The comfortable familiarity of notions of ‘baseline’ funding and of reliance on ‘savings’ or reallocations within established departmental budgets has undergone revival. A new process for subjecting governmental expenditure programs to genuine scrutiny is now required; the lifespan of successful innovation in government management seldom exceeds 25 years.
New Zealand’s current government identifies itself clearly as a conservative-liberal administration, with a platform characterised by ‘nuanced change’. It has restricted the influence of advocates of both radical change and populism. Senior government members have, in their rhetoric, sometimes demanded proposals for ‘disruptive change’ from the public service, and dissatisfaction with public service cautiousness, which responds much more to government decisions than to ministerial rhetoric, has led to the government’s creation of task forces on tax policy, welfare policy, and national savings. While the government has presented this turning to ad hoc groups of advisers as being radically innovative, it is actually the continuation of longstanding tradition. The tax task force has already submitted its report. In response, the government accepted its least radical recommendations and implemented a modest tax switch from direct to indirect tax. The welfare and savings groups will report next year; but the Prime Minister has already ruled out making any significant change in entitlements to public subsidies in older age and no more than cautious evolution can be expected.
The Prime Minister’s Christmas message identified three priorities for 2011: the government’s ‘comprehensive economic growth plan’, the Rugby World Cup, and the general election which is to be held by the end of the year. One would hope that the first is not buried in the others, but the plan itself is not exactly breathtaking either. It consists of the familiar refrains of growth-enhancing tax reform; boosting infrastructure; better, smarter public services; business innovation and trade; boosting education and skills; and cutting red tape and regulation. Sound aspirations do not constitute a strategy. There is little hope that there will be a great deal of progress to report by the end of 2011.
New Zealand’s foreign policy shows similar caution and reluctance to contemplate major change. A Defence White Paper analysed New Zealand’s strategic outlook, with an unusually rigorous scrutiny of how the Defence Force uses its resources. Appropriately, New Zealand’s key strategic issue was defined as being the role it can play in the Asia Pacific region. The analysis is sober and realistic, yet still reveals nostalgia for the familiar. The White Paper lists the first purpose of the Defence Force as being for the defence of New Zealand. This is quickly related back to the protection of maritime resources, but is still clearly in service of a political purpose, seeking to reassure those who still think the traditional pre-eminence of defence as a state objective has any relevance to contemporary New Zealand. The White Paper also assures the Defence Force that its first purpose is to fight, although acknowledging that providing appropriate assistance in intrastate disputes and even peacekeeping and disaster relief are likely to be much more important military operations. Indeed, underlying the analysis can be detected a view that anything resembling significant warfare as conventionally understood is unlikely.
An unresolved foreign policy issue is that of regional deliberations. The government is trying to retain its traditional security relationships with Australia, US, UK and Canada and welcomes the distinct recent warming of relations with the US, while acknowledging that the weight of New Zealand’s economic relations has shifted towards Asia. It avoids facing the question of whether the ‘Asia Pacific’ construct which has been so congenial to New Zealand can really be the basis of international strategy for the next planning period.
The United States has a Pacific coastline, and much of its business looks towards Asia. The US market will remain significant. But that is a thin reed on which to hang confidence in the pre-eminence of an Asia-Pacific grouping.
In future, international norms and processes are likely to be guided by the G20 and relations between the G20 and such institutions as the WTO and IMF. Significant developments will require accommodation of Asia, Europe, the United States and other players. Asian economic integration is likely to proceed on the basis of addressing simultaneously both international supply chains dealing with all of production, innovation, and marketing, and also infrastructural development. Regulatory reform will merge with trade and investment liberalisation.
The US was invited to participate in the EAS on the explicit and even emphatic condition that it should participate in the existing agenda, not seek to convert the EAS to its agenda. While the US is significant in many Asian security issues, it is not a leader in the region’s economic agenda. The US remains a major participant in all international affairs, but it faces a major challenge in accommodating others as equals and it has yet to accept that ‘engagement’ is different from ‘leadership’, let alone ‘dominance’.
The New Zealand government and official machine continue to hope that comfortable structures from the past can be the basis for future strategies. Learning the reality is a task for 2011 and beyond.
Gary Hawke is Senior Fellow at the New Zealand Institute of Economic Research.
This is part of a special feature: 2010 in review and the year ahead.