• Simon Upton


I start from the premise that political parties should only promise to do, in office, those things they can hope to do superbly. At the very least they, they should only involve the Government in tasks that no other agency can perform better. If things can be done better by others, they should be left to get on with them.

Last month we announced a Budget that allowed for an additional $5 billion expenditure over the next three years. Yet before we even began to debate how it would be spent we knew it would be described as inadequate by all and sundry. Worse, we all knew that despite outlaying $34 billion, only a fraction could truly be said to be spent securing a superb outcome. So why do we do it?.

There has been a good deal of soul-searching about the role of governments in recent years. The radical reforms of the 1984-1993 years stripped away the power of sectional interest groups. Unions, employers, farmers, manufacturers and a host of lesser pressure groups found that governments preferred to leave them to sort their problems out in the marketplace rather than ministerial offices.

We've got a pretty good idea about what governments aren't good at. But when it comes to describing a positive role for government there's something of a vacuum. The left talks a lot about community. But it seems to be a version of community that requires a remarkably expansive role for central government. The radical right, on the other hand, has become increasingly shrill in its disparagement of any government activity at all. Carried to extremes, this view of politics would leave the direction of society to the unfettered pursuit of individual self interest.

It's not a view I can subscribe to. I think there is a national interest, and it's larger than the sum total of individual interests. We are members of the National Party. We believe there is a national interest that sensible people can identify and agree on. We're not just a haphazard collection of strangers with scarcely anything in common.

Some people talk as though things will always turn out for the best through benevolent neglect. I don't. The 'invisible hand' of marketplace solutions is essential; but it's not sufficient. The honesty and integrity of people is vital if there is to be any sense of fairness in the community. And if we want to guarantee that honesty we need rules and regulations. That's inevitable in a world in which there are few angels. Those rules provide not just traditional law and order, but protection from a raft of human and environmental risks that civilised societies do not wish to be involuntarily exposed to.

There's no definitive list of government functions. But there's a core which is hard to avoid:

There's providing the basic machinery for a democratic, parliamentary system of government and a means of delegating responsibility to local and regional tiers of government;.

There's the maintenance of our basic criminal, commercial, environmental and safety codes and the machinery of enforcement needed to compel compliance:

There's the maintenance of our biosecurity system;

Similarly we need an immigration service;

Then there's the collection and publication of a wide range of information for use by industry and the community - everything from land information to much of the data collected by the Statistics Department;

There's scientific research of benefit to the public at large and to support the maintenance of regulatory regimes like fishing quotas, water rights and so on;

There's the conduct of foreign policy, defence and intelligence gathering;

And finally, there's the conservation and protection of the plants and animals that are unique to New Zealand and in public ownership.
Most of these activities require skilled people, high quality information and, in many cases, increasingly sophisticated, capital intensive equipment. If they are done well they can provide an efficient, well-lubricated infrastructure into which citizens and communities can plug. I estimate they currently account for about $5.5 billion of the $34 billion the government spends annually. I make no apology for saying that in many of these areas our investment is inadequate and our national performance is impaired as a result. Here are a couple of random examples:

Your government remains the proud owner of an ancient, clunking paper-based births, deaths and marriages register that our livestock industry dispensed with years ago;

We have just five diplomatic and trade promotion staff in the entire South American continent, home to 320 million people who generate a combined GDP of $1.9 trillion.
Or take, for instance, the quality of our regulations. Our world is changing fast and our regulatory environment has to be 'state of the art'. Out of date regulations can be almost worse than no regulations if they end up 'freezing the frame' on yesterday's technologies.

There are some who believe we can we exchange regulations for voluntary compliance. I think that's naive. We live in a society that demands bottom line performance. And where non-performance can harm the rest of the community, or our reputation in the marketplace, it has to be swiftly dealt with. It may surprise you to learn that in some cases our problem is the absence of clear bottom lines.

Take the Resource Management Act. In truth, there is very little proper regulation under the Act. We rely instead on narrative and discretionary controls that make for huge uncertainty. Proper regulations based on good research and high quality technical data would spell out performance standards that would protect the environment and provide businesses with clear guidance. Most people don't mind complying if they know what they've got to comply with.

But it all costs money. To generate a suite of standards and clean up techniques for organochlorines alone is a three year, $3 million programme for the Ministry for the Environment. To cover the field at the current rate will take decades. But without clear regulations we can't secure environmental quality and we can't monitor whether we're going forwards or backwards.

Now it's all very well to describe the problem. And all too easy to solve it by simply saying that we'll add to that $34 billion total. The harder answer involves asking whether we can find the extra resources from somewhere else within that total. And I can tell you immediately that the answer doesn't lie in re-examining the vote of the Ministry of Women's Affairs for the nth time. Nor does it lie in combing endlessly through the same core $5.5 billion I mentioned. There's something almost comical about Ministers bravely volunteering savings from essential cash-strapped programmes yet limply handing over hundreds of millions to appease claims we know we will never be able to satisfy. We need to look at where the bulk of our assets and expenditures are tied up.

The first point to make is that there's nothing inevitable about many government activities. Government programmes are frequently the result of historical accident. For example, dental care for adults in New Zealand has largely been left to individuals to purchase privately. In the United Kingdom dentistry is publicly provided at no cost through the National Health system. There's no particular reason why there should be this difference in approach - it simply reflects different historical circumstances that have led to different social expectations.

Conversely, when it comes to Government owned enterprises, we still own electricity generating companies. But in the United Kingdom they've long since been privatised. This is no small consideration: the sale of ECNZ and Contact Energy would generate $5 to $6 billion; if the proceeds were applied to debt repayment we would free up about half a billion dollars of debt servicing costs. I for the life of me can't see why we want the government to own gas and coal fired power stations when the private sector is building new clean wind farms. But that is the strange legacy of the reforms of the last 10 years -- private telephones and public power stations.

The government trading enterprises that survive are living fossils. It may be that these companies will become one of New Zealand's unique features, a sort of commercial tuatara. But there is no rational case to keep them in public ownership.

The case of social services is altogether more difficult. For a start, most people don't see many of the social services being provided by the government as being necessarily beyond its competence. For all the carping and criticism, people know that the health system works more or less; and that the education system, despite some disaster areas, manages to graduate lots of successful young people. Is a further upheaval, they ask, worth the effort? The onus is going to be on those who advocate change, and hectoring ideology won't be sufficient. It all boils down to what is and isn't working - and whether you think things can get significantly better performance within existing arrangements.

With that in mind, let me consider the public provision of health care. The perception is that it isn't working. That perception goes back at least 10 years. It spans Helen Clark's health system and the present one. Why can't the public purse deliver the health services people believe they should be getting?

One of the reasons is that while people want a 'public' health system, their demands of it are increasingly ambitious and personalised. If the public health system was dealing only with very basic needs (as it was 50 years ago before many of today's technologies and medicines had even been dreamt of) it might still make sense to regard the government as the obvious guarantor of what we need. But our expectations of what a health system should deliver today go so far beyond basic needs that governments are increasingly unable to deliver, no matter how much money they are able to command from taxpayers.

That doesn't imply a wholesale retreat from a public health system. But it does call for an honest debate about what's best left to individuals and what can still be done really well publicly.

None of us know how long we will live, nor how well or ill we will be. Fate can deal very different hands. When it comes to matters of life and death I don't know of anyone who doesn't believe that care should be available without reference to your bank balance. We should be able to provide first class care of this type from taxes. But we also know that in the ordinary course of our lives, routine care will be required from time to time. Furthermore, all of us know that the way we live influences our day-to day need for health care; and that there is an unlimited amount that even well people can spend on their health if they put their minds to it. Furthermore, the gap that once existed between expert medical opinion and lay knowledge is being closed by an increasingly well-informed public.

I have no difficulty with paying taxes to cover the acute emergencies that can't be planned for, or the often lengthy and harrowing incapacity that attends the degenerative illnesses of old age and inherited incapacities. Neither do I object to contributing taxes to see that we don't take any chances with the critical years from conception to toddler-hood: problems over-looked then can blight an entire life and cause huge costs - emotional and material.

But does it make sense to meet the reasonably predictable needs of working age New Zealanders whose individual requirements are highly personal by taking in taxes and then churning them out through costly bureaucracies which are under little pressure to perform? As any Minister of Health will tell you, while the drug bill soars onwards under prescribing pressure from doctors and patients who have little idea of the costs involved, absolutely vital areas of public health surveillance that can only be done by the government are seriously under-funded.

When it comes to where treatment is provided our priorities are even harder to explain. The overwhelming majority of New Zealanders receive their primary health care from private providers called GPs. They run their practices themselves with a minimum of fuss. I don't hear calls for the government to take them all over. But when hospital care is needed we suddenly get terribly excited about who owns it. Does it matter who holds the scalpel as long as the service is delivered safely and skilfully? There is no reason why a wholly 'public' health system could not be delivered privately but for the fact that we've refused to debate it.

The health reforms I launched - and which remain only partially unfolded today - were not designed to eliminate public funding of health care as some ideologically disposed commentators claimed. But they were designed to make it easier to link private funding with public funding. The more you drive public and private health apart, the more you drive up costs and inequities.

Did you know that ophthalmologists in the private sector charge around $1900 to do a cataract with a lens implant. It takes about 23 minutes which is a shade under $87 per minute or $4000 an hour. The equivalent public sector rate is $62 per hour. If public hospitals entered the fee- paying market, they would collapse these extraordinary margins. Suddenly, a whole lot of people who couldn't afford $1900 but could afford something more reasonable, might decide to leave the public waiting list freeing it up for those who really can't afford anything. And in a genuinely integrated system, the 'public' patients might end up being treated privately.

For some unknown reason this way of thinking is regarded as heretical. So absurd and costly practices are allowed to continue. Yet the evidence is clear that the more public and private health systems are allowed to complement one another, the better the guarantees that can be given without making unrealistic claims about how far the tax dollar will go.

The National Party should consider a division of labour in which the Government agrees to provide those aspects of health care that don't lend themselves to insurance and pose particular affordability problems, while citizens pick up the balance of their health care needs through packages tailored to their personal and family circumstances. Tax reductions would be necessary to make that possible. It's a question of sorting out what decisions can best be made in advance by individuals and what can sensibly be left to a tax-funded scheme, ensuring all the time that the outcome - access to health care for ordinary citizens - is a morally defensible one.

By holding itself out as able to do everything, the government spreads itself too thinly and compromises the investments on which everything else depends. In doing so, it short changes the very people it claims to be helping. I can't see what is morally defensible about that. Yet that is what we continue to do with respect to many social services. It might have made sense in the 1940s with a less mobile, less well educated population; when the gap between experts and ordinary people was much wider. But it doesn't make sense in a better-informed, more widely-travelled society which is less and less satisfied with paternalistic responses.

If that was all there was to it, there'd be no further debate. But the argument is not just a practical one. It's also about values. Even to promote change on the pragmatic ground that it's no longer good enough for a system to be working 'more or less' (and tending in the direction of less, not more), is to invite a bucketful of slogans about equity and fairness. And it is a debate that can't be ignored or wished away. Arguments rooted in values have to be answered with similar language - otherwise people just talk past one another. This is precisely what happened during the Lange-Douglas years. The reformers confronted fairness arguments with technical answers about efficiency. I don't believe they knew what social outcomes there were really prepared to defend; what things they were prepared to leave individuals to carry; and what outcomes required a claim on the resources of the entire community through taxes.

I believe we're in danger of repeating their error. We tend to justify everything in terms of what it does for economic growth. But we know voters find that sterile. The Tories in Britain delivered the strongest economy in Europe and were wiped out. The values they projected were found wanting.

So what can we say about the values that would guide an honest reappraisal of the social services we believe we can really deliver superbly from taxes? I believe National's core supporters share a common view about what motivates people.

I would suggest that there are three things that determine the course our lives take. The first is how hard we work. It may be unfashionable to say so, but being on the Rich List says very little about the worth of the individuals named there. It's their values that count, and it's the acknowledged hard workers among them who win respect from the wider community, not just the small clique of rich and famous. For us, hard work is non-negotiable. Not only is hard work a necessary ingredient of success: lack of it is positively bad for people. It doesn't matter whether you avoid it by relying on inherited wealth or welfare, not working hard leads to a lack of self-esteem.

Secondly, our skills and aptitudes will influence our lives. We applaud the fact that people are different and that some people have special talents that we haven't got. That's not a cause for envy: it's a cause for celebration - we all benefit from gifted people in our community. But everyone has skills and something of value to offer. Recognising that rather than wondering how everyone could have been made the same is the best way of caring about people.

Thirdly, there's the role of luck - or the lack of it. This is possibly the most worrisome factor. We don't begrudge people their good luck. Again, envy has nothing valuable to offer. But it is morally indefensible to turn your back on somebody in trouble just because they've had bad luck. We can't choose our parents or our genes. That's where the social insurance we provide for one another through publicly funded health and education comes in.

I prefer the phrase social insurance to safety net. Safety nets catch people -- which is fine. But there are people who, from day one, have nowhere to fall. And our obligations to them are no less.

This is what distinguishes us from ideological right wingers who insist on the inviolable rights of individuals but have little to say about their responsibilities. The North American obsession with rights and their endless litigation is not a part of our heritage, and we should resist those who seek to import it. We need, rather, to stress our responsibilities - responsibilities to ourselves, to work hard and to use our skills, but also to care for others. Our entire approach must be driven by our view of people.

It also distinguishes us from the left. The political left has always been obsessed by theory. Its most urgent goal is equity. It's a word I never use. Equity doesn't exist in this world. We're all different. We're better to base our social relations on the way humanity is rather than some ideal theory of how it might be.

I believe there are tasks that would be better left to citizens along with lower taxes to pay for them. That would leave a more modest government doing what remains superbly. That remains my bottom line: if political parties are going to argue that governments should do things, then they must do them superbly. If, on the other hand, they decide that things are best done outside the political arena then they should quit them. You as New Zealanders and National Party members have to tackle these issues. If you can run with them, we as your parliamentary representatives can. If you can't, there will be no constituency for change and we will go on trying to do more than we should and more than we can do well.