated so the rewards for lower emissions practices tional carbon markets risks being incon- far. It is not clear whether this target is still being followed by some farmers are all sistent with the Kyoto Protocol, which officially considered achievable. If it is, it the smaller in the absence of an effective states that use of flexibility mechanisms is will be important to give some idea of carbon price. So the most important to be ‘supplemental’ to domestic action.18 the pathway to get there, with the policies features of the ETS which should advance This was never quantified as a percentage, and measures that would be used. the long-term transformation of the New but it was further specified in a decision The government continues to Zealand economy are prejudiced by the that domestic action must be a ‘signifi- promote the emissions trading scheme cheap carbon price, since they reduce cant element’ of the effort made by each (ETS) as the country’s primary climate incentives to close to zero. Annex I party.19 This is consistent with change policy instrument, ‘one of the Since its original design – a world- the concept of a global transformation very best in the world’ in the words of first, all-sector all-gases scheme – the ETS towards low-carbon economies rather one minister (Bridges, 2013b). There is has been weakened by the continued non- than paying to pollute. A case could be bipartisan agreement of the two major inclusion of agriculture and the softening made that New Zealand’s ETS failed this

Page 52 – Policy Quarterly – Volume 10, Issue 2 – May 2014 supplementarity test during the first Kyo- But with the indefinite exclusion of were felled owing to uncertainty and to to commitment period. agriculture – just under half of New avoid future liabilities. Planting picked The rationale of carbon pricing in Zealand’s emissions under the present up again as the government provided New Zealand is explained as: ‘we are accounting rules – this question is no more certainty about the period 2008–12. committed to doing our fair share. That longer relevant. The New Zealand ETS at Currently timber is profitable for foresters means working at not trying to have around 54% does not cover much more but carbon is not. While the government policy settings above the international of the economy than its EU counterpart. has blamed foresters for not reading the price’ (Bridges, 2013a, emphasis added). New Zealand’s ETS settings have market better (Groser, 2014a), another A typical response to criticism of the low created winners and losers: winners in specifically New Zealand dimension of carbon price is as follows: the livestock sector, the most emissions- the problem is the complaints from iwi intensive of agriculture; and losers in who have lost an estimated $600 million Markets go up; markets come down forestry, other less greenhouse gas- value from the trees on land they were … I think it is extremely unlikely intensive land sector uses, and also to given in settlements under the Treaty of that in 27 years, carbon prices – some extent the rest of the economy, Waitangi (Turia, 2014).22 which have got nothing to do with which has to bear the costs of the 46% The latest ‘snapshot’ of greenhouse the New Zealand emissions trading of emissions that are outside the ETS gas emissions and the Kyoto accounting scheme; they are all influenced by the international price – will be sitting around the current extraordinarily Overall, the availability of cheap units together low levels. (Groser, 2014a) with the other settings have taken away the ETS’s The implication of these comments bite during the first commitment period, and the is that the rising international price will provide the incentive to reduce stockpiled NZUs/AAUs will reduce incentives for emissions. This suggests that the pace of New Zealand’s emissions reductions transformation during the next commitment period. will be determined by the vagaries of international markets. Complete dependence on international markets but within New Zealand’s international position for 2008–12 shows both an was never the intention of the ETS, since target. The ETS settings have encouraged increase in emissions, running at 25% it has built-in safeguards against a too- arbitrage – liquidating deforestation above the 1990 level, and a net surplus high international price, through a price obligations at an insignificant price per under Kyoto owing to holdings of ceiling of $25 a tonne. What is lacking is a tonne through purchasing ERUs, holding forestry and Kyoto units (Ministry for the price floor as a domestic policy lever and on to NZUs in the expectation that they Environment, 2014). In fact, the expected a low-carbon transition tool consistent will eventually increase in value, and surplus is very close to the Kyoto units with the stated objectives of the scheme. converting to dairy with a consequent held (90 million). As in the first biennial As of the first quarter of 2014, New increase in emissions, which do not have report, there is no breakdown of these Zealand’s net accounting position under to be paid for.20 This could be seen as a units. It is likely that many of these units the Kyoto Protocol was using a price of domestic form of the carbon leakage that will displace NZUs and New Zealand 30 cents a tonne, and NZUs were around the government argues will be the case AAUs (assigned amount units), which $3.00. Foresters and iwi have asked for a internationally if New Zealand puts a can be carried over into the next period, price floor of $15. The government has price on emissions where other countries whereas Kyoto’s flexibility mechanism rejected such ideas, arguing that at a time don’t.21 units can’t. However, it is also clear of economic fragility such measures would Under this combination of price from this report that emissions from raise costs to New Zealand consumers. factors and settings, the ETS appears agriculture (owing to dairy expansion) It could be argued that under the to have led in the opposite direction to and transport are on a rising trend, partly original design of the ETS, covering that of the intended policy, and is most offset by improvements in emissions almost 100% of New Zealand emissions, likely to delay New Zealand’s transition intensity. This latter trend is a co-benefit, it was appropriate to use it as a single to a low-carbon economy. Getting offside driven by improvements in production instrument of climate change policy, with the sector on which New Zealand efficiency (Clark, Aspin and Reisinger, neutral across all sectors. In this case, is relying, in all scenarios, to meet 2014); it is not attributable to climate with a carbon price potentially through future commitments on mitigation is change policies or measures. the whole economy, complementary unfortunate. This is the second time that Overall, the availability of cheap measures would be less necessary. foresters have been disaffected, the first units together with the other settings Contrast this with the EU ETS which being towards the start of Kyoto’s first have taken away the ETS’s bite during covers only around 45% of EU emissions. commitment period, when many forests the first commitment period, and the

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 53 Climate Change: towards policy coherence stockpiled NZUs/AAUs will reduce reconfigured into the Sustainable Business received no formal government incentives for transformation during Council.25 The Sustainable Business response. The report contained a the next commitment period. In this Council is now working with business modest set of recommendations, but context it is notable that New Zealand’s on climate change and sustainability. The importantly endorsed the idea of the partly government-sponsored premier private sector-led Pure Advantage group, inevitable transformation towards low annual primary industries conference while it has not attracted the bulk of carbon growth.27 It covered broader in May 2014 focused largely on the goal mainstream business, strongly advocates sustainability issues beyond climate of doubling the value of agriculture the benefits to New Zealand of green change, for example in recommending a exports. There was no mention in the growth.26 Meanwhile, opposition parties ‘conversation’ about mining. The global prospectus for the two-day programme and environmental and youth NGOs transformation to clean energy will not of sustainability, future energy sources or continue to push for more government mean early extinction of fossil fuels, but climate change.23 action on climate change. it will be important to understand how For the sake of completeness, men- future potential oil and gas exploitation tion should be made of other government Achieving coherence will factor in. What assumptions should policies and measures, which include International and domestic policies are be made about the price of carbon, and sectoral measures in energy, energy effi- both internally incoherent and inconsis- about investment in carbon capture and ciency, housing and transport. A full list- tent with each other. In order to regain co- storage or other technologies? Is there a risk of stranded assets? How can oil and gas exploitation avoid prejudicing A virtuous circle on agriculture might be achieved the ‘clean, green’ brand? There is a polarisation of public discussion on this at home, with action to price or regulate nitrous important issue, between groups seeing oil and gas exploration as an absolute oxide – the cumulative gas of the two principal evil and a government view in which agricultural ones – with benefits of both lower climate change is ignored completely in predictions of economic benefit. emissions and cleaner water. Second, the fallacy of the ‘international price of carbon’ should be dealt to. This makes sense only when seen in narrow ing of these complementary measures is in herence, and steer New Zealand through terms of compliance with international New Zealand’s sixth national communica- the coming global transformation, there commitments as a financial operation. tion. These measures appear somewhat are some obvious steps that can be taken. It is misleading to talk of this when piecemeal and overall are not yet strongly First is a statement which shows there are constraints on demand for coordinated or coherent with the ETS. a shift from compliance and burden- these units imposed by governments, The absence of a long-term vision, minimisation to economic transforma- and New Zealand is unique in having or a meaningful carbon price, together tion. Rather than the present government none. However, since New Zealand ETS with piecemeal complementary measures line of waiting to see what the major participants have now lost their access has created a policy vacuum which could players do, this could convey an informed to international units, the government delay New Zealand’s transformation, and vision of the place of the New Zealand may have to abandon its laissez-faire make it harder to make an internationally economy in a lower-carbon world and approach to the price of carbon in credible contribution to global emissions how that transformation can be managed. the period ahead. Linking with other reduction. It also potentially stifles low- It would logically focus on opportunities emissions trading schemes could be carbon investment, given that there are for New Zealand, and at the very least one response, but would take time to no clear signals to business. could put forward ‘no regrets’ pathways negotiate. Auctioning of NZUs, which is To help fill this vacuum some on which some progress could be made already allowed for under the ETS, could initiatives have sprung up outside or independently of the state of international easily be implemented. The advantage of alongside government. The economic action. An emphasis on the long-term auctioning is that the government has consultancy Motu is running a new orientation of this transformation rather the scope to determine what price is best research programme called Shaping New than attempting to pick winners through to meet the twin objectives of meeting Zealand’s Low-Emission Future: making a single prescription would be most international obligations and steering the NZ ETS effective.24 Business New effective. Such a long-term view may the economy through its low-carbon Zealand has absorbed the functions of the require revision of the 2050 target, and/ transition. moribund New Zealand Business Council or some idea of a strategy to achieve it. Third, New Zealand has the chance to for Sustainable Development, which The 2011 Green Growth Advisory advocate an approach to agriculture and has been merged with Business New Group report was a lost opportunity the land sector that would take account Zealand’s Sustainable Business Forum and for policy coherence, since it has of the special needs of food production

Page 54 – Policy Quarterly – Volume 10, Issue 2 – May 2014 and food security, acknowledge the carbon prices or of internationally- has a head start here, as electricity implications of the science regarding pledged reduction targets and mitigation generation is already 70% renewable methane as a short-lifetime gas, and options for New Zealand. This research and a realistic target exists to increase encourage optimum land use choices. could contribute to an update of New that to 90% by 2025. This transition is This does not necessarily mean trying Zealand’s mitigation potential, and could occurring even without a meaningful to renegotiate basic rules, but would inform the review of the ETS in 2015. carbon price, so it can be assumed that certainly have the potential to recognise Fifth, the government could re- it could be faster with one. Given New that agricultural methane makes a much engage with stakeholders, some of whom Zealand’s geography, transport stands out smaller contribution to global warming are ahead of government in thinking as a vulnerable sector where electric and than its current metric would suggest.28 long-term. The private sector could biofuel-powered vehicles and expanded New Zealand should have high credibility assist in assessing the policy implications public transport have potential. Progress here through its world-leading research of market and broader ‘brand’ factors. is being made on energy efficiency. On on the mitigation of ruminant methane. Local government, too, is an important agriculture, no government is going to A virtuous circle on agriculture stakeholder in climate change because it send the dairy industry out of business, might be achieved at home, with action bears the responsibility for adaptation, on but it should not be too difficult to to price or regulate nitrous oxide – the which it has been calling for more guidance determine how far the current model is cumulative gas of the two principal from central government. A sense of long- sustainable in the long term, and what agricultural ones – with benefits of both lower emissions and cleaner water.29 An even-handed approach to the different Moving away from fossil-fuelled energy is obvious; players in the land sector which treated livestock farmers the same as foresters, New Zealand has a head start here, as electricity orchardists and others, and took account of recreation and tourism values, would generation is already 70% renewable and a realistic be valuable. Such an approach could target exists to increase that to 90% by 2025. secure recognition of the limits to New Zealand’s mitigation potential in international burden-sharing discussions, while providing an economically rational term direction from central government policy settings are needed, taking into framework at home. on both adaptation and mitigation would account other possible land uses, in order The whole land sector is the most give some context for local government, to ensure the best economic as well as complex area of the UN rules, and supporting local autonomy without environmental outcomes. achieving changes will be a challenge being over-prescriptive. While the main Thus, the combination of better because the major players are not responsibility of local authorities is science, new international deadlines demandeurs here. It will require some adaptation, some are also putting in place and increasing interest from domestic solid research, and New Zealand will mitigation policies, as seen, for example stakeholders is an opportunity to achieve need allies among the major agriculture- in Auckland’s Energy Resilience and Low both policy direction and coherence. producing nations. At Warsaw in 2013 Carbon Action Plan (Auckland Council, There are choices to be made on the Tim Groser launched the discussion 2014). This is consistent with action being long-term policy direction, and on the by calling for a different approach to taken by major cities around the world. consequent mix of price and regulatory agriculture under the UNFCCC in order Sixth, a further opportunity for inputs measures that would best serve it. A to bring developing countries on board into policy will be the expert review renewed sense of direction at home, on mitigation. New Zealand’s latest under the UNFCCC of New Zealand’s evidence-based policies, and a credible submission on land sector accounting sixth national communication and first commitment to international efforts, (New Zealand Government 2013a) is in biennial report, which will lead to public including leadership in agriculture, looks this regard rather general and sits on the and international scrutiny as well as the like an achievable, coherent package that fence on most key issues, suggesting that chance to judge how far New Zealand could be brought together during 2015. New Zealand thinking is not far advanced. is leading or lagging. Although the new Based on the experience of almost two processes are untested, they should 1 For background on the recent history of international climate change negotiations, see Macey (2012). decades of negotiations on LULUCF, there produce insights for government and 2 10% to 20% below 1990 levels by 2020. 3 Apart from access to ‘primary CERs’, which is not likely to be is very little time indeed left to negotiate stakeholders. attractive to New Zealand business. rules in this highly complex area. Apart from the land sector, where 4 See www.mfat.govt.nz/fffsr/. 5 www.globalresearchalliance.org. Fourth, to provide an updated innovative thinking and research 6 www.unep.org/ccac/. 7 www.majoreconomiesforum.org/. evidence base for policy the government are needed, none of this looks too 8 http://gggi.org/. could commission further research: complicated. Moving away from fossil- 9 ‘New Zealand is doing its fair share on climate change, taking into account our unique national circumstances, both for example, on the effects of different fuelled energy is obvious; New Zealand to restrict our own emissions and support the global efforts

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 55 needed to make the cuts that will limit warming’, Groser figures.pdf. This contrasts with the first surrender period 22 ‘Some iwi were given forests as part of their Treaty settlement stated in the government’s initial response to the IPCC’s (2010), when offshore carbon markets contributed only and these were assets with a value of between $20 and working group III report. 1.6% of units surrendered. These were all CERs from $30 per carbon credit. These credits have been reduced 10 See Smith (2011). The term ‘responsibility target’ means the Clean Development Mechanism. See http://www. in value to as little as $3 per credit, therefore reducing the using a combination of domestic measures and international climatechange.govt.nz/emissions-trading-scheme/ value of the overall settlements. The loss is expected to be carbon markets. building/reports/ets-report/. in the hundreds of millions of dollars … Last month, the 11 There has been one recent public mention of it. It was 17 There is a precedent for the government intervening to Government confirmed they would not intervene to put a referred to in Parliament by Tim Groser on 8 April 2014 as restrict the use of units of dubious environmental integrity fixed price on carbon, despite a possible $600 million Treaty ‘the aspirational target of 2050, when we aim to reduce in the ETS. New Zealand followed the EU and Australia in claim from the Climate Change Iwi Leadership Group due to emissions by 50 percent’ (Hansard, vol.697, p.5). banning CERs and ERUs from HFC-23 and N2O industrial the reduced value of the carbon credits on their forests under 12 http://www.majurodeclaration.org/the_declaration. The gas destruction projects. Additional reasons for the ban were the current failed scheme’ (Turia, 2014). 50/2050 target was in a draft version of the annex listing to maintain prospects of linkage with other schemes, and to 23 https://www.conferenz.co.nz/conferences/nz-primary- measures by country, but did not appear in the final text. avoid a price collapse in the ETS. On the reasoning behind industry-summit. The target is, however, listed in New Zealand’s sixth national this decision, see http://climatechange.govt.nz/consultation/ 24 http://www.motu.org.nz/research/group/shaping_new_ communication to the UNFCCC (Ministry for the Environment hfc-23-n2o-cers/consultation-document/index.html. zealands_low-emission_future. (2013b)). 18 Kyoto Protocol article 6.1 states: ‘The acquisition of emission 25 www.sbc.org.nz/. 13 http://www.climatechange.govt.nz/emissions-trading-scheme/ reduction units shall be supplemental to domestic actions for 26 www.pureadvantage.org/. about/why.html. the purposes of meeting commitments under Article 3.’ 27 New Zealand’s sixth national communication (Ministry for the 14 A point made in 2011 by the Ministry for the Environment in 19 Decision 2/CMP.1, para 1. Environment, 2013b) states that ‘Aspects of greening growth its briefing to incoming ministers: ‘While the ETS plays the 20 One of the original aims of the ETS was to slow such have been integrated into the Government’s wider Business core role in our response to climate change, a price alone will conversions: ‘There will be a slower rate of conversion of Growth Agenda, including a commitment to transition to a not be sufficient to deliver a smooth and efficient transition forestry land to dairy farming as a result of applying the low-emissions economy.’ But this integration seems far from to a low carbon economy, particularly in the short term ETS to the forestry sector from 2008. This is likely to be the comprehensive. while the price remains comparatively low. Complementary largest impact of the ETS in the short term’ (http://www.mfe. 28 Methane’s global warming potential is 25 times that of measures will be needed to support investment in longer govt.nz/publications/climate/framework-emissions-trading- carbon dioxide, but as it only lasts about 12 years in the term abatement and infrastructure. These will likely include scheme-sep07/html/page9.html). atmosphere is not cumulative. A picturesque analogy to measures to promote technological change, innovation and 21 The carbon leakage argument is most frequently used for illustrate this point is made by Professor Myles Allen of behaviour change’ (http://www.mfe.govt.nz/publications/ agriculture, and starts from the increasing demand for animal Oxford University, who likens the long-lifetime gases to the about/briefing-incoming-minister-2011/, p.20). protein. ‘Any attempt to deliberately price carbon to reduce turkey and methane to the cranberry sauce. 15 Emissions-intensive industries have to surrender one unit for our agriculture output to make some ideological point would 29 Agricultural nitrous oxide emissions increased almost 30% every two tonnes of carbon. See http://www.climatechange. not only be an economic mistake of grave proportions, it between 1990 and 2011. Fertiliser and animal excreta are govt.nz/emissions-trading-scheme/ets-amendments/index. would worsen the problem of global anthropogenic-induced the two main sources. (Ministry for the Environment, 2013b, html. greenhouse gas warming since the production gap would be p.56.) 16 See http://www.climatechange.govt.nz/emissions-trading- filled by less carbon efficient producers than ours’ (Groser, scheme/building/reports/ets-report/ets-2012-facts-and- 2013).

References Auckland Council (2014) The Auckland Plan, http://theplan. Ministry for the Environment (2013b) New Zealand’s Sixth National theaucklandplan.govt.nz/ Communication under the United Nations Framework Convention Bridges, S. (2013a) Hansard, 11 July, vol.692, p.11975 on Climate Change and Kyoto Protocol, Wellington: Ministry for the Bridges, S. (2013b) Hansard, vol.694, p.4190 Environment, http://www.mfe.govt.nz/publications/climate/nz-sixth- Clark, H., M. Aspin and A. Reisinger (2014) ‘Financial imperatives in national-communication/sixth-national-communication.pdf reducing emissions’, Dominion Post, 15 April Ministry for the Environment (2014) Snapshot April 2014: New Zealand’s Executive Office of the President (2013) The President’s Climate Action Greenhouse Gas Inventory and Net Position Report 1990–2012, Plan, Washington: White House http://www.mfe.govt.nz/publications/climate/greenhouse-gas-inventory- Green Growth Advisory Group (2011) Greening New Zealand’s Growth: 2014-snapshot/2014-snapshot.pdf report of the Green Growth Advisory Group, Wellington: Green New Zealand Government (2013a) ‘New Zealand submission to SBSTA: Growth Advisory Group, http://www.med.govt.nz/sectors-industries/ initial views on issues related to more comprehensive LULUCF environment/pdf-docs-library/Greening%20New%20Zealands%20 accounting’, http://unfccc.int/files/methods/lulucf/application/pdf/ Growth.pdf nz_submission_to_sbsta_more_comprehensive_lulucf_accounting_ Groser, T. (2013) ‘Speech to New Zealand National Fieldays’, 13 June, corrected_04_05_2013.pdf http://www.beehive.govt.nz/speech/address-new-zealand-national- New Zealand Government (2013b) ‘New Zealand submission fieldays to the working group on the Durban Platform for enhanced Groser, T. (2014a) Hansard, 11 February, vol.696, p.15754 action: work stream 1’, http://unfccc.int/files/documentation/ Groser, T. (2014b) ‘IPCC report shows need for global agreement on submissions_from_parties/adp/application/pdf/adp_new_zealand_ omissions’, press release, 13 April, http://www.beehive.govt.nz/ workstream_1_20131015.pdf release/ipcc-report-shows-need-global-agreement-emissions Smith, N. (2011) ‘Government sets –50% by 2050 emmissions Macey, A. (2012) ‘The road to Durban and beyond’, Policy Quarterly, 8 reduction target’, press release, 31 March, http://beehive.govt.nz/ (2), pp.23-8 release/govt-sets-50-2050-emissions-reduction-target Ministry for the Environment (2013a) New Zealand’s First Biennial Turia, T. (2014) ‘Emissions law is costing dearly’, Wanganui Chronicle, Report under the United Nations Framework Convention on Climate 20 March, http://www.nzherald.co.nz/wanganui-chronicle/opinion/ Change, Wellington: Ministry for the Environment, http://www.mfe. news/article.cfm?c_id=1503423&objectid=11222865 govt.nz/publications/climate/nz-first-biennial-report/first-biennial-report. pdf

Page 56 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Jessika Luth Richter and Lizzie Chambers

Reflections and Outlook for the New Zealand ETS must uncertain times mean Convention and the [Kyoto] uncertain Protocol; and (ii) reducing New Zealand’s net emissions of those gases to below measures? business-as-usual levels’. Beyond this, the New Zealand Introduction government has confirmed The New Zealand emissions trading scheme (ETS) was three objectives for the ETS: introduced by legislation in 2008. The legislated objectives as stated in section 3 of the Climate Change Response Act 2002 • help New Zealand to are to ‘support and encourage global efforts to reduce the deliver its ‘fair share’ emission of greenhouse gases by (i) assisting New Zealand of international action to meet its international obligations under the [UNFCCC] to reduce emissions, including meeting any Jessika Luth Richter is a PhD researcher at the International Institute for Industrial Environmental Economics, Lund University. international obligations; Lizzie Chambers is founding director of Carbon Match Ltd and a Director of the New Zealand Forest Research Institute Ltd. • deliver emission relations

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 57 Reflections and Outlook for the New Zealand ETS: must uncertain times mean uncertain measures?

in the most cost-effective manner; providing more flexibility and mitigating riculture sector and introduced intensity- • support efforts to maximise the long- short term costs for business while based allocation for emissions-intensive term resilience of the New Zealand ensuring clear long term price signals and trade-exposed industries. ‘Transition- economy at least cost. (New Zealand that encourage a smooth transition to al measures’ were also legislated: a ‘two Government, 2012; Ministry for the a low carbon economy’ (New Zealand for one’ surrender obligation (whereby Environment, 2013a) Cabinet, 2012, p.1). emitters in all sectors except forestry are Criteria used by the Ministry for the The initial design of the New Zealand required to surrender only one unit for Environment to assess the regulatory ETS was heralded as a trail-blazing all- every two tonnes of emissions) and a impact of changes to the ETS (shown sectors, all-gases, flexible cap-and-trade fixed price option (effectively a $25 price in Table 1) give further insight into a system (see, for example, Moyes, 2008; cap on the value of a New Zealand unit possible interpretation of these objectives. Jiang, Sharp and Sheng, 2009). However, (NZU)). The measures were argued by Decarbonisation is part of long-term it was also criticised for its reliance on the National government as being neces- economic resilience, demonstrated by offsets (from both forestry and overseas) sary in the uncertain economic climate the criteria to ‘provide incentives for and lack of ambition in terms of gross and were supported by many industry the long-term development of low-cost domestic emissions reduction (for further stakeholder groups. However, they were emission abatement technologies’ and criticisms see, for example, Bertram also criticised for being overly generous to ‘minimise negative/maximise positive and Terry, 2010). Since its introduction with allocation, being even less ambi- wider environmental impacts’ (Ministry the ETS has also undergone significant tious than the original scheme design, for the Environment, 2012c, p.10). change, although the main framework of and putting the interests of some stake- Furthermore, a key strategic driver for the scheme has remained intact. holder groups above others (Hood, 2010; subsequent amendments made in 2012 Amendments introduced by the Bertram and Terry, 2010; Bullock, 2012; was to ensure that the ETS ‘supports the National government in 2009 deferred Richter and Mundaca, 2014). Transitional government’s economic growth priorities: the imposition of obligations on the ag- measures were due to be phased out af- ter 2012, but have instead been retained Table 1: Ministry for the Environment assessment criteria under high-level objectives indefinitely. High-level Delivering fair Delivering cost-effective Long-term economic resilience This article discusses the development objective share emission reductions and performance of the scheme since the report of the Emissions Trading Scheme Criteria Facilitate international efforts Minimise short-term negative Minimise long-term negative economic impacts economic impacts Review Panel in 2011. In particular, the article presents the results of a survey Contribute to NZ international Minimise costs to businesses Maintain long-term international undertaken by the authors in April 2013 obligations competitiveness of stakeholders’ perception of the scheme Enhance NZ’s international Minimise market distortions Provide incentives for the long- and its performance. The survey was credibility term development of low-cost designed and administered by the authors emission abatement technologies using FluidSurveys software. Contribute to achieving NZ’s Minimise risks of trade sanctions Maximise equity between sectors General questions about the fair share and socio-economic groups scheme’s objectives and future outlook were asked of all respondents. More Provide incentives to Minimise government’s Promote intertemporal equity targeted questions regarding market and abate administrative and implementation costs compliance behaviour were asked of respondents who identified themselves as Contribute to meeting NZ’s Minimise ETS participants’ Ensure appropriate risk-sharing either forestry participants, emitters with 2050 target compliance and transaction between emitters and government direct obligations, emitters indirectly costs affected by the scheme, carbon traders, Promote understanding of ETS Appropriately reflect the Crown’s or ‘others’, including representatives of responsibilities as a Treaty partner non-governmental organisations and Minimise fiscal costs/ maximise Support the development of the policy makers. The survey was advertised fiscal savings Ma-ori economy consistent with through numerous channels, including their environmental values the Carbon Match website. The key results of the survey were that Maximise market liquidity Minimise negative/ maximise and transparency positive wider environmental considerable regulatory uncertainty has impacts surrounded the scheme; that stakeholders are divided over its future; and that it Facilitate links with other Ensure the environmental integrity currently provides no incentive for new schemes of overseas emission units planting. Lastly, this article discusses the surrendered in the ETS issue of uncertainty in the scheme and Source: Ministry for the Environment (2012c)

Page 58 – Policy Quarterly – Volume 10, Issue 2 – May 2014 discusses possible scenarios for the future to a greener economy, a practical aim of businesses, as well as giving more certainty of the New Zealand ETS. the ETS has been to drive afforestation (Ministry for the Environment, 2012a; and deter deforestation. Indeed, it is not 2012c). In practice, the amendments The New Zealand ETS as a tool for to industry but to forestry that the vast diverged significantly from the panel decarbonisation bulk of issuance of emission units has recommendations. Instead of ‘transitional Decarbonisation of the New Zealand been made to date (EPA, 2014). measures’ being phased out, these were economy is considered challenging. retained indefinitely and applied to new Around half of the country’s gross Performance of the New Zealand ETS sectors due to enter the scheme in 2013. greenhouse gas emissions (excluding The 2011 report of the Emissions Trading The phasing out of ‘free’ allocations LULUCF: those from land use, land-use Scheme Review Panel found that the ETS to the industrial sector was postponed change and forestry) can be attributed was performing to expectations, but also indefinitely, removing what would have to agriculture. While mitigation options made suggestions aimed at improving been a marginal, but annually increasing, exist, the effectiveness of their application the operation and effectiveness of the pressure on direct industrial emitters varies, as does the estimation of their scheme to ensure it meets its objectives. and large energy consumers to achieve costs (see, for example, Cooper, Boston Broadly speaking, had the review panel emissions reductions. Finally, the idea and Bright, 2012; Kerr and Zhang, 2009). recommendations been adopted their of implementing a general quantitative Dependence on private transport is high, with total emissions from the domestic transport sector making up about 20% Critics perceive that the ETS is not working as of total gross emissions and projected to continue to increase steadily. Demand for envisaged because the price signal is far too weak car transport is also relatively inelastic to fuel prices due to the country’s low to incentivise behaviour change and low-carbon population density and culture of mobility investments while key emitters are shielded and geographic isolation (Ministry for the Environment and Treasury, 2007). Hence from the price and forests are being converted to emissions reductions in this sector, while possible, are challenging. emissions-intensive dairying ... In contrast, an average of 70% of electricity in New Zealand is generated from renewable sources, mostly hydro. net effect would have been to increase the restriction on the use of United Nations This already high contribution of scope and size of the ETS, relative to where offsets (i.e. ‘supplementarity limits’) renewables means that many low-cost it stands at the time of writing this article appeared to fall by the wayside and such fuel switching opportunities used by (March 2014). The panel recommended restriction was not introduced. other developed countries for emission that ‘transitional measures’ – specifically It is perhaps the failure to implement reductions are not available in New the ‘two for one’ deal and $25 price cap this general quantitative limit on offset Zealand (OECD, 2011). There is still – should be phased out (albeit more use which has had the greatest impact on scope for increased investment in gradually than originally envisaged). the efficacy of the scheme to date. Those renewable energy, and energy efficiency The panel also reaffirmed the ‘all sectors, with obligations remain able to use UN is attractive in New Zealand. Large-scale all gases’ approach, and said that it was offsets for up to 100% of surrender afforestation, particularly of marginal appropriate that agriculture was to be obligations and this will remain the case and erosion-prone land, as well as included (with free allocation). until at least May 2015. The extreme avoided deforestation has been argued The government’s consultation reliance by obligated participants to to be one of the most cost-effective document in April 2012 largely reflected date on the cheapest, and in some ways of reducing net emissions, at least these recommendations, and also cases lowest quality, certified emission in the shorter term (Ministry for the proposed a quantitative restriction on reductions (CERs), emissions reduction Environment, 2008).1 It is for this reason the surrender of international units units (ERUs) and removal units (RMUs) that New Zealand’s key policy tool for (New Zealand Government, 2012). All has drawn questions internationally over reducing emissions, the New Zealand else held constant, such a restriction the environmental effectiveness of the ETS, is the first emissions trading scheme could reasonably have been expected scheme. The fact that the concept of in the world to include forestry both as to provide increased continuity of ‘supplementarity’2 remains undefined in a source of units for removals and as a demand and hence greater support for the New Zealand ETS has been the subject direct point of obligation for emissions. the domestic carbon emissions unit, the of criticism (see Mundaca and Richter, Setting aside the debate over whether NZU. However, actual amendments made 2013). It should be noted that while a afforestation simply buys time or in fact is later that year focused instead on easing series of amendments to render certain the first rung on the ladder of transition the burden and cost on households and low-quality offsets3 ineligible were made,

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 59 Reflections and Outlook for the New Zealand ETS: must uncertain times mean uncertain measures?

Figure 1: Breakdown of surrendered units by type year by those with obligations under the scheme (see Figure 1). 30000 This trend could have continued for perhaps a decade had the 2012 United Nations climate change conference not 25000 had significant implications for the New Zealand ETS in this regard. Indeed, that the price of a New Zealand unit continued 20000 to outstrip that of an ERU (which have traded into the New Zealand market for less than 15 cents) can only have been due 15000 to the possibility of further policy change which would have the effect of increasing the future carbon price. 10000 It was ironic, then, that it was the New Thousands of units surrendered Zealand government’s own international negotiating position and decision not 5000 to take on a second commitment under the Kyoto Protocol which delivered this, causing the country to lose access to the 0 Kyoto flexible mechanisms with effect 2010 20112012 from the conclusion of the true-up period Forestry NZUs Other NZUs NZ AAUs CERs ERUs RMUs Fixed price for the first Kyoto commitment period.4 Source: Ministry for the Environment, 2011, 2012b, 2013b As a result, from 1 June 2015 Kyoto units will no longer be eligible for use in these did not equate to a more general 2012 amendments: see Ministry for the the New Zealand ETS and New Zealand quantitative restriction, and in any event Environment, 2012c, p.22). emitters will no longer have access to the they were made after many of these units Critics perceive that the ETS is not cheap international offsets on which they were already in the New Zealand registry. working as envisaged because the price have relied almost exclusively to date. By The result is that the scheme’s ability signal is far too weak to incentivise default, then, the New Zealand carbon to meet all of the government’s stated behaviour change and low-carbon market, historically so highly linked to and policy objectives (as outlined in the investments, while key emitters are affected by the market for Kyoto offsets, introduction above) has been stunted. shielded from the price and forests are looks set to become cut off. While future The 2011 government report on the ETS being converted to emissions-intensive linking to other markets is, of course, (Ministry for the Environment, 2011) dairying (see, for example, Taylor, 2013; possible, at this stage only units of New concluded that the scheme was on course many of these arguments were also Zealand origin will be able to be used for to meet the first two objectives, but the made in public submissions in the 2012 compliance from 1 June 2015 onwards. 2011 review panel also concluded that it consultations). Meanwhile, however, as our survey was still too early to discern the impact of With such unfettered access to UN shows, the extensive changes to the the scheme, particularly in relation to the offsets, over the course of 2011–13 the large domestic ETS design, all in only the first long-term resilience objective (objective surplus of international units, particularly four years of the policy’s existence, have three). The review panel found that there ERUs and RMUs, as evidenced by the led to considerable uncertainty among remained a need for a clear price path volume of these units in the New Zealand stakeholders over the continuing viability to incentivise low-carbon investments Emission Unit Register (see EPA, 2014) of the New Zealand ETS, particularly in order to deliver the government’s EPA, 2013; Ministry for the Environment, among foresters. Confidence has waned third objective (and to continue to work 2012b), and their falling prices became among foresters, and indeed the sector is towards the first). Indeed, it is hard the dominant influence over the price of set to become a net source of emissions to see how the current scheme could the New Zealand unit, which fell from just rather than a sink by the mid-2020s. be supporting efforts to maximise the over $20 in late May 2011 to little more Not only is afforestation due to the ETS long-term resilience of the New Zealand than $6 in late May 2012, to less than $2 not currently indicated, but ongoing economy at least cost, if this is dependent in late May 2013. As market events in the participation from the sector on a on the prevailing carbon price and the European Union ETS continued to see voluntary basis appears to be at risk, while level of ambition set by the scheme (two the price of ERUs and RMUs descend investments from other sectors in low- determinants highlighted by Ministry to negligible levels, New Zealand units carbon technology needed to begin the for the Environment in their regulatory appeared set to play an ever-diminishing transition to a greener domestic economy impact statement regarding the proposed role in the mix of units surrendered each also do not appear to be happening.

Page 60 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Perceptions of the New Zealand ETS Table 2: 2013 NZ ETS Outlook Survey responses to NZ ETS meeting its objectives Our survey highlighted a lack of consensus The NZ ETS helps New Zealand reduce its overall emissions among participants on whether the ETS is Strongly Total meeting its objectives. Table 2 shows the disagree Disagree Neutral Agree Strongly agree Responses number and categories of respondents to Foresters 26 30% 28 33% 8 9% 21 24% 3 3% 85 the survey and responses to the question about the performance of the ETS in Emitters 2 6% 11 34% 9 28% 9 28% 1 3% 32 relation to its objectives. It is important Traders 3 23% 6 46% 0 0% 4 31% 0 0% 13 to note that several of the respondents Others 8 21% 13 33% 7 18% 9 23% 2 5% 39 who agreed that the New Zealand ETS is Total 39 23.1% 58 34.3% 24 14.2% 43 25.4% 6 3.6% 169 meeting its objectives noted that they were considering the policy’s potential rather than actual performance to date. The NZ ETS is a cost-effective way of reducing emissions in New Zealand One of the stand-out findings of our Strongly Total survey was that most respondents either disagree Disagree Neutral Agree Strongly agree Responses disagree or strongly disagree that sufficient Foresters 28 33% 20 23% 11 13% 22 26% 5 6% 85 regulatory certainty has been provided by Emitters 2 6% 8 25% 9 28% 13 41% 0 0% 32 the government to date. Perhaps most seriously – for a country whose domestic Traders 2 15% 6 46% 0 0% 4 31% 1 3% 13 emissions reductions plan appears to be Others 8 21% 13 33% 8 21% 6 15% 4 10% 39 so heavily geared towards afforestation, Total 40 23.7% 47 27.8% 28 16.6% 45 26.6% 10 5.9% 169 and indeed for a scheme whose domestic supply potentially relies heavily on the involvement of forestry – of the 85 The NZ ETS helps New Zealand transition to a greener economy in the future foresters surveyed not one believed the Strongly Total ETS currently drives any new planting. disagree Disagree Neutral Agree Strongly agree Responses The situation is particularly serious Foresters 17 20% 29 34% 10 12% 23 27% 7 8% 85 given that there are costs associated with Emitters 4 12% 5 16% 8 25% 15 47% 0 0% 32 involvement in the scheme. Indeed, over half of our respondents either disagreed Traders 2 15% 6 46% 0 0% 5 38% 0 0% 13 or strongly disagreed that the ETS was a Others 5 13% 11 28% 6 15% 15 38% 2 5% 39 cost-effective way of reducing emissions, Total 28 16.6% 51 30.2% 24 14.2% 58 34.3% 9 5.3% 169 while 16.6% responded neutrally to the question. consider planting if the price was at least ‘the Government has provided sufficient As mentioned earlier, an important $15–20. (This roughly corresponds with regulatory certainty about the NZ ETS’, objective of the ETS is longer-term the findings in Manley, 2013.) over 80% of the total respondents either economic resilience, which includes Among emitters, 66% of respondents disagreed (31.4%) or strongly disagreed transition to a low-carbon economy. There said that the ETS has caused no emission (50.3%). There is great uncertainty is cause for concern about whether this will reductions in their company to date, about whether the ETS will continue transpire: longer-term decarbonisation despite the initial prices in 2010–11 past 2020, with just under half (48%) will be facilitated by wise investments of over $20. A further 6% said that of the respondents confident that this made in the short to mid term. Of the reductions were planned but had not yet would be the case. However, in contrast foresters surveyed, 37% indicated that eventuated. Of those who could reduce to Australia’s carbon pricing mechanism, the long-term carbon price (e.g. to 2020) emissions, the majority indicated that the New Zealand ETS’s framework and was a decisive factor for them to stay they would seek to do so if the price the policy of carbon pricing at least has in the ETS. Most said that the ETS had stayed above $20 (24%) or $25 (28%). support from the major political parties, incentivised new planting in the past This fact, taken with the perception that although bipartisan support of the design (63%), while 35% answered that the ETS the ETS no longer drives afforestation, remains elusive (though National and had not incentivised new planting at all. No would appear to indicate that investment Labour nearly came to a memorandum of foresters answered that the ETS continues in a low-carbon economy driven by the understanding on this in its early stages: to incentivise new planting. Of those ETS is at a standstill. see New Zealand Labour and National capable of afforestation, none indicated Parties, 2007). that they would consider doing so below Dealing with uncertainty The scheme still lacks a sufficient and $10 per tonne of CO2e (CO2 equivalent), The theme emerging from the answers to predictable price signal to give certainty and the highest percentage of respondents our survey was that of a lack of regulatory about future costs or to incentivise low- (43%) indicated that they would only certainty. In response to the statement carbon investments. Our survey revealed

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 61 Reflections and Outlook for the New Zealand ETS: must uncertain times mean uncertain measures? that most respondents would ideally like the Iwi Leadership Group claim against Committee on Climate Change or the to know the price of carbon for the next the government over the loss in value of Climate Change Authority in Australia; three – five years or longer. In proposing carbon forestry (see Reuters, 2014). even the European Commission is the 2012 amendments the government The Iwi Leadership Group proposed, assuming more responsibility for the ETS noted that ‘participants will also have along the lines of the price cap, a price cap, which had formerly been the sum of more certainty about the price of carbon floor, which is a potentially proportionate member states’ caps). Nor does it have the as the $25 price cap will be extended’ and symmetrical policy response to potential command and control power (Ministry for the Environment, 2012a). help address this issue. The price floor of the Environmental Protection Agency The fixed price option provides certainty mechanism is recognised both in theory in the United States. The Parliamentary about the highest potential costs faced (see Aldy and Stavins, 2012; Jacoby and Commissioner for the Environment by obligated participants and provides Ellerman, 2002; Philibert, 2006), and in has an independent role as an advising a safety valve to that end, with the ETS practice with the auction price floors officer of Parliament and this could be essentially functioning as a tax if the in the California ETS (of $US10) and a natural home for such an institution. price of carbon increases beyond $25. the UK (at £16/tonne) (additionally, the However, with a very small staff and a In fact, some businesses in passing on original design of the Australian carbon large portfolio covering wide-ranging carbon prices to consumers have used pricing mechanism included an $15 environmental issues, more resources would be needed to expand this role and stronger mechanisms for enhancing its It seems apparent that the ETS with its current authority to make the government more accountable in its policy targets which settings will cause negligible domestic emissions deviate from scientific recommendations reductions in the short term and uncertain for seriously addressing climate change. investment for the longer term. Outlook for the New Zealand ETS New Zealand will meet its Kyoto commitments for 2008–12, but largely due to forestry offsets (under article 3.3) and the $25 price cap as a proxy price, when price floor). As of the time of writing a units acquired under the Kyoto flexibility lower-priced units were actually being floor was also being considered as one mechanisms, rather than by absolute used for compliance (evidence of this of six structural changes to the EU ETS reductions in gross domestic emissions, was commented on by the review panel (European Commission, 2014). It may be which, on the contrary, have continued (Emissions Trading Scheme Review Panel, an option to explore; although an overall to rise significantly even through the first 2011, p.32). While this gives certainty cap designed to ensure that supply and commitment period. Now net emissions that the businesses will not undercharge demand produces a consistent strong (i.e. including emissions and removals consumers (in fact, they are more likely price signal could also help the New from domestic forestry) are rising as well, to profit), this practice has already lead Zealand ETS better meet its third objective as the ETS and other economic factors to disputes (see, for example, Smellie, of incentivising low-carbon investments drive deforestation. The latest Ministry 2013). and transitioning the economy (Mundaca for the Environment report projects While there is certainty regarding the and Richter, 2013). that net emissions will reach 90 million highest costs of compliance, there is no It is clear that the ETS is still strongly tonnes of CO2e by 2040 (Ministry for certainty of any such price to underpin influenced by politics, and this underlies the Environment, 2013c). This 50% rise investments in decarbonisation. The much of the uncertainty and lack of in emissions (from 1990 levels) contrasts range of $0–25 is a wide margin within ambition surrounding the policy. One starkly with the government’s 2050 target which forestry and other investments step towards de-politicising the ETS of a 50% reduction, which would be 29.9 become viable or not. The deforestation would be the establishment and proper million tonnes of emissions. The forest intentions survey (Manley, 2013) and our resourcing of a truly independent sequestration that has been helping to own survey reveal that the price of carbon regulatory authority. The establishment meet short-term commitments will in New Zealand is currently not sufficient of the Environmental Protection instead become a liability as large amounts to deter deforestation or incentivise Authority (EPA) as a separate Crown of post-1989 forests are harvested or new planting. In line with results in the agency in 2011 put the ETS regulatory deforested as predicted in the 2020s and Manley survey, our survey indicates that functions more at arm’s length from onwards (see Bertram and Terry, 2010). prices over $10–15 are probably needed ministers (Smith, 2010, p.3). However, It seems apparent that the ETS with to incentivise new planting. Beyond new the EPA does not advise on the ETS and its current settings will cause negligible planting, certainty about the value of emission reduction targets in the same domestic emissions reductions in the existing forestry NZUs is also a point of manner as independent administrative short term and uncertain investment for contention, and the argument behind bodies elsewhere (for example, the UK the longer term. (Even in 2011 the review

Page 62 – Policy Quarterly – Volume 10, Issue 2 – May 2014 panel noted that the impact of the scheme Figure 2: Allocation and use of NZUs had been low even though price signals 140 then had been higher (Emissions Trading Scheme Review Panel, 2011, p.17).) New Fisheries Other Removals 120 forestry investments appear to have been EITE Allocation committed to on a lagged basis, driven by earlier (higher) price signals, or indeed by 100 ancillary drivers independent of the price Yet to be (e.g. log prices). This is consistent with 80 Post-1989 Surrendered findings from the deforestation survey of 2012, which showed that ‘the ETS scenario 60 leads to higher levels of deforestation than the No ETS scenario’, and predicts Emissions Units (m) greater deforestation rates in the 2020s 40 and continuing conversion of forest land to dairy – all likely contributing to a 20 significant increase in emissions for New Pre-1990 Surrendered Zealand. In fact, that survey even found 0 one respondent intending to implement Issuance & Allocation 2008-12 Incl Surrender v Surplus an accelerated level of deforestation Source: Ministry for the Environment, 2011, 2012b, 2013b; 2013d under the ETS scenario in response to current low carbon price: ‘We want to staggering number given that compliance July 2011. The allure of using ERUs to make hay while the sun shines’ (Manley, demand from fossil fuel-related emissions effectively pre-fund harvesting liabilities 2013, p.12). remains less than 20 million tonnes per means surrender of ERUs by forest Our survey indicated a ‘wait and annum. One possible cause of the influx owners may remain a dominant theme see’ strategy, with 60% of forestry is that among post-1989 forestry owners, until mid-2015. Indeed, the scale of respondents currently in the scheme the most economically rational course of issuance to post-1989 foresters and the indicating that they would remain in the action is now to opt out of the ETS and ongoing availability of cheap ERUs means ETS but did not intend to trade. Another surrender RMUs and ERUs back to the that there is scope for surrender by forest 15% indicated they would opt out of the government. This removes the risk from owners to outstrip surrender from all scheme, with most indicating that they post-1989 land in the sense that it can the other (fossil-fuel emitting) sectors would surrender international units for now be deforested or harvested without combined. their liability and either sell or retain their further future liability (which could be This situation, combined with the New Zealand units. However, one of the difficult to quantify given regulatory market behaviour of emitters buying authors of this article is involved directly uncertainty and hence uncertainty about international units, suggests that ERUs in the market and recent observations the future price of carbon). In essence, will dominate the surrender mix until of market behaviour indicate that this post-1989 foresters can pre-fund future May 2015. Indeed, 67% of emitters in our number is likely to increase as those harvest liabilities at negligible cost today. survey who managed their company’s eligible become more fully apprised of There is a further upside in that foresters obligations expected to surrender almost their options. who wish to can continue to hold New entirely (over 90%) ERUs in 2014. The The EPA has already recorded over Zealand units earned to date in the hope result is that there is a large number 545 foresters leaving the scheme, almost of future price appreciation. Indeed, of New Zealand units that have been all since the carbon price fell below $10 for many older post-1989 foresters ‘de- issued and not used (see Figure 2). While in mid-2011, and over 400 in 2013. The risking’ NZUs in this way puts them in a international units already purchased settings of the ETS also enable post- position to sell more carbon than if they must either be used by 31 May 2015 or 1989 forest owners to opt their land in stay in the ETS. re-exported, NZUs have no such expiry. and out of the ETS, and this behaviour Evidence of the beginning of this trend In the face of current compliance has been observed. This fact, combined was also found in the ETS annual report demand from the non-forestry sectors with the fact that any eligible emissions for 2011 (Ministry for the Environment, compared to issuance to date, there is units can be used in order to meet any 2012b): deforestation emissions reported the potential for significant oversupply resulting liabilities under the ETS, has were roughly half actual units surrendered in the market and thus ongoing low recently presented attractive arbitrage by forest owners. Numbers were small carbon prices even after May 2015. opportunities for forest owners. Indeed, and the trend was relatively recent, with However, there are reasons to believe that in the 2013 calendar year alone over 92 the ‘switch’ point at which New Zealand this will not be the case. The first is that million Kyoto units were imported into units started trading consistently above there appears to be a reluctance among the New Zealand Emission Unit Register, a international units occurring around forestry sellers, who tend to be seasoned

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 63 Reflections and Outlook for the New Zealand ETS: must uncertain times mean uncertain measures?

Figure 3: Four possible scenarios for the NZ ETS in the near future give more certainty about these costs (and incentives if floors are used), the overall level of political ambition is more determinant of the likely price. WHOLE NEW WORLD STATUS QUO + CAP Legislative amendments made by the Green party influence sees increased ambition Commitment only under UNFCC –no UN offsets with tight cap and removal of, or less, price post May 2015 —> a domestic NZU only ETS current government in late 2012 mean control measures Supply of NZUs from post-89 approx 12.5m p.a. that auctioning could be implemented Auctioning necessary to support increased with additional supply only auctioned after surplus via regulation. Thus far, the New Zealand demand from new targets, rather than to ‘ensure used and with tight cap to ensure demand for supply’. forestry units government focus appears to have been Revenue recycled towards complementary 2 for 1 remains —> annual compliance demand on ensuring the lowest cost of compliance measures. would remain <20 m per annum. to business and households, rather than

Forestry credits / interational offsets potentially Increased domestic ambition Fixed price option remains on providing the price signals necessary allowed supporting role to domestic action . Current levels of assistance to emitters (about to drive investment in decarbonisation = significantly higher carbon prices ensuring 3.5-4m per annum) remain constant as part of ensuring long-term economic behaviour change and low carbon investments = a tighter market with rising price resilience. To this end, it is important that the implementation of auctioning, if any, Less price controls More price controls is not driven simply by the need to ensure continuity of supply of emissions units BACK TO THE FUTURE SECURE SUPPLY NOW to emitters, but that it is underpinned Rejoin Kyoto and a return to design akin to 2008 Underlying ambition (5% on 1990) unchanged. by an appropriate and effective cap on Labour ETS allowing offets. As above but auctioning introduced imminently

Could include any/all of the below: Decre (i.e. by end 2015) before surplus used and with domestic emissions (the ‘responsibility’ Initially double the size of the market for NZUs by loose cap responding to business concerns about target to date cannot be regarded as such

removing the 2 for 1 deal; ased security of supply. given that use of imported UN offsets has Potentially remove or increase the price cap of Auction supply competes for buyers with the been unconstrained). $25; do existing pool of forestry NZUs already in registry

mest (>110m). To this end the European Union Impose surrender liabilities on agriculture (taking compliance demand/surrender to approx 70m Possible supply of cheaper international offsets ETS can offer lessons. While there were ic ambition –free allocations would also increase). (non-Kyoto, e.g. by directly linked schemes). mechanisms implemented which provided = larger domestic market and international = persistent lower price in a domestic only for relief of pressure, the removal of excess market offsets for price flexibility supply has been an issue that continues to prove difficult for the European Commission to address. The over- generous cap in the EU ETS, for example, left a projected surplus of two billion long-term investors, to sell at prices of the auction to make other fundamental allowances to remain over the entirety of lower than what the surveys discussed structural changes. At the moment there is its third phase (until 2020). The recently here indicate. Secondly, as the schematic neither an auctioning design blueprint nor approved ‘back-loading’ of new units in in Figure 3 illustrates at a high level, any information on the prerequisite cap- the EU ETS (effectively the temporary there are a number of different political and-carbon budgeting process that would reduction in previously signalled auction and regulatory scenarios that could see be necessary to ensure the integrity of such volumes) is the first step in addressing this issuance to date used up for compliance a step. However, these design features will issue, and longer-term structural reform much more quickly than under the status dominate in a closed system and require proposals include a ‘stability reserve’ which quo. significant consultation to ensure their would create automatic adjustments in Decisions in Doha have already made robustness and equity. Figure 3 details the supply of units to the market as well a significant change to the outlook of the some of the possible scenarios for the as adjustment of the EU cap (European New Zealand ETS in restricting access New Zealand ETS in balancing interests Commission, 2014). to international Kyoto units other than between managing the costs to businesses Like the EU ETS, the New Zealand primary CERs. However, the growth and consumers by having price controls, ETS will have challenges in addressing of liquidity in the NZU market has and managing the ambition to incentivise the surplus supply and setting a cap that undoubtedly been hampered by the lack of emissions reductions, behaviour change achieves credible emission reductions, supplementarity limits to date. So, against and longer-term investments. The policy while balancing predictability and this backdrop of uncertainty we may also choices have implications for the carbon flexibility. Given the large volume of New see further policy focus on potentially price (and thereby the costs to emitters or Zealand units issued but not surrendered enabling auctioning of units in order to the incentives for low-carbon investments), to date, the strong respect for property ‘assure supply’. Could the market be poised as well as the domestic environmental rights in New Zealand and distaste for to undergo redesign by default? If so, this performance of the scheme in response retrospective law making and regulation, will present opportunities to use the design to this price. While price controls can the most effective mid-term fixes will

Page 64 – Policy Quarterly – Volume 10, Issue 2 – May 2014 effective abatement opportunities in other sectors (see, for likely be on the demand side. The most Zealand ETS have lacked regulatory example, Bertram and Terry, 2010). obvious would be signalling the removal certainty, an essential ingredient 2 The idea of the flexibilities offered by the Kyoto unit trading was that they should be supplementary to domestic action. of the ‘two for one’ provision and the for domestic investment that could Article 17 of the Kyoto Protocol, referring to supplementarity, reads: ‘The Parties included in Annex B may participate reinstatement of phasing down the rate contribute to the decarbonisation and in emissions trading for the purposes of fulfilling their commitments under Article 3. Any such trading shall be of free allocations where applicable. Over hence resilience of the economy. While supplemental to domestic actions for the purpose of meeting quantified emission limitation and reduction commitments the longer term, however, auctioning is the government has made amendments under that Article’ (UNFCCC, 1992, emphasis added). 3 http://climatechange.govt.nz/emissions-trading-scheme/ highly likely to be required in order to to the scheme with the goal of providing building/regulatory-updates/guidance-emission-reduction- units-certified-emission-reduction-units-ets.pdf. better manage the market and ultimately greater certainty, our survey suggests 4 The New Zealand government’s negotiating position was to see emissions reductions take place. that significant uncertainty persists. This attempt to keep open access to cheaper international Kyoto markets without taking a responsibility commitment in Kyoto The general election of 2014 has is likely to undermine or delay the low- II. It was a gamble to expect continued access to cheap Kyoto units for countries unwilling to take on responsibility significant implications for carbon carbon investments needed to meet the targets for the second commitment period of the Kyoto Protocol. The decision at Doha to restrict access was not market policy. The Labour Party has long-term economic resilience objective surprising and had been well signalled as a risk given earlier previously signalled that it would of the scheme. threats by developing countries (Reklev and Allan, 2012). continue to support Kyoto. While this The extreme reliance by emitters Acknowledgement may not even be administratively feasible to date on international offsets has Jessika Luth Richter was supported by the in the time scale required, if the country likewise been to the detriment of carbon AES Research Programme of the Swedish were to rejoin then presumably access forestry domestic action and has delayed Energy Agency through grant No. 33684-1. to UN offsets would be re-enabled. A investment in long-term projects. It also We would like to thank the stakeholders bill previously introduced by Labour appears to have been at odds with the goals who responded to questionnaires as well sought to require a minimum of 50% of of international climate commitments. as the helpful comments from Dr. Luis compliance obligations to be met with Moving forward, there are a number of Mundaca and the two peer reviewers of NZUs. This again creates uncertainty for opportunities to improve the design of this article. the emitters and landowners alike. the scheme within the existing legislative and policy framework. Conclusion 1 There are also critics of forestry’s long-term emission It is clear that the first years of the New reduction potential and arguments that there are many cost-

References Aldy, J.E.and R. Stavins (2012) ‘The promise and problems of pricing economic and public policy research working paper 09–16, retrieved carbon: theory and experience’, Journal of Environment and from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1604248 Development, 21 (2), pp.152-80 Manley, B. (2013) Deforestation Survey 2012 Final Report, Wellington: Bertram, G. and S. Terry (2010) The Carbon Challenge: New Zealand’s Ministry of Agriculture and Forestry emissions trading scheme, Wellington: Bridget Williams Books Ministry for the Environment (2008) ‘Mitigation potential and the cost Bullock, D. (2012) ‘Emissions trading in New Zealand: development, of mitigating greenhouse gas emissions in New Zealand’, Climate challenges and design’, Environmental Politics, 21, pp.657-75 Change Information New Zealand, retrieved 4 November 2013 from Cabinet Office (2012) ‘Emissions Trading Scheme Review 2012: http://climatechange.govt.nz/emissions-trading-scheme/building/ proposed amendments’, Cabinet minute, CAB Min (12) 8/7, groups/climate-change-leadership-forum/2008-02/mitigation-potential- Wellington: Cabinet Office cost-gas-emissions.html Cooper, M.H., J. Boston and J. Bright (2012) ‘Policy challenges for Ministry for the Environment (2011) Report on the New Zealand livestock emissions abatement: lessons from New Zealand’, Climate Emissions Trading Scheme, Wellington: Ministry for the Environment Policy, pp.1-24, doi:10.1080/14693062.2012.699786 Ministry for the Environment (2012a) ‘2012 amendments to the New Emissions Trading Scheme Review Panel (2011) Doing New Zealand’s Zealand Emission Trading Scheme (NZ ETS): questions and answers’, Fair Share. Emissions Trading Scheme Review 2011: final report, retrieved 18 June 2013 from http://www.climatechange.govt.nz/ Wellington: Ministry for the Environment emissions-trading-scheme/ets-amendments/questions-answers.html EPA (2014) New Zealand Emission Unit Register, retrieved 18 June Ministry for the Environment (2012b) NZ ETS 2011 – facts and figures, 2013 from http://www.eur.govt.nz/ Wellington: Ministry for the Environment, retrieved from http://www. European Commission (2014) ‘Structural reform of the European carbon climatechange.govt.nz/emissions-trading-scheme/building/reports/ets- market’, retrieved 18 January 2014 from http://ec.europa.eu/clima/ report/nzets-2011-facts-and-figures-2012.pdf policies/ets/reform/index_en.htm Ministry for the Environment (2012c) ‘Regulatory Impact Statement Hood, C. (2010) ‘Free allocation in the New Zealand Emissions Trading ETS Review 2011: proposed amendments to the Climate Change Scheme: a critical analysis’, Policy Quarterly, 6 (2), pp.30-6 Response Act 2002’, retrieved from http://www.climatechange.govt. Jacoby, H.D and A.D. Ellerman (2002) ‘The safety valve and climate nz/emissions-trading-scheme/ets-amendments/regulatory-impact- policy’, retrieved from http://dspace.mit.edu/handle/1721.1/3561 statement-proposed-amendments-part-1.pdf Jiang, N., B. Sharp and M. Sheng (2009) ‘New Zealand’s emissions Ministry for the Environment (2013a) New Zealand’s Sixth National trading scheme’, New Zealand Economic Papers, 43 (1), p.69-79, Communication under the United Nations Framework Convention on doi:10.1080/00779950902803993 Climate Change and Kyoto Protocol, retrieved from http://www.mfe. Kerr, S. and W. Zhang (2009) Allocation of New Zealand Units within govt.nz/publications/climate/nz-sixth-national-communication/sixth- Agriculture in the New Zealand Emissions Trading System, Motu national-communication.pdf

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 65 Reflections and Outlook for the New Zealand ETS: must uncertain times mean uncertain measures?

Ministry for the Environment (MfE) (2013b) NZ ETS 2012 – facts and policy and the Emissions Trading Scheme, http://blog.labour.org.nz/ figures, Wellington: Ministry for the Environment, retrieved from wp-content/uploads/2009/09/ets-dcouments-150909.pdf http://www.climatechange.govt.nz/emissions-trading-scheme/building/ OECD (2011) OECD Economic Surveys: New Zealand 2011, Paris: OECD reports/ets-report/ets-2012-facts-and-figures.pdf Philibert, C. (2006) Certainty Versus Ambition: economic efficiency Ministry for the Environment (MfE) (2013c) Report of the Ministry for in mitigating climate change, working paper LTO/2006/03, Paris: the Environment for the Year ending 30 June 2013 (annual report IEA/OECD, retrieved from http://philibert.cedric.free.fr/Downloads/ no. ME 1126), Wellington: New Zealand Government rb_certainty_ambition.pdf Ministry for the Environment (2013d) 2012 ‘New Zealand Emissions Reklev, S. and A. Allan (2012) ‘Poor seek to cut CDM access at Trading Scheme 2012 final allocations for eligible activities’, Climate U.N. climate talks’, Reuters Point Carbon, retrieved 4 November Change Information New Zealand, retrieved 5 November 2013 from http://in.reuters.com/article/2012/09/03/un-climate- from http://www.climatechange.govt.nz/emissions-trading-scheme/ idINDEE8820BW20120903 participating/industry/allocation/decisions/index.html Richter, J. and L. Mundaca (2014) ‘Achieving and maintaining Ministry for the Environment and Treasury (2007) The Framework for a institutional feasibility in emissions trading: the case of New Zealand’, New Zealand Emissions Trading Scheme, Wellington: Ministry for the Mitigation and Adaptation Strategies for Global Change, pp.1–23, Environment doi:10.1007/s11027-014-9557-4 Moyes, T.E. (2008) ‘Greenhouse gas emissions trading in New Zealand: Reuters (2014) ‘New Zealand tribal group threatens multi-million-dollar trailblazing comprehensive cap and trade’, Ecological Law Quarterly, claim over carbon scheme’, South China Morning Post, 7 February, 35, pp.911-64 http://www.scmp.com/news/asia/article/1422930/new-zealand-tribal- Mundaca, L. and J.L. Richter (2013) ‘Challenges for New Zealand’s group-threatens-multi-million-dollar-claim-over-carbon carbon market’, Nature Climate Change, 3 (12), pp.1006–08, Smellie, P. (2013) ‘Z Energy in stoush over cost of ETS’, National doi:10.1038/nclimate2052 Business Review, 7 February, retrieved from http://www.nbr.co.nz/ New Zealand Cabinet (2012) Emissions Trading Scheme Review 2012 – article/z-energy-stoush-over-cost-ets-bd-135422 final decisions on amendments to the Climate Change Response Act Smith, N. (2010) ‘New Environmental Protection Authority announced’, 2002, Wellington: Cabinet Office, retrieved from http://www.mfe.govt. media release, retrieved 8 September 2012 from http://www.beehive. nz/issues/climate/resources/cabinet-papers/ govt.nz/release/new-environmental-protection-authority-announced New Zealand Government (2012) Updating the New Zealand Emissions Taylor, G. (2013) ‘Environmental policy-making in New Zealand, 1978– Trading Scheme: a consultation document, retrieved from http://www. 2013’, Policy Quarterly, 9 (3), pp.18-27 climatechange.govt.nz/consultation/ets/consultation-ets-changes.pdf United Nations Framework Convention on Climate Change (UNFCCC) New Zealand Labour and National Parties (2007, 2009) Letters and (1992) Pub. L. No. Treaty Doc No.102-38, retrieved from http:// draft memorandum of understanding between the New Zealand www.unfccc.de/resource/conv/index.html UNFCCC. Labour and the New Zealand National Parties on climate change

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Page 66 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Jim Sinner and Natasha Berkett1

Collaborative Planning for Freshwater the challenge of a new paradigm

As New Zealand embarks on a new way of doing freshwater This article draws upon planning it is important to consider the forces driving the international and this change, and some of the fundamental ideas about emerging New Zealand knowledge and democratic institutions that are being literature on collaborative redefined along the way. Understanding these changes planning, as well as the will help us to identify some of the challenges we must authors’ experience with address to realise the potential of collaborative planning. a collaborative planning

Jim Sinner is a senior scientist at Cawthron Institute in Nelson, where he is the Science Leader for process for the greater Social Science and an objective leader for a freshwater research programme on values, monitoring and outcomes funded by the Ministry of Business, Innovation and Employment. Heretaunga plains of Hawke’s Natasha Berkett is the Planning and Policy Manager for the Coastal and Freshwater Group at Bay. Cawthron Institute in Nelson. She is involved in the values, monitoring and outcomes programme as a member of the research team for a collaborative process in Hawke’s Bay.

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 67 Collaborative Planning for Freshwater: the challenge of a new paradigm

Global pressure on resources and institutions quality. Overall water quality within a Scientific management aspired to rise We now share this planet with seven region must be maintained or improved, above politics, relying on science as billion people, and global markets and over-allocation must be remedied. the foundation for efficient policies enable consumers in China, India, North Over-allocation means that community made through a single central America, Europe and Africa to buy food goals set out in a regional plan are not authority – a bureaucratic structure and other products from New Zealand. being met and water quantity limits have with the appropriate mandate, As incomes rise there is an increasing been exceeded. jurisdiction, and expert personnel. demand for protein from milk and meat. The NPSFM says that limits are to be (Brunner and Steelman, 2005, p.2) This growing demand puts pressure on set regionally, based on values. The terms land, water, air and biodiversity in New ‘value’, ‘values’ and other variants occur This paradigm suggests that through Zealand as businesses respond to global 24 times in the policy statement’s nine use of science and experts we can compile markets. Resources in New Zealand pages of text. There is a list of ‘important enough evidence about ecosystems to become increasingly scarce, which means national values’ of freshwater (ibid., 2011, determine the ‘correct’ or even ‘best’ that one person’s use of a water body p.4), but no indication of how catchment- objectives for each freshwater body. In increasingly affects other people and their level values are to be identified, assessed or recent years we have added values to this ability to enjoy that same water body. balanced to arrive at limits. This is left up equation. The scientific management paradigm would see this as just another scientific challenge: to identify, measure Our institutions ... have proven to be insufficient and balance values so that experts can determine the ‘right’ management to deal with increasing pressure on water quantity objectives and approaches. This paradigm has led, for example, and water quality. Highlighted below. to attempts to define objectively ‘Water Bodies of National Importance’ (Chadderton, Brown and Stephens, Meanwhile, more New Zealanders to regional decision-making processes. 2004), and also to a method to assess the are expressing their concerns about the There are some bottom lines, however. significance of rivers for a range of uses environment. In a 2010 survey, water The Resource Management Act 1991 and values (Hughey and Baker, 2010). pollution and water-related issues were (RMA) provides broad guidance, for And there is a growing literature on rated by New Zealanders as the most example in section 5 (‘safe-guarding the non-market valuation using techniques important environmental issue facing life-supporting capacity of air, water, soil such as choice modelling to estimate the New Zealand (Hughey, Kerr and Cullen and ecosystems’), and sections 70 and monetary value of things that are not 2010). 107 prohibit certain adverse effects on traded in markets (Pascual et al., 2010). As a society we manage conflict water quality. The NPSFM itself requires However, research over last decade has through our institutions – the laws, that there be no overall decline in water made it increasingly clear that value and norms and cultural practices that guide quality within a region, and in late 2013 values are often constructed in context: our behaviour. New Zealand’s existing the minister for the environment released that is, how people value something institutions were mostly designed and proposals to amend the statement to depends on when, how and by whom have evolved in times of relatively establish a national objectives framework the question is asked. If someone asks abundant resources. These institutions, to set minimum water quality standards you, ‘What is the value of this lake, river, and in particular our collective practice for human and ecosystem health. But, wetland?’, before you answer you are in how we use them, have proven to assuming that the implementation of likely to want to know, ‘Value to whom? be insufficient to deal with increasing the national policy statement is not just For what? And why do you want to pressure on water quantity and water about setting limits at these bottom lines, know?’ And further, ‘How will you use my quality, especially during the summer communities will need to identify, assess answer?’ This is not necessarily because months. and balance values to reach decisions on people are being strategic in their answers where the limits should be. How is this – trying to influence a study with policy A call upon values to be done? implications, for example – although they After more than ten years of reports and might be. More generally people look for policy papers to successive governments The paradigm of ‘scientific management’ context because they actually need it to on how to fill this institutional need, the Over the last two decades or more, at least define meaning. national policy statement for freshwater since the enactment of the RMA, resource The key point here is that value is not management (NPSFM) was released in management in New Zealand has been always objective and cannot necessarily May 2011 (New Zealand Government, operating under the paradigm of what be determined or measured by experts 2011). The NPSFM directs councils to has been called ‘scientific management’. in ways that are immune from contest set limits for water allocation and water As defined by Brunner and Steelman, in places like council hearings or the

Page 68 – Policy Quarterly – Volume 10, Issue 2 – May 2014 Environment Court. As an example, our people have to speak for themselves, to test recognise collaborative processes for case study in the Tasman district in 2012 their arguments against those of others. freshwater management more formally showed that it is not possible to separate When this authentic dialogue occurs via amendments to the RMA (Ministry the documentation of values from how we can get a basis for collective action. for the Environment, 2013). Yet New those values will be prioritised and given In other words, we can get agreement Zealand’s transition to collaborative effect to in a regional plan (Sinner and on how a community will address a planning is still tentative, as councils and Tadaki, 2013); that is, we cannot describe challenge such as how much water to stakeholders ponder how it will work and or measure values without reference to allocate for abstraction and how to what outcomes it will produce. how that description or measurement will manage land use to protect water quality, Collaborative planning is much more be used. Categorisation and measurement aquatic ecosystems and mauri (meaning than consultation; it is delegating deci- of values inevitably also involve framing life force or principle – the essential quality sion-making to a group of stakeholders and value judgments, and they provide and vitality of a being or entity). (Ansell and Gash, 2007). It requires the language in which policy options are discussed. Collaborative planning is ... a way to negotiate a A new paradigm Thus a shift is occurring from a scientific plan of collective action while recognising that management paradigm to a paradigm of collaborative governance to address people may have different values and different complex problems. In this new paradigm ways of understanding the world. there is no ‘right answer’ or optimal solution. Science is still important to help explain how things work, but cannot tell us what is ‘best’. Rather than seeing New Zealand’s experiment in collaborative people to listen to each other and learn resource management issues as ‘problems planning to appreciate other values and ways of to be solved or optimised’, we see them Collaborative planning is an experiment seeing the world. The central idea of as complex systems and ‘situations to be in deliberative democracy, a different collaborative planning is the Habermasian improved’. way of practising democracy at a local notion of exploring, constructing and This paradigm shift has been level based on the Habermasian notion of testing values in context to build a vision influenced by Jürgen Habermas, authentic dialogue (Dryzek, 2001; Innes of the future that everyone can live with, a leading philosopher of the 20th and Booher, 2010). We are interested, and a consensus on the plan for heading century. Habermas argued that human here, in collaborative planning that there. If all parties are fully involved and interaction and social life require agreed explicitly seeks to involve all parties with a can reach consensus, then the sponsoring meanings to enable coordinated action stake in a decision. However, collaborative agency, for example a regional council, – for example, to agree on policy for processes may also involve inter-agency can adopt the consensus agreement freshwater management – through a co-operation, rather than diverse without political risk. Conversely, a process he called communicative reason. stakeholders, and hence might not be per council decision that deviates from the Knowledge, Habermas argued, can only se ‘democratic’ (e.g. see Fuller, 2009). consensus would be seen as a breach of be determined based on what people Collaborative planning has ‘bubbled trust. can agree on in ‘authentic (open and up from many local experiments’ out Collaborative planning is, therefore, balanced) dialogue’ (Flyvbjerg, 1998; of dissatisfaction with the current way a way to negotiate a plan of collective Innes and Booher, 2010). The validity of doing things (Ansell and Gash, 2007, action while recognising that people may of an argument, and knowledge more p.544). In New Zealand, councils have have different values and different ways generally, is defined as consensus reached not set limits or made plans to achieve of understanding the world. without the influence of power: ‘all them (especially for water quality) and a That is the theory of collaboration. concerned in principle take part freely range of stakeholders are not comfortable However, Michel Foucault argued that and equally, in a cooperative search for leaving those decisions with elected Habermas’ ideal conditions are never truth, where nothing coerces anyone politicians. The Land and Water Forum satisfied, because politics is always except the force of the better argument’ recommended collaborative planning subject to power (Flyvbjerg, 1998; Pløger, (Habermas, quoted in Flyvbjerg, 1998, to the government as a new way to set 2001). And therein lies the fundamental p.213). catchment-level limits. This followed challenge facing New Zealand’s A premise of collaborative governance research by Guy Salmon and others venture into collaborative planning for is that, when considering complex based on experiences with collaborative freshwater management: how can we problems with high uncertainty, elected governance in Nordic countries (Salmon construct dialogue to develop a shared politicians cannot perform authentic et al., 2008). The government has accepted understanding among all interested dialogue on behalf of their constituents; this proposition and has proposed to parties, while minimising power

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 69 Collaborative Planning for Freshwater: the challenge of a new paradigm imbalances that could lead to outcomes a collaborative planning process it takes some of the control of planning processes that are not trusted and supported by the good facilitation to ensure that individual and empowering people who have not wider community? viewpoints are heard. traditionally had decision-making power. Fourthly, power imbalance can arise Some councils will be more comfortable Sources of uneven power around the presentation and use of science with this than others, depending on their To address this challenge, the first step (Pløger 2001). In the current planning internal culture. is to identify and acknowledge how process under the RMA schedule 1, Will councils embrace the col- power imbalances can arise. One of the submitters engage their technical experts laborative planning model? Factors which most obvious is that it is not possible to to conference with the technical experts might contribute to reluctance include have everyone in the room: there will be of councils at pre-hearing meetings, and uncertainty of outcomes and the fear individuals, organisations and discourses to present information at hearings. This of losing control of the process. What if that are proportionally under-represented conferencing and questioning at hearings the participants in the process agree on or are not represented at all. It is possible allows for a rigorous, robust debate of recommendations that the council is not that collaborative planning processes the scientific facts: in other words, the comfortable with? Councils might also be could actually decrease opportunities for evidence base for decisions. reluctant because of perceived cost and public participation, especially if they are In collaborative processes for regional time requirements. At this stage there is little comparative data on the cost and time required for collaborative planning Some stakeholders have been reluctant to embrace versus traditional planning processes. Proponents argue that it will cost less collaborative planning, with one describing it as ‘a in the long run, or will produce more durable outcomes, but the costs might be surrogate for compromise … an insidious slippery ‘front-loaded’ without an assurance that slope that is fundamentally destructive of our savings will occur later. Some stakeholders have been interests’ reluctant to embrace collaborative planning, with one describing it as ‘a surrogate for compromise … an insidious linked to restrictions of appeal rights, and freshwater planning, council-provided slippery slope that is fundamentally increase the opportunity for capture by science appears to be the norm. In destructive of our interests’ (Johnson, powerful interests (Rydin and Pennington, planning exercises governed by the RMA, 2013). While participants are unlikely to 2000). this means that scientific debate between achieve everything they might like in a Another potential source of uneven the technical experts is not likely to collaborative process, the more relevant power arises when sponsoring councils happen until a plan change is notified, i.e. question is whether they can get a better are aligned with politically powerful after the collaborative consensus has been outcome, in both the short and long groups. This is most likely to happen reached. Considering alternative science term, than if they had pursued a more where agency management and elected arguments at this stage would seem to be traditional planning approach. representatives predominantly share the both inefficient and ineffective in terms There is the possibility that world view of those politically powerful of process outcomes. Indeed, debating the through power imbalances and group groups. Council staff can influence science at this stage could undermine the think environmental outcomes after a collaborative planning process by entire collaborative process. So ways are collaboration could be worse than under organising and directing who gets needed to provide opportunities to test the current planning process, if the values included in a stakeholder group, meeting scientific analysis during the collaborative of participants are tilted towards jobs and agendas, and how agreements are recorded process. development. The converse also is true and translated into policy outcomes, for (of course): economic outcomes could example. Not business as usual be worse if the values of participants are Power imbalances can also develop Enabling constructive, authentic dialogue tilted towards the environment. as a result of ‘group think’ (Dryzek and through a collaborative planning process Another challenge with collaborative Niemeyer, 2008). Studies have shown is likely to require a shift in mindset for planning processes is that freshwater that a person who has correct factual council staff and elected representatives. management is essentially a wicked information about a situation will often There will need to be recognition that problem: that is, there are dozens of not volunteer that information in a making decisions is not the only way to interrelated complex issues to address. It is group setting if everyone else is united in lead: that is, a council can lead or sponsor difficult for a roomful of people, each with offering alternative (even if inaccurate) a process but allow others in the process their respective viewpoints and interests, information (Mauboussin, 2009). It takes to make the decisions. This is another to stay within the pre-defined scope of the brave people to resist group think, and in change for regional councils: giving up process. This is a boundary problem: what’s

Page 70 – Policy Quarterly – Volume 10, Issue 2 – May 2014 in and what isn’t? Define the problem too should be conscious of power found to be inaccurate or incomplete, broadly and the complexity will overwhelm imbalances and the potential for a consensus can come unstuck. the process; define it too narrowly and these to influence how assessments • In a collaborative process, the stakeholders will be disempowered and are done and how they are used. expert’s role is to inform the the options will be too limited for diverse How can expert analysis be made discussion, to provide the best stakeholders to construct an outcome that accessible to lay people, including science about how A is related to B, has something for everyone. those not around the table? How and to challenge others’ assumptions, Finally, there is still no clear guidance on can we ensure that it is not just intuitions and group think with how to actually ‘do’ collaborative planning. the powerful who determine the evidence as a means of promoting Without adequate design, failures are more questions and the methods? a better understanding of a social- likely to occur. There may be situations • What to assess and how to assess it ecological system. where recommendations cannot be agreed should be determined together with • In doing so, the expert or analyst upon, and some processes may ‘blow apart’, those involved in a collaborative needs to be open to the views of creating as much controversy as, or more process, rather than predetermined people who see the world differently, than, existed before a collaborative process by the council or an outside expert. and to engage in authentic dialogue began. The possibility of failure is risky for • Categories, indicators and assessment with them. Experts might realise politicians, who are generally conservative methods have policy implications and articulate some of their own and mindful of election cycles. and are not value neutral. The choice assumptions and values and how of these can privilege one way of these have shaped their thinking. Implications for policy analysis understanding a situation over other This raises the further question of Having considered some of the ways in ways. For example, assessing a river who is in fact the expert, and the which power can influence constructive for ‘whitewater kayaking’ rather need to recognise local knowledge as dialogue and some of the challenges of than for ‘boating’ will engender equally legitimate in getting a fuller collaborative planning, it becomes clear different meanings and different understanding of a complex system. that design is all-important to achieve results (Tadaki and Sinner, 2014). • The task of policy analysis should successful outcomes. Reporting impacts on GDP will give also include consideration of how The promise and the potential rise to different conversations than stakeholders can be involved in for constructive dialogue to deliver reporting the change in the number monitoring the things they care freshwater management that is trusted of jobs. about – for example, including the and supported by the communities is • Information is power, and there is impacts of a new development – most likely to be realised if the following also power in choosing the categories and how this can be constructed to criteria are met: of information. While this cannot enable adaptive management with • the sponsoring council is fully be avoided, it needs to be recognised active involvement of stakeholders. committed to the process and the and care taken in the choice of In a true collaborative planning process is well-resourced; categories, indicators and assessment process, the policy analyst or other expert • the roles of participants, including methods. Again, this should be done does not have the last word on how those of the council, are well with stakeholders, not separately by to represent policy alternatives. What understood; the council or an outside expert. matters is not what an expert considers • the scope of the process is well- • For assessments that involve to be correct or true, but rather how the defined; responses from human participants, stakeholders agree to understand how • participants are recruited carefully the answers they provide to something works, and how they will in order to engage a diverse range of questions depend not only on how work together to monitor and achieve views; the questions are asked but on who their desired outcomes over time. • deliberations are informed by science is asking and how the respondent 1 This article is based on research conducted by the Values, and all parties have an opportunity thinks the information will be used. Monitoring and Outcomes research programme funded to present knowledge from their To take this further, there are many by the Ministry of Business, Innovation and Employment. Earlier versions were presented at the freshwater policy perspectives; and ways to contribute information: symposium Tools for implementing the Freshwater Reforms on 16 October 2013 in Wellington and to the New Zealand • skilled facilitation ensures that all should we require people to answer Association of Impact Assessment, Palmerston North on 28 perspectives get a fair hearing and someone else’s questions, or can we November 2013. that scientific analysis and other provide other ways for people to forms of knowledge are tested. communicate their knowledge, values and opinions? As for the provision of expert advice, • Assessments and evidence provided there are some further implications: to a collaborative process should • Those conducting impact be tested during that process rather assessments and policy analysis than at a later hearing, because if it is

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 71 Collaborative Planning for Freshwater: the challenge of a new paradigm

References Ansell C. and A. Gash (2007) ‘Collaborative governance in theory and Ministry for the Environment (2013) Freshwater Reform 2013 and practice’, Journal of Public Administration Research and Theory, 18, Beyond, Wellington: Ministry for the Environment pp.543-71 New Zealand Government (2011) National Policy Statement: Freshwater Brunner, R.D. and T.A. Steelman (2005) ‘Beyond scientific management’, Management, www.mfe.govt.nz/rma/central/nps/freshwater- in R.D. Brunner, T.A. Steelman, L. Coe-Juell, C.M. Cromley, C.M. management.html, accessed 20 December 2012 Edwards and D.W. Tucker (eds), Adaptive Governance: integrating Pascual, U., R. Muradian, L. Brander, E. Gomez-Baggethun, B. Martin- science, policy and decision making, New York: Columbia University Lopez, M. Verma, P. Armsworth, M. Christie, H. Cornelissen, Press F. Eppink, J. Farley, J. Loomis, L. Pearson, C. Perrings and S. Chadderton, W.L., D.J. Brown and R.T. Stephens (2004) Identifying Polasky (2010) ‘The economics of valuing ecosystem services Freshwater Ecosystems of National Importance for Biodiversity: and biodiversity’, in P. Kumar (ed.), The Economics of Ecosystems criteria, methods, and candidate list of nationally important rivers, and Biodiversity: ecological and economic foundations, London: discussion document, Wellington: Department of Conservation Earthscan Dryzek, J.S. (2001) ‘Legitimacy and economy in deliberative democracy’, Pløger, J. (2001) ‘Public participation and the art of governance’, Political Theory, 29 (5), pp.651-69 Environment and Planning B-Planning and Design, 28 (2), pp.219- Dryzek, J.S. and S. Niemeyer (2008) ‘Discursive representation’, 41 American Political Science Review, 102 (4), pp.481-93 Rydin, Y. and M. Pennington (2000) ‘Public participation and local Fuller B.W. (2009) ‘Surprising cooperation despite apparently environmental planning: the collective action problem and the irreconcilable differences: agricultural water use efficiency and potential of social capital’, Local Environment: the International CALFED’, Environmental Science and Policy, 12 (6), pp.663-73 Journal of Justice and Sustainability, 5 (2), pp.153-69 Flyvbjerg, B. (1998) ‘Habermas and Foucault: thinkers for civil society?, Salmon, G., K. Zilliacus, J. Scherzer and H.-M. Barlund (2008) British Journal of Sociology, 49 (2), pp.210-33 ‘Collaborative governance on environmental policies affecting rural Hughey, K.F.D. and M.A. Baker (eds) (2010) The River Values landowners: comparing Nordic and New Zealand practices’, paper Assessment System: volume 1: overview of the method, guidelines presented at the Yale University/UNITAR conference on environmental for use and application to recreational values, LEaP report 24A, governance Lincoln: Lincoln University Sinner, J. and M.Y. Tadaki (2013) ‘Understanding conflict over freshwater Hughey, K.F.D., G. Kerr and R. Cullen (2010) Public Perceptions of New values in a regional plan’, policy brief, Manaaki Whenua Landcare Zealand’s Environment: 2010, Christchurch: EOS Ecology Research, http://www.landcareresearch.co.nz/__data/assets/pdf_ Innes, J.E. and D.E. Booher (2010) Planning with Complexity: an file/0006/64842/freshwater_values_policy_brief.pdf introduction to collaborative rationality for public policy, London and Tadaki, M.Y. and J. Sinner (2014) ‘Measure, model, optimise: New York: Routledge understanding reductionist concepts of value in freshwater Johnson B. (2013) ‘Chief executive’s comment: an insidious slippery governance’, Geoforum, 51, pp140-51 slope’, Fish and Game New Zealand, 37, pp.6-7 Mauboussin, M.J. (2009) Think Twice: harnessing the power of counterintuition, Boston: Harvard Business School Press

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Page 72 – Policy Quarterly – Volume 10, Issue 2 – May 2014 John R. Martin

Reflections on the Life of Kenneth William Piddington (1933–2014)

Few public servants in the post-war era have made such vital export markets that resulted in the Luxembourg Protocol of 1971. a significant contribution in so many fields or shown In the early 70s, after a spell in 1966– more vision than Ken Piddington. Tragically, Ken was 67 in Geneva during the GATT Kennedy round of trade negotiations, Ken moved killed in a motor accident near Sanson on 28 February away from New Zealand trade policy into new fields. In 1972 he became the deputy 2014, while en route to his eco-friendly property near director of the South Pacific Bureau for Mount Ruapehu. Economic Cooperation, set up in Suva by the recently-formed Pacific Islands Born in London to Australian parents, Forum to facilitate member cooperation Ken Piddington attended 12 schools in on trade, tourism, transportation and the United Kingdom and Australia before economic development. Ken made a his father, Ralph, took up an appointment strong contribution to fostering the as the first professor of anthropology at beginnings of a regional consciousness Auckland University, a position he was in the Pacific. He helped to establish the to hold until 1974. In at least two areas Forum Secretariat, the Forum Line and Ken was to follow his father. The first was the South Pacific Regional Environment in a commitment to ‘supporting Mäori Programme. This was the period during aspirations’: Professor Piddington began which New Zealand began consciously the teaching of te reo Mäori at Auckland to move from being the administering University. (Ken was a fluent te reo authority in a number of island territories speaker.) Secondly, Professor Piddington, to establishing its identity with other like his son, demonstrated ‘a keen sense of nations of the South Pacific. As Brian justice’, early in his career earning censure Talboys put it in July 1972, ‘if we had a from the authorities for giving publicity British past we certainly have a Pacific to abuses of Aborigines (Metge, 2000). future’ (quoted in Henderson, 1999). Ken too was notable for his willingness to Back in Wellington, Ken was seconded challenge those in authority. in April 1976 from the Ministry of For- After graduating in languages from Economic Community of six members, eign Affairs to a task force charged, un- Auckland University, Ken taught briefly, founded in 1957). The High Commission der the leadership of Sir Frank Holmes, but then in 1959 joined the Department in London and the new New Zealand to ‘study previous experience with plan- of External Affairs in Paris where he had Mission opened in Brussels in 1961 ning in New Zealand and to recommend been studying (and where he met his wife, were at the centre of the negotiations an institutional framework to meet pres- Pam). After a short period in Wellington that were launched in 1961 by the ent-day requirements for planning’ (Task (including a spell of secondment to the Macmillan government, halted by de Force on Economic and Social Planning, Treasury) Ken took up his first overseas Gaulle in January 1963, and successfully 1976, p.3). Various sector councils had postings. resumed by Edward Heath in 1970. Ken been established during the 60s, and in New Zealand’s external economic Piddington, fluent in French, played his 1968 the Holyoake government mounted policy in the early 1960s was dominated part in the intense efforts in Wellington a National Development Conference and by the United Kingdom’s relations with and in European posts devoted to the then set up a representative National De- the European Union (then the European successful protection of New Zealand’s velopment Council. The Kirk government

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 73 Reflections on the Life of Kenneth William Piddington (1933–2014) abolished the council in 1973, but the The legacy of his father was un- notably his calm, and a willingness to notion of ‘planning’ had support among doubtedly a significant factor in Ken’s allow staff a measure of self-expression some politicians, the public service and life-long interest in and commitment to and to encourage the enrichment of academia. Essentially what was sought encouraging an enlightened approach their skills. Ken’s analytical capacity was was a policy framework with support- to bicultural relations in New Zealand. matched by an ability to express himself ing institutions that took the long view The phrase ‘the principles of the Treaty’ with skill orally or in writing. and ranged holistically across economic, which found its way into wide-ranging His next role was to test these qualities social and cultural developments. Such a legislation is attributed to him. Mäori severely. On 1 April 1987 New Zealand’s viewpoint characterised Ken Piddington’s leadership referred to him as a ‘lightning environmental administration was approach throughout his life, whatever rod’ in transforming the perception of radically changed in accordance with the the policy area in which he was engaged. Mäori culture in New Zealand society. principles that were to shape the reform of The report of the task force, New Another strong influence on Ken the governmental system in the late 1980s. Zealand at the Turning Point, was was his close friendship with writer Witi Non-commercial functions were to be delivered in October 1976. By May 1977 Ihimaera, begun when Ihimaera was separated from commercial; policy advice the New Zealand Planning Council serving with the Ministry of Foreign was to be separated from operational proposed by the task force had held its Affairs. responsibilities. The Commission for the first meeting. Chaired by Frank Holmes, In 1980 Ken Piddington was appointed Environment (along with the Department the council had a diverse membership to head the small Commission for the of Lands and Survey and the New Zealand and was advised by a secretariat led by Forest Service) was abolished. Two policy Ken Piddington. Over the next two years ministries were established, the Ministry it reviewed a wide range of issues and Ma-ori leadership for the Environment and the Ministry published a significant number of reports. of Forestry, and two departments with The Planning Council series included referred to him mixed responsibilities were formed: publications on topics ranging across the the Department of Conservation and economic future, taxation reform, the as a ‘lightning rod’ the Department of Survey and Land welfare state, employment policy, public in transforming Information. expenditure and regional planning. Surprisingly, Ken Piddington was not The publication closest to Ken’s heart the perception of appointed to head the Ministry for the was undoubtedly He Matapuna: a source; - Environment, which was charged with the some Maori perspectives (New Zealand Maori culture in primary responsibility for environmental Planning Council, 1976), illustrated with New Zealand policy advice; the capacity to provide a Ans Westra photographs and containing strategic view was one of his strengths. essays by Mäori who played a notable society. Instead he was appointed as the first part in changing cultural attitudes from director-general of conservation at the the 70s and dispelling ‘the assumption head of a department bringing together of Pakeha superiority’.1 Each essay was Environment, a position he was to serve in the natural resource management prefaced with a brief commentary which for six years. The substantial role that he functions of Lands and Survey, the bears the Piddington stamp. The message was to play in issues about conservation Ministry of Agriculture and Fisheries, conveyed was, as Frank Holmes expressed and a sustainable New Zealand (and the Forest Service and Internal Affairs. it in the foreword, ‘We must stop using global) environment had begun. This The ‘green spots’ were to be joined. The Pakeha values as the sole basis of our was the era of Robert Muldoon’s ‘Think director-general carried responsibility for planning and policy-making.’ Big’ national investment: challenges to around 2000 staff – in eight regions and A few months later Ken, spurred environmental values were not surprising. 34 districts – nett expenditure of $106 by a New Zealand Listener editorial, Piddington was not afraid to take up million and 30% of New Zealand’s land published a response, and then as a these challenges. Most often cited is his area. This formidable administrative task, planning paper a short essay, Puzzled, successful advocacy in confrontation constrained by a reduced budget, was Pakeha?, in which he reflected on his own with the prime minister over the project approached by Ken and his colleagues experience, including of Mäori urban to pipe into the sea the polluted waste ‘with missionary zeal with one arm behind drift to Auckland, and challenged Päkehä from the Taranaki synthetic fuel plant. its back’ (Napp, 2007). He was explicit to review their attitudes to the changing The effect on Mäori fishing grounds was that the new department ‘would shake off place of Mäori in New Zealand society the deciding consideration. the baggage of its parent agencies’. (Piddington, 1980a, 1980b). This is a Piddington brought to his managerial In 1988 Piddington was headhunted piece of well-grounded advocacy that is role at the Commission for the for the newly-created position of director as relevant today as when it was written Environment the qualities that had of the environment department at the over 30 years ago. enabled him successfully to lead the World Bank (the International Bank team in the Planning Council secretariat, for Reconstruction and Development)

Page 74 – Policy Quarterly – Volume 10, Issue 2 – May 2014 in Washington, DC. No position could issues, first as adjunct professor at the future of the institute, driven by a wish better employ Ken’s diplomatic and University of Waikato (where he did to honour the memory of one of the environmental experience. In this considerable work on resource-use institute’s founders, Sir Frank Holmes, institution, dominated by economists, taxation) and then as a senior associate of for whom he had great respect. only comparatively recently had there the Institute of Policy Studies at Victoria. Ken Piddington maintained his links been acceptance of the notion that An article he wrote for the New Zealand with the international environmental environmental considerations could Herald in 2001 summed up the position scene, taking part in successive regional legitimately be taken into account in that Ken continued to hold until his United Nations Environmental Pro- assessing the suitability of projects for death: gramme meetings of South Pacific and investment. An important development South East Asian heads of environment with which Ken was closely associated was There are great dangers ahead for and conservation departments. Ken was a the creation of the Global Environmental New Zealand in the assumption that mentor to many of the participants. Facility to provide funding for global we can now return to business as Ken was a friend to so many people environmental concerns. An account of usual. Locally, there are even greater in many nations. He was a warm man the establishment negotiations captures dangers for Auckland if policies with a sense of fun; from over 50 years Ken’s typical approach: ‘The Bank should are not put in place to head off the acquaintance, I will recall him as a person be putting itself in a situation where creeping effects of the transport with whom, even if paths had not crossed [it] is not simply reacting to various crisis, which has made it the for some time, the friendship of the last initiatives, but is taking the lead in putting country’s least-liveable urban area. occasion was immediately resumed. But some of the practical considerations to For the economy at large, there are at the centre of his life was his family: governments ’ (Sjoburg, 1994, p.10). also costs in avoiding the strategic his beloved wife, Pam (who sadly died in As his close friend and colleague, management of climate change risk. 2006), Graham, Karl, Rosalie and their David McDowell, said in his tribute to (Piddington, 2001) families. Our thoughts are with them. Ken at at his funeral at Old St Pauls: Ken Piddington is warmly remembered Over the past decade Ken published a for an outstanding contribution to public He set his legacy in place by helping number of significant articles (for example, welfare in New Zealand and abroad and to mainstream environmental issues Piddington, 2005), made submissions is sadly missed. in the Bank’s work, driving the to select committees (for instance, with 1 Paul Reeves, Ranginui Walker, Tilly Reedy, Hugh Kawharu, development of mandatory safeguard Professor Frank Scrimgeour of Waikato Kara Puketapu, Timoti Sam Karetu, Bruce Stewart, Sid policies which required Bank- on the Climate Change (Emissions Mead, Rangimarie Rose Pere and Robert Mahuta. sponsored projects to have built- Trading) Amendment Act 2008), and was in mitigatory and compensatory an active and respected participant in the Acknowledgements: measures which reduced the social Institute of Policy Studies: he acted as IPS Rosalie Piddington, Shonagh Kenderdine, and environmental impacts of large coordinator for the successful conference David McDowell infrastructure projects like dams. Climate Change and Governance: critical issues for New Zealand and the Pacific After his ‘retirement’ to New Zealand in March 2006 and edited the first two in 1992, Ken Piddington became actively editions of Policy Quarterly. In recent involved in energy and climate change years Ken devoted time and energy to the

References Henderson, J. (1999) ‘New Zealand and Oceania’, in B. Brown (ed.), Piddington, K. (1980b) Puzzled, Pakeha?: some reflections on He New Zealand in World Affairs III: 1972–1990, Wellington, Victoria Matapuna, NZPC planning paper 9, Wellington: New Zealand Universtiy Press with the New Zealand Institute of International Planning Council Affairs Piddington, K. (2001) New Zealand Herald, 2 February Metge, J. (2000) ‘Piddington, Ralph O’Reilly’, Dictionary of New Zealand Piddington, K. (2005) ‘Preparing for “peak oil”: towards a preliminary Biography, vol.5, Auckland; Wellington: Auckland University Press agenda’, Policy Quarterly, 1 (2) and the Department of Internal Affairs Sjoberg, H. (1994) From Idea to Reality: the creation of the Global Napp, B. (2007) Born with a Mission: A short history of the Department Environmental Facility, Global Environment Facility working paper 10, of Conservation 1987–2007, http://www.doc.govt.nz/about-doc/role/ Washington, DC: Global Environmental Facility, http://www.thegef.org/ vision-role-overview-and-statutory-mandate/a-short-history-of-doc/ gef/sites/thegef.org/files/documents/Sjoberg94 New Zealand Planning Council (1979) He Matapuna: a source; some Task Force on Economic and Social Planning (1976) New Zealand at Maori perspectives, NZPC paper 14, Wellington: Government Printer the Turning Point: report of the task force on economic and social Piddington, K. (1980a) New Zealand Listener, 29 March planning, Wellington: Task Force on Economic and Social Planning

Policy Quarterly – Volume 10, Issue 2 – May 2014 – Page 75 Shape the debate When you’re ready to make the world stop and think, contact the Victoria University School of Government. 2014 Trimester 2 online enrolments now open. We’re the only school of government in New Zealand. Located in the heart of government, we have access to the people, places and policy makers that will shape your future. Our staff have extensive public sector experience and your study will be applied through relevant case studies. Our courses are flexible to accommodate your work schedule. We also offer a range of study options to suit your needs and experience. Choose from Certificate or Diploma Courses that will take your career to the next level and open the door to a Masters Degree in Public Management, Public Policy or e-Government. Whatever level you study, you’ll find our courses and those who take them are highly sought after. To find out more and to enrol, contact the School of Government now. You can email [email protected], call 04-463 5453 or visit www.victoria.ac.nz/sog