The next Mega-Ministry is coming and it is going to disappoint

Notwithstanding the histrionics from the Greens and other hard-left activists, the Ministry for the Environment isn't being shut-down, it's being merged with two other Ministries and part of a Department to create the Ministry for Cities, Environment, Regions and Transport (MCERT). 

I opposed this when it was floated nearly a year ago, and I still oppose it.  Not because of the claims that it will risk MfE's work programme (if only!), but because bigger bureaucracies are NOT more cost efficient, and they are certainly not more dynamic, nor do they result in integrated and co-ordinated thinking.

I've worked in both large and small government agencies, but it's not just that experience that informs my opinion, it's the experience seen elsewhere. The views on savings are largely from the perspective of accountants, who typically measure "X-efficiency" which is about minimising wasted resources. In the context of government it is really around the number of managers vs. output, which given the outputs are highly subjective, is hard to assess without a close understanding of the detail of those outputs. It's not goods sold or customers satisfied.  It might consider productive efficiency based on numbers of people relative to outputs, although the "productivity" of policy agencies ought to reflect the quality of output, which I'd be astonished if the Public Service Commission could identify at more than a rudimentary level. 

What definitely isn't measured is dynamic efficiency (how responsive organisations are to innovations and technology), nor do they measure allocative efficiency (allocating resources to meet most specifically what is desired - in this case by Ministers).  

From experience, large Ministries can be awfully inefficient and slow to be responsive. For example, I half wonder if I still have a live "on demand" employment contract with MBIE, even though I left its predecessor permanently 26 years ago, although I did work casually for it for a subsequent 2 years. I never received any communications terminating it.  However I digress. 

One of my favourite administrative failures of MBIE's predecessor - MED - was how it spent three years developing an all of Ministry centralised Document Management System, which was designed primarily for "security". There were full time staff dedicated to this project, who were bewildered when one senior advisor pointed out that every single document created in this system was copied onto individual PC hard drives, which were accessible to anyone who logged onto the PCs. It took another year for the system to be implemented, by which time it was already obsolete.  

As much as there are efforts to try to bring together people in a single Ministry to be co-ordinated across sectors, the record of doing so successfully, without bringing other activities to a snail's pace is not particularly inspiring. By and large, MED and its predecessor the Ministry of Commerce, largely operated in silos.  The idea there was some commonality between how energy, telecommunications, land planning (RMA) and industrial/trade policy was fanciful. Electricity was heavily regulated and resulted in structural separation, telecommunications was very lightly regulated, land use planning was largely about tinkering with the RMA (and monitoring the impacts of its implementation), industrial/trade policy focused on tariff removal and supporting MFAT on trade negotiations.  Throughout the five years I had there, the proportion of effort of the Secretary/Chief Executive in telecommunications, broadcasting, postal and IT policy as a share of activity was <5%.  In other words, mega-Ministries struggle to get their senior management across everything they do.  Small ones don't have that problem.  Of course that can be an advantage for divisions/directorates/units led by managers who want to get on with their jobs without micro-management at a more senior level, but it is hardly amenable to accountability.  Of course what it does mean is that there are multiple Ministers for the Ministry to report to, over the head of the Secretary/Chief Executive (otherwise the Secretary would spent all of her/his time at every Minister's office). 

What mega-Ministries DO implement is a rather significant in-house administrative function, which inevitably justifies more staff to perform functions across IT, HR, finance and information management. 

I've pointed out that MBIE and DIA, both large Ministries have not displayed much capability in delivering innovative reforms over recent years. MfE of course delivered an abject disaster with Labour's proposed RMA replacement with two pieces of legislation imposing greater costs on property owners and more complication through centralisation of power.  This is primarily because MfE's culture is antithetical to economic growth, development and private property rights (you can still see in the new Planning Bill which is far more diluted and modest than what is needed to address the sclerosis in development). This was so apparent when in 2023, Vicky Robertson departed as MfE Chief Executive and stated:

In her presentation she pointed to the programmes that will have a profound and lasting positive impact on our environment.

She spoke about how reforming the resource management system has been the Ministry’s key priority and remains our single biggest deliverable for a system that is future-focused, adaptable, and encourages decisions that are good for our long-term wellbeing.

I'm not sure whose wellbeing she meant, certainly not taxpayers...

“People still say what they love about the Ministry is how people care about each other. They still say that now, as they did when I started. It’s pretty incredible how we’ve gone from 320 people to 1200 and held onto our culture. I’m proud we’ve been able to do that,” she says" 

Being proud of more than trebling staff numbers says all you need to know about bureaucratic culture.  Now that is being merged with the local government arm of DIA (which spent decades responsible for the statis of water policy), the Ministry of Housing and Urban Development (which was established in 2018 and presided over the country's most rapid increase in housing prices) and Transport (which itself has seen a more than doubling of staff numbers over 25 years). 

Another example. 

In 2004, Transfund New Zealand was merged with the Land Transport Safety Authority to become Land Transport New Zealand.  That entity was merged with Transit New Zealand in 2008 to form the NZ Transport Agency. The end result has been to create a bureaucratic monster.  In 2004, the three separate agencices had a combined total of around 700 staff.  In the 2023/24 financial year, NZTA had 2,769 permanent employees.

In 2007 announcing the merger, then Transport Minister Annette King said:

“Combining the functions of Land Transport New Zealand and Transit New Zealand will create one organisation accountable to one board, ensuring improved focus on value for money for land transport activities and an appropriate balance of land transport activities".

Value for money?

In Australia, a mega-Department I've previously done work for had a total of six project leads for a single project I was involved in as a contractor, over five years.  Each time the new lead had to be brought up to speed and learn again.  The reason why was because the mega-Department kept poaching anyone talented to work on other projects in other areas.  One comment I heard from a different agency was "this is the Department you send projects to so they die". That's a bit unfair, but isn't entirely untrue. Quite simply there are five layers of management on top of each project or activity, so it is easy for them to get lost.

So I'm not optimistic. I'm not sure a single entity co-ordinates better than separate entities, because the bigger the organisation the more sluggish it is to work as an integrated whole. Moreover, so much of what these agencies do is not across other portfolios. I doubt aviation policy has ever paid much regard to housing policy, local government or the environment, but I am sure there are people in a couple of those who would keen to get involved - which would slow it down.  A mega-Ministry has great potential for sclerosis.

I hope I'm wrong, but I've seen multiple mega-agencies in several countries over 30 years.  I'd love to see the example that, by an objective external measure, has delivered serious innovative reforms that have released productivity, growth and dare I say "wellbeing" for taxpayers and the public.

Is New Zealand a capitalist command economy?

Head of Lifestyle Economics at the UK's Institute of Economic Affairs (IEA), a free-market thinktank, has written an excellent piece at The Critic called "On Britain as a capitalist command economy". 

The central hypothesis is that the UK is both far removed from being a free-market economy with a small state and light-handed regulation, and from being a state-owned economy run by bureaucratic, politically driven trading departments.  It is worth reading in whole!  

He describes the conundrum of how to describe the UK economy...

The left call it neoliberal but neoliberals have had no meaningful influence on British governments for thirty years. The right call it socialist but neither the Tories nor Labour have shown much interest in seizing the means of production. Keir Starmer’s government is more left-wing than he wants you to believe, but even if he renationalises the rail and water companies, it will be a nostalgic gesture rather than a heartfelt effort to control the heights of industry. Only on the fringes of the left is there any desire to return to the days when British Airways, Jaguar and Thomas Cook were under “democratic control”.

Arguably New Zealand isn't much different.  Of course the Greens, TPM and parts of Labour will say the country is under the oppressive yoke of neo-liberalism, their latest scapegoat "billionaires" and "foreign capital", and of course people like me will rail against the "commie kids" on the left in Parliament, and in local government, but there's little real evidence of NZ embarking on Douglas/Richardson Mk. 2 or becoming the DDR under the last government.

Jim Bolger put the brakes on free-market liberalisation and shrinking of government after the 1993 election, although the direction of travel largely remained the same until 1999 when the Clark Government starting turning things back - notably by passing legislation to cancel the contracts of private ACC employer account providers to return ACC to a state monopoly insurer.  Clark followed by renationalising Air NZ and the Railways, setting up a state retail bank (Kiwibank) raising income taxes and vastly expanding the welfare state with "Working for Families". The Key Government did little to change this trajectory, and the Ardern/Hipkins Government doubled down, with significant spending increases (even leaving aside the Covid response), and increasing both the size of the public sector and scale of regulatory intervention in the private sector.

On the face of it, the post-Thatcher settlement has held, but there is nothing Thatcherite about this government, nor the ones that preceded it. 

Likewise in NZ. It's not to say the Douglas/Richardson (note it isn't the PMs noted for these reforms) reforms have been unwound. New Zealand isn't returning to rampant protectionism, nor has Labour embarked on vast renationalisation (the Government isn't going to get a national bus company, shipping company, hotel network or life insurance company), but what has happened is an accretion of central command and control.  The UK of course has long had it with the Town and Country Planning Act, the single biggest act constraining housing supply and enabling local government to be the greatest NIMBYs in the UK's history. It was passed in 1947!  New Zealand has only had the Resource Management Act since 1991 (passed during the height of Ruth Richardson's reforms, but inherited from Labour led by Geoffrey Palmer - which speaks volumes), but it too had kneecapped housing supply, inflated the cost of infrastructure and is only now with a chance of being replaced with something a bit less worse.

Snowdon writes about price caps introduced in the UK on energy, the Starmer Government's ban on "no-fault evictions" of tenants and enabling legal challenges on rent increases. 

He highlights the nonsense of the Equality Act in the UK, which is being used to impose "pay equity" claims of the sort Brooke Van Velden has put a stop to, much to the chagrin of retired former politicians. 

the Equality Act ... stipulates that men and women should be paid the same salary if they do work of “equal value”. Grotesquely over-interpreted by activist judges, this led to the bankruptcy of Birmingham City Council and 16 months of strikes after it was ruled illegal for (mostly male) dustmen and gravediggers to be awarded bonuses when (mostly female) cleaners and carers were not. ..

In the Next case, it was revealed that the company offered its 25,000 retail staff a chance to work in the warehouse but only seven took up the offer (three of whom walked out within a year). Despite one of the claimants admitting that she didn’t find the prospect of working in a noisy warehouse appealing but would have considered it if she was offered a lot more money, the company still lost.

The process used to determine what was "equal value" is what Snowdon describes as "that looks like something from a Marxist professor’s fever dream to decide the value of an employee’s labour."  This diagram is the basis for a bureaucratic central planner's view of how people's pay should be set, which bears zero reference at all to how many people want to do the job for the pay offered.  Have you seen a single politician or journalist in New Zealand outline how ridiculous this is? This is exactly the outcome of the philosophy of the capitalist command economy.

Snowdon describes it as essentially the application of activist state seeking to remould capitalism to meet centrally determined goals:

An activist state is systematically coercing the private sector in the pursuit of a range of social engineering goals, all of which are implicitly assumed to be more important than the economy. It is a form of central planning, albeit with a patchwork of different plans rather than one overarching goal.

Following on from my previous post, this is exactly what you can see from the Opportunity Party, whose leader "stepped into the world of... purpose-driven business". The purpose you can be sure is not why people and other businesses risked capital in the business, it's a purpose that is mostly about signalling virtue, and just chips away at its competitiveness, its resources to respond to consumers and competitors (especially in economies that don't have this sort of regulatory impost).

It's commonplace for people to refer to the People's Republic of China as a "communist" country. While it is led by the Communist Party, and has a great deal of central command and control, in many aspects it lets private enterprise run rip and be competitive, especially when exporting and seeking to win against foreign rivals. While it has plenty of state owned enterprises it directs and controls, it is less interventionist in the private sector.  You see China actually cares about economic growth and development, because it works.

In the UK and across much of the developed world, governments are far more concerned about social engineering goals. Snowdon notes Net Zero (regardless of cost) which in the UK sees car retailers fined for selling too many cars that people want (petrol or diesel powered) relative to cars fewer people want (EVs).  The market doesn't price goods the politicians want people to buy cheaply enough, and the public don't want to pay more for them, so the politicians penalise companies selling people what they want.  The Ardern Government did this more softly by taxing the cars people wanted to subsidise the ones the government wanted people to buy. It did it by implementing US style government procurement rules to preference responses to tenders that included Maori enterprises, just because of their ownership, regardless of the value the enterprises offered to taxpayers relative to others. 

Snowdon notes how far the public health lobby has gone in the UK (and it's obvious the same lobby in NZ wants similar steps):

Supermarkets have already been banned from offering multi-buy price discounts on “less healthy” food and are prohibited from displaying these products in certain parts of their shops. Wes Streeting plans to go even further and start fining supermarkets for selling too many calories.

I don't think New Zealand is quite so bad. A cursory look at economic statistics indicates:

- State spending as a proportion of GDP is 41% in NZ, 44% in the UK

- Tax as a proportion of GDP is 27% in NZ, 35% in the UK

- Public debt as a proportion of GDP is 41% in NZ, 98% in the UK.

It's notable that many of the command and control steps in the UK haven't been followed in NZ, although some of these were stopped with the removal of the Hipkins Government.

However, the approach of regulatory control of the private sector remains at the heart of what the Wellington bureaucracy advances to meet social goals, and it has widespread support in academia.  Some elements of the capitalist command economy remain very much in place.

Even with its replacement, the Resource Management Act will still not put private property rights first, and will still mean local government very much is in command.  

The electricity industry remains a weird blend of a market economy, with significant state investment, constrained by the planning system, which neither resembles a free market (given how difficult it is to build new generating capacity, and the state majority owning three quarters of the sector), nor a socialist system (as there is not a monopoly state provider). The previous ban on new oil and gas production (which in the current environment seems absurd) was purely an exercise in social engineering and virtue signalling, to show off a commitment to "Net Zero" even though it made virtually no impact on such targets (and no impact on climate change).  However it certainly scared off new investment in the sector, fearing a change in government could ban its industry once again.

While supermarket competition is not what some would wish, this is largely due to the planning system, although there remain calls to split up the industry in ways unheard of in other countries, with even the Finance Minister having floated it, and it still being a "live" policy with some political parties.  The fact this was even considered by a purportedly centre-right government indicates how far from the 1980s and 1990s NZ has gone. 

New Zealand lacks the compulsory centralised pay bargaining seen in Australia, which bears the cost of it because the wealth generated from mining is so significant, the loss in productivity is diluted.  However, it was only a change in government in 2023 that stopped it being implemented in NZ. 

So I'd say New Zealand isn't quite as far down the path of regulatory sclerosis as the UK, but that is not because of a lack of will to continue down that path. You can see it in Labour, the Greens and the Opportunity Party, as well as within the glance of part of the National Party and NZ First to seek to add "just another" regulation to make business have "purpose" to meet the politicians' goals.

The fascists of the 1930s (actual fascists, not David Seymour) didn't advance communist style nationalisation of the economy because they preferred to use regulation and state control over business and industry to meet their goals. The word is vastly overused by the far-left, but its approach philosophically is not a million miles away from the bureaucratic command and control state regulating capitalism to meet the lofty ambitions of politicians.

One thing is for sure, it sure isn't a free-market capitalist economy.

The Opportunity Party is clearly on the left

What was TOP and founded by the eclectic Gareth Morgan has been through a few leaders, and is into its latest one, and instead of using the acronym, has gone from the “Opportunities” party to just Opportunity. Just one opportunity, presumably for its candidates to get a handle on power.

I last wrote about it in 2020 when I said:

The centre-left policy wonks' party. For clever people that would usually vote Labour, and think they can solve many solutions if only the tax system were tinkered with. There are a couple of clever people here, but it just the intellectual wing of the Labour-Green parties, and takes its support from there.  Long may it do that.

This remains largely the case. While it avoids the Hamas-adjacent one-eyed view of Israel of the Greens, and the self-interested grifting of unions seen in Labour, it is essentially a party of left-wing activists combining those who have made careers in corporate virtue signalling and productivity sapping, or in the public sector. You need only look at the profiles of the leader, deputy-leader and some candidates to get a clear picture that this isn’t a party of free-wheeling entrepreneurs, advocates for freedom of expression and competition and choice in public services.

Leader Qiulae Wong profile states “After studying law and politics, she stepped into the world of human rights, disability inclusion, ethical fashion, climate and purpose-driven business”

Now that fits right into the standard box-ticking of left-wing virtue supporting. Human rights, inclusion, ethical and then the weirdest... "purpose-driven business"

If you think “purpose-driven business” is different from other businesses, then you don’t understand business. The purpose of business is to make a return on capital. However, she presumably thinks that isn’t enough, and business should seek to show off some noble intent beyond providing goods and services at a quality and price that customers are willing to pay for.  

She led the “B Corp” movement in NZ which is a corporate grift that seeks to extract money from businesses to get a virtue signal stamp to: 

“Be part of a growing global movement working to create an economy that benefits people and the planet”

This is largely vacuous nonsense. The economy exists because people produce goods and services that benefit people.

However, if you want to be part of a movement that is about putting productivity and wealth creation secondary to sacrificing shareholder value to identitarian and zero net impact climate change goals, then good for you, but let’s not pretend this is “centrist”. I am sure they will think I am some awful mean nasty capitalist individualist who thinks it's ok to run people over and kill pandas and whales to make a buck, but this sort of language and empty concepts are largely conceived by small groups of people who are very much the same as each other.  They are all trying to prove to one another that despite their considerable wealth, education and relative luxury level of living, they are actually altruistic and generous people who care about something beyond themselves and their family, and this is proven by showing off credentials that are popular amongst themselves.  

You can be sure probably none of them donate to Iranian's fighting the Islamic Republic, North Koreans trying to defect to the free world, Mauritanians fleeing slavery or Ukrainians repelling Russia. It's far more glorious to save a few tonnes of emissions from installing a solar panel or getting equal numbers of highly paid women on the local board of a major accounting multinational.

It could be right from the Green Party.  You see these movements are great for big companies that can afford to waste money hiring people or consultants to do zero-value research, publicity and branding to look good to airhead consumers, finger-wagging politicians and activist NGOs. However, they are deadly for small entrepreneurs just trying to break even, minimise costs and maximise consumers in taking on competitors like this.  

Deputy Leader Daniel Eb is cut from the same cloth. “Dan works to transition Aotearoa New Zealand to a just, regenerative food system”. Wait, what? How is it unjust now? How is not regenerative? Well he might tell you because…

“Dan founded a communications agency to help tell stories about rural innovation, community building and nature-positive farming”

Again, this could be right from the Green Party. Marketing and spin oriented.

Dr Kayla Kingdon-Beb (Wellington Bays candidate - where she is up against Julie Anne Genter) is “a well-known environmental policy leader and advocate. She believes Aotearoa’s most crucial (and undervalued) asset is nature”. She is Chief Executive of WWF-NZ and before that was Director of Policy at the Department of Conservation.  Again, could be right from the Green Party, and probably a good candidate to win votes from the far too frequently angry Julie Anne Genter.

I wont go through all the candidates, although this image of them tells a story that shows how it isn’t like the Green Party. The Green Party isn’t keen on white males as candidates anymore, whereas the Opportunity Party is.  Indeed a majority of candidates are male. Maybe it's centrist to not just select people on identitarian grounds nowadays?

Yet it is policies that tell you how leftwing the Opportunity Party is:

Universal Basic Income: Welfare for all. Paying people to be idle (of course it’s not characterised as that), by taxing some people more is a distinctively leftwing policy. It is directly redistributive, taking from some to give to all, and it is distinctively uninterested in productivity or wealth creation. $370 a week to everyone isn’t enough for some to live on but is a nice handout to the daughters and sons of lawyers, doctors and policy wonks at university. Note it doesn’t replace all benefits. The proposal is that solo parents get extra money, there are extra payments for people with children, housing support. So “admin” savings on this aren’t going to be total. With labour shortages in some sectors, the idea that people should receive other people’s money unhindered by any obligation to do anything is fundamentally socialist.

Fully subsidised Public Transport: This is another transfer from taxpayers to a small number of people, which has been proven elsewhere to achieve little. It is a blunt tool to help the poor (many of whom don’t live in places with much or any public transport, or certainly not public transport that goes to where they need) but is a big hand out to middle income taxpayers who work downtown in major cities like Auckland and Wellington. Overseas experience indicates it does little to relieve traffic congestion but does a lot to attract people from walking and cycling. Making the supply of a service free at the point of use is a fundamentally socialist concept. Imagining it is “just” for a six-figure sum public servant in Wellington to get a free trip into work, but for the shift-worker in Naenae who starts at the airport at 4am to not do so (because she drives) is quite something.  Of course the party also wants to pour more money into public transport, regardless of net benefits (because well… socialism).

Land Value Tax: New Zealand already has this in rates, but this extends it to central government. The premise being that it could replace some income tax, but the proposal is that there would be three income tax brackets – 28%, 34% and 39%. Lower income tax rates are abolished because of the welfare to everyone payments. The point of the Land Value Tax is to encourage more intensive use of land, except in rural areas (the party is keen on zoning of course). There would be lots of exceptions as well including Māori land, conservation land, land owned by NGOs, government and social housing.  Woe betide government be taxed the same as the great unwashed “speculating land bankers”. Now I don’t think Land Value Tax is necessarily left wing, if done simply and lowers income tax equally, but this isn’t it. 

Citizens’ Assemblies: Heaven help us all if this comes in so that the curtain twitching finger-wagging brigade of semi-retired activists get to dictate public policy. This sort of direct-democracy will inherently exclude business-owners and people with multiple jobs (who won’t have the time to participate), but be perfect for lobbyists, activists and retirees who are just aching to get involved in running other people’s lives. It’s exactly this sort of approach to planning that has caused NIMBYism, and which ultimately gets hijacked by people who want to interfere, who want to tax and spend other people’s money and run any policy area like a village.  It’s the atmosphere that has no place for radical individuals, doing something different in business, community, society, art or even just in their own lives that doesn’t harm anyone else.  The Greens would love it.

There’s other stuff like creating a “circular plastics economy” presumably regardless of cost or impact. Implementing Labour’s previous ban on smoking for adults as they age (helping grow the black-market in tobacco for organised crime). Raising youth court jurisdiction to 25 (soft-pedalling on repeat offenders who cause untold harm to victims). 

It’s interesting it has dropped capital gains tax because it wouldn’t have the same impact as a land value tax, but let’s not pretend the Opportunity Party cares much about economic growth and productivity as much as it cares about redistribution and being virtuous. 

It talks about bringing left and right together. Well it brings left for sure, I’m not sure what it brings on the right.

For example, what does it say about fiscal prudence? There is little about saving on government spending, the main emphasis appears to be to let the economy “grow” to surplus (although that seems a bit like Nicola Willis to be fair).

What does it say about foreign affairs? Nothing

What does it say about greater choice in health and education provision? Nothing

What does it say about improving New Zealand’s competitiveness internationally? Nothing. Just keep sliding down below the per capita GDP of Italy (and well below Australia)

I’m very happy for the Opportunity Party to attract some voters from the Greens or Labour, but let’s not pretend this is some haven for disaffected National voters who think there is a chance for any principles of smaller government, personal responsibility and individual freedom to be respected. This is still a party of policy wonks, now led by a grifter of “corporate social responsibility”.

It's a victory!

In July 1953, then Premier of the Democratic People's Republic of Korea, Kim Il Sung, declared victory in the Great Fatherland Liberation War (the "Korean War" to the rest of us).  This was a war he started in 1950 (although he claimed the US started it), and had a clear purpose, which was to obliterate the Republic of Korea (south Korea) and unify the country under his communist rule. 

This was after over 200,000 military deaths and the death of over 1 million north Korean civilians (and likely over 200,000 Chinese deaths, as Mao intervened to deter the US attacking China), and the net loss of 3,900 square km territory.  However, Kim Il Sung treated it as a victory and the Kim dynasty has done ever since.

Sure it lied about why the war started, and it is logically impossible to think that the war was any sort of victory for the north, but at least the Kims have an excuse - they are part of a psychopathic totalitarian dynasty clinging to power.

Trump doesn't have that. 

Sure, 90% of the Iranian Navy has been destroyed, but it is clearly fully capable of attacking ships in the Strait of Hormuz, using small boats, coastal based cruise missiles and drones. The US and Israel have obviously not destroyed that capability.

Sure, most of the Iranian airforce has been destroyed, and its ballistic missile capability has been badly damaged, but it isn't over. Perhaps its nuclear programme is completely, or mostly destroyed, but its motivation to have a nuclear programme will not have abated, indeed quite the opposite.

After all, Kim Il Sung himself also knew that once the Soviet Union collapsed, the only security guarantee the regime in Pyongyang could rely upon is having its own nuclear weapons.  That has been proven, as there is little real chance of the US engaging in a first strike against north Korea, because the risk of nuclear retaliation, whether to the south or to Japan or beyond, is very real.

The Iranian regime has been weakened, it has lost leaders, but it has not loss control of the borders, the mass media or the instruments of domestic repression. It has not been destroyed, but it has been battle hardened and has - rightfully - claimed victory. Victory against the United States is defined as survival. It is not a victory Saddam Hussein could claim, as the Iraqi Government fell completely.  It is not a victory Muammar Gaddafi could claim either (although the regime of Nicholas Maduro is - largely - intact without him).

Trump's claim of victory isn't quite as hollow as Kim Il Sung's, but at best he has diminished and deferred the ability of the Islamist regime to project its terror abroad, and only moderately diminished its capability to project terror domestically.

If the regime remains, it will be more hardline, more focused on advancing terror abroad, including targeting the US, Israel and liberal democracies globally. 

I bet the Cuban regime isn't that worried anymore.

TACO indeed.

What's the role of government in an energy crisis?

For all of the fatuous claims of those who think fossil fuel use should be ended "as soon as possible", we can all see that the world values them, not just to power transport, and provide base-load energy generation in many countries, but to provide the essential materials for a vast range of industrial and consumer goods.  Notwithstanding the nonsensical claims by the likes of Greta Thunberg and de-growth multinationals like Greenpeace, oil use continues to grow worldwide according to the International Energy Agency.  Half of that growth comes from aviation and chemical feedstocks - in other words the use of oil as an input into the manufacturing of everything from pharmaceuticals to pipes to electrical insulation to asphalt and paint. 

Yes there is some substitutability around energy in some sectors. Most obviously in electricity generation, although no single alternative to oil or coal is "ideal".  Hydro-electricity is geographically dependent, nuclear is difficult primarily due to extremely high capital costs and public opposition, and solar/wind power is intermittent (and storage remains expensive).

In transport there have been huge leaps ahead in technology for light road vehicle, and medium weight trucks and buses doing short to medium haul trips are increasingly electric as well. However, it is going to be some years before long haul heavy trucks (and coaches) will go electric.

Aviation isn't moving from petroleum for some time, although hope it being seen in biofuels, that has its own issues. Shipping likewise, which mostly uses heavy fuel oil, is also not moving away from petroleum.  What many activists ignore is that most transport, certainly commercially provided transport, is only too aware of the importance of minimising fuel costs.  Conventional engines have never been more fuel efficient, and that is driven by market factors more than anything. Airlines, shipping companies, trucking companies all want to save on costs, because most of what they do is motivated by profit. 

Private individuals less so because they trade off high capital expenditure vs. lower operating costs, and many don't have much capital to spend on cars, but the incentives are there.  As someone once said, the stone age didn't end because of a lack of stones. Similarly railways did not move from steam locomotives because coal (and fuel oil) were scarce, but because technology made diesel and electric traction more cost effective.  

Outside transport, and outside the wishes of planners hoping people will trade off time and comfort to use public transport and active modes more (which will happen anyway due to cost), the big consumers of fossil fuels are in agriculture, industry and manufacturing, and much of that isn't changing soon.

So what SHOULD government do when petroleum gets more scarce and more expensive?  

1. Not meddle with prices. Higher prices ensure more supply and encourage more supply.  When people face the real price of energy they will take steps to conserve or change energy sources, and trade off whether they think it is a short or a long term saving they get from switching. The idea that politicians or bureaucrats have any clue as to what best meets the needs of everyone using petroleum products now is simply absurd.  High prices are already encouraging people to shift modes of transport, to drive less and consider what their next vehicle's fuel consumption is.  Let that work, and don't listen to the excitable planners who think more needs to be done. A majority of the costs of urban public transport are already predominantly paid for through motoring taxes and rates, as it is already "being encouraged" with fares well below cost.  It doesn't need to be more.

2. Don't get in the way of exploring for more energy.  The Ardern Government's ban on new oil and gas exploration was always an act of virtue signalling to fly a vacuous flag around climate change to the world, even though the impact of no more exploration on climate change is nil.  The even more preposterous argument that "there isn't any more to discover" makes it more ridiculous, because there is no need to ban something that wouldn't happen anyway.  Norway has the world's highest takeup of electric vehicles (96% of new light vehicle sales are EVs) and it is the world's seventh largest exporter of petroleum and gas (and there is bipartisan consensus about expanding it). 

3. That means all energy.  Whether it be wind power, solar power, nuclear power, tidal or coal, government should get out of the way. There are negative externalities with some options, but these should be treated as property rights issues.  Pollution is an escape over property boundaries and permission should be obtained from owners of such property if pollution represents anything from nuisance level onwards.  There should be minimal restrictions on installing solar panels, wind turbines or damning waterways if you own them, and the replacement of the RMA should enable this.  It also means that electricity generators should also be able to plan for future supply.

4. Maintain constructive foreign and defence relations with allies: Freedom of navigation is critical to survival for New Zealand. That means defence matters, including the alliance with Australia in particular, but also other like-minded liberal democracies.  Yes that includes the United States, Japan, south Korea and Singapore. It means that there should be a blue water navy and an air force that is a credible contribution to collective defence of sea lanes. It doesn't mean having to go along with every military action by allies, but it does mean contributing to the defence of allies, and having clear lines about what matters in the national interest. 

5.  Maintain a minimum critical reserve of supply: The International Energy Agency recommends member states keep reserves worth 90 days of supply. This isn't "free" to do, but should be considered a core part of national defence. Without such supply, significant parts of the economy and the public would be in danger.

6. Sell off your ownership in gentailers: As clever as it seemed for the Key Government to sell 49% of three electricity gentailers, it doesn't go far enough. For these generators to build more supply they need more capital, and it shouldn't be constrained by governments having to put their own capital into the three SOEs. Government should state that, at the very least, it is relaxed about becoming a minority shareholder, or better yet just hand over the shares to the general public for it to do with as it pleases. They can sell them or hold onto them. Before that happens, it should break them up. Generation and wholesaling electricity should be separated from retail, so the retail market can thrive. I don't mean the private gentailers like Contact, just the majority state owned ones.  That will stir up the market and encourage investment in capacity, which is just what is needed as more choose electricity over gas and petrol.

I'm old enough to remember how the National Party's greatest conservative socialist, Muldoon, tried to centrally plan New Zealand away from the volatility of oil prices, and lumbered the country with billions in debt for inefficient pet projects. From the Motunui gas to gasoline plant, to the North Island Main Trunk electrification, many Think Big projects were an economic disaster because officials assumed oil prices would remain high perpetually, which was not to be the case.  

The Muldoon government subsidised CNG and LPG conversions for vehicles, and subsidised the roll out of CNG and LPG refuelling at service stations across the country, and by the mid 1980s the growth in demand in CNG and LPG had collapsed. It also indirectly subsidised road use by such vehicles, as fuel duty on CNG and LPG was (and still is!) significantly lower than that for petrol.

In a few months, the US-Iran war will be over and the crisis in fuel prices will have ameliorated, and despite the eager calls by central planners, the best government can do is to