The credit card “scandal” is not really a scandal but a perfect illustration of the squalid fate of taxpayer’s money. It is not the private use of public money, as egregious as that is. It is not even the nauseating sense of entitlement and privilege in the excuses we have heard to date. It is the acceptance of inadequate accountability.

Tracy Watkins points out in her article yesterday that:

The checks and balances that apply to ministerial spending are actually quite robust compared with those that apply to spending under the cloak of the Parliamentary Service – the body which administers MPs’ travel and accommodation expenses and doles out largesse in the form of about $41 million in state funding to political parties each year.

If Tracy finds Parliamentary Services accountability, with its $41 million budget, scary, she should try the frightening lack of accountability in almost every aspect of the public service and especially in the services administering welfare.

The problem is that all these “checks and balances”, that the public service purports to have, are created by public servants – often the same ones who will then be handling the money. Essentially, this means that the public service demands money from us (via the IRD), determines what it will spend it on (via parliament) and the determines how accountable it will be with this unearned money. Why we then evince surprise when hundreds of millions of taxpayer dollars disappear into black holes that make no difference in our lives, is a mystery to me.

I am not saying here that public servants are stealing from us. I am not even saying that they are troughing (though they undoubtably are). I am saying that allowing public servants to determine what is suitable accountability is like having the village burglar designing your bank’s alarm system. The alarm may still work – just not when you need it.

A good concrete illustration would be the millions of dollars spent on quit smoking campaigns. The public service will approach accountability like this: There will be a number of tenders each containing a list of “deliverables”. All of the deliverables will be set up in terms of actions like “set up a committee to determine the feasibility of using public health nurses to deliver an anti-smoking message” or ” set up a system to ensure an outpatient is offered the quit smoking service”. No attempt will be made to determine whether these interventions will be useful in reducing smoking. At some point the public service will commission a survey to determine whether the rate of smoking has dropped. If it has, they will then continue to do the same thing, regardless of whether it can be shown that none of their interventions has made this difference. If the rate of smoking has not dropped, they may drop some things and try something else, without ever ascertaining whether any of their interventions were working. Or they may continue to spend public money in the vain hope that “it’s too early to tell” whether the interventions have been a success (a line certainly fed to them by the beneficiaries of state tenders)

What is never asked is:

• Do the majority of taxpayers see this intervention as being worthwhile?
• Is any one particular intervention actually achieving the desired outcome?
• Is this outcome actually achievable using these interventions?
• Should this work be done by government? Is it not more soluble as a private or a community initiative?

It is this last question that strikes fear into the heart of public servants the world over. In terms of smoking, all the evidence points to this being much better tackled as a community initiative. Typically communities (who have to raise money voluntarily) and private business (who have to produce it) are far more careful with the use of money than governments. There are, of course, spectacular exceptions to this.

Public servants have no real imperative to find actual solutions, only to be seen to be looking for them. Thus accountability for public money has little to do with results and everything to do with “services”. These may be services that have no use or meaning for us, but they are being delivered – whether we want them or not. It is this disconnect, between what the public really want and what they actually get for their money, that shows up the public accountability charade for what it really is – a set of rules to add legitimacy to an action that has no real legitimacy.

Witness the debacle of Bill English’s double dipping. Technically, English did absolutely nothing wrong – according to the rules laid out. But few of us think that claiming a home you rarely live in as your official residence, in order to claim the ministerial housing allowance, is a fair or honest thing to do. The accountability rules were clearly not designed to protect the taxpayer, but benefit the politician and the public servant. The rules are there so that public servants can claim legitimacy for their spending, not so we, the public, can see that this is money well-spent.

All the credit card spending means it that, in terms of the government, the words Quality Spending should always invoke howls of derisive laughter…

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1. Are you being served?
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“If we do a half decent job as a Government growing our economy, I’m confident that’s not going to be happening and that’s not on our agenda.”

In today’s speech he floated the idea of raising GST (and later news made it clear that GST would be going up).

I confess I am enjoying watching Labour castigate National for wanting to raise taxes. Apparently the breathtaking hypocrisy of this position has not yet dawned on them.

It was utterly inevitable that John Key was going to have to break at least one election promise. After all, he promised two completely contradictory things. He promised not to make significant cuts to state services, retaining nearly all of Labour’s extravagant spending spree, and he promised to reduce taxes. While he might have got away with this in a boom economy, there was no way he was going to be able to do both in a recession. He chose to break his promise on tax.

This was also inevitable. A broken promise on tax would lose him some support to the right – support that would mostly gravitate to ACT, a natural ally anyway. A broken promise on state services would lose him the center – support that would naturally move to Labour. Inevitably, as a politician, he chose to fudge tax – less downside for National (even if it has most downside for New Zealand)

Today marks his attempt to keep his promise to reduce tax. As this is impossible, he must go for the illusion of reducing taxes, by raising GST. The downside of his breaking his word here is mitigated by the fact that this is a single utterance of John Key, rather than a National party platform policy. The public is more likely to forgive him this lapse, particularly when the impact of raising GST is less than people think. Key will almost certainly make sure that those on benefits and welfare for families will feel little effect. Those on minimum wage will almost certainly be worse off – but they probably won’t vote National unless the minimum wage is set at $15.00/hour – and this is not likely to happen any time soon.

Despite the ranting and raving of commentators (notably Bernard Hickey) and the general dismissal of Key’s speech, I predict that the overall effect on National’s popularity will be virtually zero. Once more John Key delivers his friendly brand of blandness and New Zealand fails to take offense.

Related posts:

1. They Make Sense, John
2. Some Observations
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Today in the News

Millions wasting their time trying to get fit, says study

Apparently exercise is a complete waste of time for about 20% of the population. Of course, that means for 80% of New Zealanders it is every bit as good for you as doctors have been making out. However, you can guarantee that everyone will now claim they are in that 20%…

But wait, there’s more…

Beer good for bones

And beer contains high amounts of silica which helps to prevent osteoporosis (thin bones). Peter Cresswell is predictably excited about this. I can just see some of my patients with cirrhotic livers and failing hearts telling me proudly how strong their bones are.

Sigh.

I think I’ll go and have a beer to drown my sorrows

And strengthen my bones.

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WINZ accept people on to a sickness benefit when they are given a valid medical certificate by a doctor. Unless there is some very obvious reason why this certificate can be called into question, WINZ has little choice but to accept this state of affairs. Typically, someone has to report the person to WINZ before they will investigate. So it is very unfair to blame WINZ for this situation.

It is also unfair to blame the doctor for issuing the certificate. Since it takes a great deal less physical strength and stamina to be a drug dealer than an minimum wage labourer, it is perfectly feasible that a doctor could issue a perfectly legitimate WINZ certificate without ever suspecting the beneficiary’s extracurricular activities.

In addition, a patient may have an illness that provides little or no physical signs to prove that the illness is genuine. The doctor in this case has no real option but to accept the patient’s word that he is genuinely incapacitated. Good examples of this would be chronic back pain, depression and chronic fatigue syndrome. None of these have easily obtainable objective signs or investigations that definitively verify the disease. It is relatively easy for a patient to become knowledgeable enough to fake his/her symptoms. As the majority of  patients with these sorts of illness are completely genuine, it would be both counterproductive and extremely unfair to expect them to provide some sort of “proof” of their illness. One has to take them at their word.

It is perfectly feasible that some people genuinely become incapacitated at a very physical occupation, go on to sickness benefit, then find that they can make a very decent living dealing in drugs. It is not very likely that they will then say to WINZ “thanks, but I don’t need a benefit any more because I’m a successful drug dealer”. I am certain that there are dozens of sickness beneficiaries who are exactly like Mr. Szeto – drawing a benefit becomes a form of cover for them (not a very good one when they buy expensive cars!).

And before anyone frenzies in the comments, the vast majority of sickness beneficiaries are just as honest as you and I. They have genuine illnesses which prevent them from working and they don’t deal in drugs. Of course, a fair number of long-term beneficiaries could retrain themselves into a new career more rapidly and with greater enthusiasm than they do, but that is an entirely different story. Very few beneficiaries are out and out crooks or even particularly lazy (the common right-wing meme). Most (of the long-term ones, at any rate) have absolutely appalling self-esteem which holds them where they are. For this we can thank our socialist-leaning friends in Labour who have convinced most long-term beneficiaries that they are helpless without welfare.

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The Herald says that 61% of people think that the minimum wage should be increased to $15. David Farrar points out that this is a somewhat misleading statistic (What a surprise!) in that the Herald poll only had three options – reduce, stay the same and increase to $15 – meaning that 61% were in favour of an increase, not necessarily an increase to $15. But that is slightly beside the point. Virtually none of the 61% will be people who have to pay the wage bills. It is very easy for you to vote yourself and/or your mates a large pay rise when you do not have to pay for it.

Trevor Mallard makes this odd comment:

Business NZ  would squeal. But most employers know that lifting wage rates encourages investement in capital equipment and training to make their labour force more productive. It is all part of the movement to a high skill, high wage economy.

It is clear that Trevor has had little to do with business. While it is true that raising the minimum wage (not simply raising wages) might encourage capital investment and might lead to extra training (much more doubtful), Trevor seems to overlook that the only reason an employer would be doing this would be so that he can employ less people. At a time when youth unemployment is apparently at an all time high (can anyone confirm this Labour talking point?), Trevor would like to ensure that employers invest in machinery that replaces employees and extra training of employed persons, making that first rung on the employment ladder not only slippery, but damn near inaccessible.

And we won’t even talk about the blow-out in student loans caused by the dearth of summer vacation jobs…

The sad fact is that most of the industries that employ minimum wage workers are of low profitability. Although food franchises often make plenty of money – their franchisees usually have to own several stores before they make a six figure income. By the time the franchise and the mall owners have taken their cuts, there is not a lot left. And wages comprise the bulk of the remaining running costs. Bumping up wages by 20% will have one of three possible effects:

1. The store will go bankrupt and close.
2. The cost of the stores goods will go up
3. The store will employ fewer people.

No sensible store owner will opt for 1. or 2. so increasing unemployment is inevitable. Note that this only effects those on the new minimum wage and the effect is partially obscured by increased retention of the more skilled workers. So, yes, Trevor. We may get a “high skill, high wage economy”. But only at the expense of the youngest, least-skilled workers – condemned to a life on the benefit because they can’t get on to that bottom rung.

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1. Minimal Wage
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