Politics is all about choices

A National MP (Don Brash as it happens, but it is representative enough of National's view that the identity of the speaker isn't really relevant) today gave a speech that includes the following snippet. The speech was on tertiary education but as with most speeches by MPs, it included a bit of context first. The extract:

Tertiary education plays a key part in National's vision for New Zealand because, at least up to a point, it's a vital tool for promoting economic growth.   
 
Most of you will have heard me speak about my determination to close the growing gap in living standards between New Zealand and Australia, and to chart a course to get into the top half of the OECD.
 
Why do I want to do this?  Is it simply because I am a former Reserve Bank Governor and have a fondness for dry economic theory?  Most certainly not.  It's because this is the country I love and in which I have raised my children, and I want to ensure that it continues to prosper. 
 
It's because if we do not achieve these growth goals then New Zealand won't be able to offer New Zealanders the quality of life that their neighbours in Australia and other developed nations are able to enjoy.
 
The human face of this gradual slide can already be seen in people like Aletia. I met Aletia on the steps of Parliament earlier this year; she was 33 years old and suffering from very aggressive Grade 3 invasive breast cancer.  And there she was on the steps of Parliament clutching a petition, in tears, begging for her life, because her Government said it couldn't afford to give her the Herceptin treatment that was her last chance of survival.
 
Not surprisingly, Aletia couldn't afford Herceptin's $100,000 price tag. Her friends, family and community had already rallied round to raise $24,000 for another drug, Taxotere. Had she lived in Australia, she would've got Taxotere free in a public hospital. Taxotere has been funded by the Australian health system for the last five years.
 
In New Zealand, despite Pharmac having approved Taxotere, it's been locked in the cabinet, awaiting funding, for nearly two years.   
 
Aletia is why we need strong economic growth. Without more economic growth, and the increased wealth which growth brings, New Zealand will continue to have a death rate from breast cancer 30% above that in Australia.

The trouble with this statement is that it is not true.

Economic growth will not help Aletia or other cancer victims. A political choice to push more resources into drug funding would help Aletia. Labour has shown in seven years of government that its choices are to devote large real increases to funding in the health and education systems.

National's record of nine years in government was that it held real resources. That is why the public health and education systems were so badly run down by 1999.

If you want better health care, better-resourced schools and so on, you have to provide more resources. Economic growth DOES NOT do this.

All that economic growth does is provide a bigger economy. It remains a matter of political choice as to what one of the consequences of economic growth - higher tax revenues - get spent on.

National's perspective is very clear. In 2005 it promised $11bn of tax cuts over three years. It did not promise more funding for drugs, or for health, or for education.

Labour's perspective is very clear. In 2005 we promised to invest the proceeds of growth in education, health, policing, transport and all the other public services that make our country a better place to live.

More growth will only equal better services if New Zealand has a government that puts some of the proceeds of growth into services, not into tax cuts. National does not believe in public services at a fundamental level. National can never be such a government.

There is also a broader point. Don Brash and the National Party seek to hold that economic growth and social development are in contradiction with each other. That better standards of social services, more investment in infrastructure, higher benefits, stronger labour market regulation, more secure pensions etc would harm economic growth and development.

In fact the reverse is the case.  A healthier society is a more productive one. More secure families means people are more likely to take risks. Economic growth and social justice are connected in a mututally reinforcing cycle; the one benefits the other where policy sets the right feedbacks in place.

It's a matter of record that since 1999 economic growth has been very strong, thanks in part to Labour's economic policies. We've proven that we can deliver strong economic results at the same time as investing in social services. National delivered two recessions and anaemic public infrastructure.

This is no accident. It's the consequence of the different choices the parties make.

Labour is committed to economic growth and social justice together. National is committed to the old-fashioned view that the UK Tories have ditched with Margaret Thatcher: that there is no such thing as society.

So if people want better health services they know who to vote for. If they want a stronger economy, they know who to vote for. If they want a fairer society, they know who to vote for.  It's Labour.

This is the ground on which the 2008 campaign will be fought. And National, if it fails to understand this, will cruise to its well-deserved fourth defeat in a row.

Comments

[stef]

Maybe I'm having a bad day but I suspect the real problem with health is that there is always going to be an Aletia. Government spending is never going to keep pace with the technology to save some person's life.

[Insolent Prick]

You're quite right, Jordan. Politics is about choices. It's about choices of the voters in their various capacities--as voters, as consumers, as workers, as taxpayers--as much as it is about the choices of politicians.

New Zealand is drifting far behind Australia, our nearest neighbour and competitor. We already have an open transfer of labour between the two countries. The risks to the New Zealand economy--and the consequent effect on our ability to fund social services--are entirely connected to our ability to retain New Zealanders, and attract others, to help grow New Zealand.

It is an absolute fact that if Australians are earning much better incomes, from which it is able to afford much better social services, many New Zealanders will be enticed across the ditch.

There is no welfare without wealth, and no wealth without growth. Your dream of New Zealand, Jordan, would have taxpayers subsidising far more social services while reducing the incentives to work harder and grow the New Zealand economy. That can only lead, as it has over the past thirty years, in a rapid expansion in the difference of lifestyles between New Zealanders and Australians.

We don't have the economic scale that Australia has. We don't have the access to capital that Australian markets have. We don't have the same degree of international branding that they have to attract talent. We don't have the vast natural resources they have. We're further away from our export markets. And unlike Australia, we don't have a culture that strives to win, economically. If anything, it is the socialists who want to destroy that culture of economic success, by punishing those who do win.

At the very best, for the New Zealand economy to be competitive, we have to be leaner. We have to be more creative. We have to strive to create products and services for the rest of the world, and own the supply chains and distribution channels to access those markets.

Provision of social services is entirely based around what we can afford. It is only ever relative. It goes without saying, as Don Brash does, that the more our economy produces, the more services we can provide.

[kiwi_donkey]

Rubbish. Labour is just undertaking classic redistribution. The last election was all about massive electoral bribes - the student loan package and working for familes. It wasn't about investment in anything, or any vision other than the fact the Labour doens't believe my earnings should belong to me. The driving ideological force for Labour seems to be that MY money is better off in SOMEBODY ELSE'S pocket. What outrages me is that the surplus from over-taxation wasn't even being spent on government services - just pure out and out redistribution.

So here is my question Jordan. Why should I want to live in a country that tries to milk one half of the population to support the other half? And then has the ruling party smirk at and abuse the people who are funding its lolly scramble?

You arrogant sanctimonious bunch of ideologues.

[phillpjohn]

"New Zealand is drifting far behind Australia, our nearest neighbour and competitor."

Yes IP:

and Australia has pursued right wing economic reform at a much slower rate and to a lesser degree than New Zealand over the last 20 years. Perhaps part of the reason that Australians earn on average 30% more than New Zealand's workers is that over 80% of them have their work contracts negotiated by unions (though Howard is bent on changing this) - compare this to 20% in New Zealand. New Zealand wages are pathetically low because employers can get away paying them, because there are no unions to stop them. So instead of putting profits back into our economy in the form of wages, much of it's flowing back to Japan, the USA and surprise, surprise -Australia.

Australia's labour productivity growth and capital accumulation rate have doubled ours over the last 20 years. This is largely due to the fact that Australia's unions negotiate higher wages, which force business to put more money into capital so as to rebalance the labour to capital ratio to maintain profitability this results in an increase in the capitalisation of industry which leads to higher labour productivity ($ produced per hour of work). Higher wages also force employers to invest more $ in workers, which means more training and a higher skilled workforce. Because employers are investing more $ in workers they are more valuable and employers try harder to retain workers = happier workers and lower labour turnover, which results in more efficient use of human capital (i.e. if people are changing jobs every few months huge amounts of experience and skill are wasted).

There are many more macro and micro-economic reasons why it's often better to have a unionised workforce than a non-unionised workforce, but these are the main ones. A good example of the benefits of unionism is Ireland which has had enjoyed highest growth rates of any OECD economy over the last 15 years, with an almost completely unionised workforce. So maybe we should look at re-establishing a culture of unionisation in New Zealand?

[rightkiwi]

Politics is about choices. And Labour has Labour chosen to cut the Pharmac budget as a percentage of the total health budget and as a perecentage of GDP rather than chosen to increase it.

[phillpjohn]

Actually I'm with Kiwi Donkey, we don't need to be redistributing income, workers need to be taking it for themselves through joining a union. When the workforce was completely unionised in the 1970s there was no need for "working for families" because workers had the collective power to demand that they were paid what they deserved. National changed that in 1991 with the Employment Contracts Act which destroyed New Zealand's unoion movement creating a new underclass called the working poor.

[kiwi_donkey]

And I'm with you phillipjohn. Wages are disgracefully low in this country, and one of the serious problems with the Employment Contracts Act was that it ignored the international market for labour. Also, trying to compete on cost rather than value is generally a mug's game, unless you have some kind of sustainable cost advantage. In effect, we were competing on Labour costs with the Chinese! The answer to problems of competitiveness in New Zealand is not to drive down wages, but to innovate and invest.

I should give Labour some credit for four weeks leave. That is a constructive way of trying to get money out of corporate profits and into workers' pockets. But there is still a broader problem. We have too many cosy oligopolies and infrastructure monopolies. The result is they can soak the consumer and repatriate profits offshore (or into government coffers). We need much more aggressive competition or effective regulation to protect consumer interests. As you say, unionisation might do the trick - it's an argument worth exploring.

I was a bit intemperate before (sorry Jordan). But I do think ideologically driven re-distribution will not solve these problems, any more than ideologically driven privatisation and deregulation did.

[Russell Brown]

The quoted part of the speech is almost the same as part of his Zonta speech, in which he mentioned Aletia Hudson's name seven times.

She's in a horrible position: fast-growing Grade 3 invasive cancer, and she has every right to be a demanding customer of the public health system. She was given chemo pretty quickly, but no, Taxotere, a more effective chemotherapy drug, isn't funded - it's expensive. But a very similar drug *has* just been granted funding. Perhaps Dr Brash might have explained how that would have been achieved under the Budget he took into the last election.

She also has a type of cancer that responds to Herceptin. Herceptin is difficult. It works better than other treatments, but at a vastly higher cost (Roche hasn't really explained why it's so expensive), which is why only a couple of public health agencies in the world are funding it. The problem is that if you stump up for Herceptin there's a crop of other new miracle drugs being campaigned for behind it. At some point, health funders say no.

If Brash is suggesting that a National government would be funding Herceptin right now, he's a liar. He's not suggesting that, of course, he's just tagging someone's tragedy onto his usual economics speech. It seems pretty cynical to me.

And finally: "Without more economic growth, and the increased wealth which growth brings, New Zealand will continue to have a death rate from breast cancer 30% above that in Australia." What a load of *shite*. Australia's death rate is lower because for *years* they've had a much better breast cancer strategy. We're starting to make up ground, but it's just not true to say that breast cancer outcomes are a function of wealth. If they were, Belgium and Switzerland wouldn't have the world's highest mortality rates and Mexico a rate about one fifth of ours.

Cheers,
RB

[Insolent Prick]

Russell:

It is absolutely legitimate to state that provision of healthcare, along with all other social services, are a function of wealth creation. Can New Zealand afford the kind of healthcare provision that Australia can afford? Obviously not.

Brash is making a perfectly legitimate comparison with Australia: if we want to live in a society where providing adequate healthcare and social services is even an option, we have to place a clear focus on wealth creation.

[Russell Brown]

IP: "It is absolutely legitimate to state that provision of healthcare, along with all other social services, are a function of wealth creation."

That's not exactly what he said. Ironically, he's glommed onto the worst possible condition to try and illustrate such a contention: the breast cancer mortality rate in wealthy countries is four times that in poor countries. The treatments cited as the most important by the WHO are available here. The big difference in Australia is that they're a decade ahead of us in strategy.

And again, to even imply that National would have been funding Herceptin is deceitful.

Cheers,
RB

[Insolent Prick]

It's not deceitful at all.

It's perfectly legitimate to state that without much better economic performance, and an active strategy to substantially increase our wealth over the next twenty years, New Zealand simply will not be able to provide first-world healthcare, let alone breast cancer services.

For nine years while in Opposition, Labour tried to pin every individual healthcare tragedy on successive Ministers of Health and the National Government in general. In the last seven years of Labour government, despite massive increases in health budgets, New Zealand health consumers have not seen dramatically better health outcomes.

It is simply deceitful for Jordan to claim that Labour is providing better healthcare. There's no evidence for this. Dollar for dollar, healthcare outcomes have become considerably worse. Australia is continuing to improve its healtcare provision at a far faster rate than New Zealand.

Unless New Zealand dramatically improves its economic position relative to Australia and the rest of the OECD, and unless the Government commits itself to much higher quality spending of limited healthcare resources, as opposed to simply doubling the numbers of bureaucrats, as a country we might as well just give up the dream of having world-class health services in New Zealand.

[MCMC]

It's not deceitful at all.

And yet none of what I/P writes following this has anything to do with how National's health budget would have put Aletia in a different position. Even if I agree with your policy direction, using this woman's situation as a rhetorical strategy is wrong.

[Gary]

Russell, you use an interesting technique - accusing someone of being a liar "if" they had said something that you then admit they never said, is a bloody strange way to get your point across.

Still, I imagine its the best way for desperate lefties to get "Don Brash" & "liar" into the same sentence...

[Gooner]

Let's face it, if National was the government, and Aletia existed, Annette King or Steve Maharey would be giving the same speech. It's just politics. There is no deceit. People who query what he says can look the facts up for themselves. Pretty simple really.

[MCMC]

Gooner - I don't disagree, but I'd like a higher standard for political discourse. I think this is part of the reason major parties are held in disdain by so many.

[sagenz]

Jordan - Repeating another of those big lies again. I posted the fact that Labour has reduced health spending from 6.4% of GDP in 1999 to 5.5% in 2005 and 5.6% forecast in 2008 with links here http://sagenz.typepad.com/sagenz/2005/08/labour_has_cut_.html . Dr Brash was speaking the absolute truth and the facts back it up. Grow our GDP and we can afford to spend more on expensive life saving drugs.

Anybody with any sense will realise that 6% of $100m buys you less than 6% of $150m.

Labour low growth policies and failure to keep health spending at the same level of GDP combined with incompetent targeting of money that has been spent have killed people and they will kill more.

So try to stop telling lies about policy as well as Dr Brash now will you.

[sagenz]

Russell - A major strategic reason for Australia's (and the US) vastly better health outcomes in cancer is the fact that it is multi provider insurance based rather than a monopoly provider like New Zealand and the UK. That means that scans and other preventive early detection treatments are more likely to be provided early than where a monopoly with short term targets attempts to defer proper examination and treatment until the latest possible point. Competitive providers are forced to offer better and more prompt services to get customers than a monopoly.

It would certainly be interesting to know whether Pharmac would have made to judgement they could afford to fund Herceptin and other leading edge cancer drugs if the health vote had been held at 6.4% of GDP as it was in 1999.

[Aj]

9% of $100m buys just as much as 6% of $150m. The 3% extra being avaliable as it was not frittered away on tax cuts to all and sundry.

[Dean]

RB,

WHat was it like growing up on Mars, and how would you rate it compared to, say Earth?

Have you been living there for the the past 10 years?

Of course you have. How silly of me. How else could you come to the conclusion that functions of waelth do not lead to better standards of healthcare.

Tell that to Ethopia. Idealism doesn't go a long way there.

[Oliver]

Philipjohn,

Having spent the last 5 months living and working in Dublin II can assure you that union numbers in Ireland are plummeting, non-unionised workers earn more on average than unionised workers and the Irish unions accepted economic reforms that NZ unions would scream blue-murder at the mere mention of them ie corporate tax rate of 12,5%. That low tax rate has done more to attract employment and investment to Ireland than anyother single factor. John Key should know this, he transferred large sections of Merryl Lynch there when he was their global head of currency trading.

Another reason that many other countries have done better out of economic reform than NZ is because we did it first. Everyone else got to cherrypick the bits that they do and don't like.

[Crusader]

The real question is not whether "economic growth has been good" but why with the best trading conditions seen in over 50 years why was it not at least double or more? The reality is that we should have done better in terms of growth and unemployment but uneconomic deadweight policies frittered away most of the advantages that we had.

This basic question has been missed by most political commentators but then most of them are economic illiterates.

[sagenz]

aj - you obviously missed the bit where I said Labour had reduced the health vote by 0.8% of GDP. Perhaps you will be voting National next time

[kiwi_donkey]

LABOUR - PLEASE EXPLAIN

Public Health expenditure as a % of GDP in 2002

USA 6.6%
Australia 6.3%
OECD 6.1%
Britain 6.4% - increased to 7.3% in 2005/6 (source UK Hansard)
New Zealand 6.4% - reduced to 5.5% in 2005 according to Sagenz

Latest Australian Figures were 9.7% of GDP for public and private health expenditure in 2004. For NZ in 2002 the equivalent figure was 8.2%. If private expediture has not inreased as a % of GDP, the NZ figure will now be 7.3%

So our health funding, as a percentage of GDP, seems to have reduced to 75% of the levels found in Australia and the UK. What is the Government doing?

Source: http://www.health.gov.au/internet/wcms/publishing.nsf/Content/525DA4FFBD54885CCA25718D007D0FAE/$File/Chp-7-chart-59-V2.gif

[Spam]

Personally, I'd sooner see better-value spending on health than more money thrown blindly at the problem. REduce the arse-covering administration for a start.

[Tom S]

After reading the post by sagenz, I think its important to realise and re-state we don't do that badly for our bang for our buck in health spending. Brash went to electorate last election with a promise of tax cuts to be funded by a non-existant surplus and vague promise of "trimming the fat." The lack of scrutiny of the veracity of this la la land "budget" by the media in its rush to pander to the revolting and naked middle class greed that this bit of faith based wedge poilitics sparked still frankly pisses me off and was to me a scandal of public dereliction of duty by our media. So just to keep the debate reality rather than faith based, lets look at the USA briefly -
- An estimated 18,000 people die each year because they lack medical coverage.
- 50 million Americans lack medical insurance, and another 50 million are underinsured.
- 25% of insured Americans can't afford to fill their prescriptions.
- Of the more than 1.5 million bankruptcies filed in the U.S. each year, about half are a result of medical bills. Of those, 75% had health insurance.
- Insurance premiums increased 75% 2000 and 2006, and per capita costs are expected to keep rising. National health care spending in the U.S. is predicted to double over the next 10 years.
- The World Health Organization (WHO) ranks the U.S. health care system 37th of 190 countries. N.Z. is 41st.

For our money, we do very, very well. There is no fat in our health system and the work load on nurses and doctors is high for below average wages for comparable jobs offshore. More relevant, it also bears repeating - constantly and loudly - that the alternatives propsed by National are still the delusional, failed faith based ideological answers of the 80's and 90's. Tax cuts that benefit the richest few percent the most, 19th century industrial relations regulations that unsurprisingly produce 19th century wages and slashing real government spending is nonsense. It is about choice - between working hard for long term prosperity or indulging the wishful thinking and greed of the klondike economics of the New Right.

[Jordan]

Public health expenditure as a % of GDP in New Zealand - I haven't gone earlier but going off this year's Budget and going back and forward one year, we see the following.

Nom GDP $m Nom Health $m % of GDP
150,914 8,813 5.84 (2005/06)
156,257 9,563 6.12 (2006/07)
160,013 10,732 6.71 (2007/08)

Those numbers are from the Budget documents on the Treasury's website. So Sage, stop accusing me of lying. I will pull the series together back to 1990 after next week.

[kiwi_donkey]

Tom S: "It is about choice"

Labour's choice is to let health spending decline relative to Australia and the UK. Labour's choice is to use this money to help fund a re-distributive lolly scramble. Labour's choice is to fund Hip-Hop tours and Twilight Golf. Labour's choice is to oppose US foreign policy and then give massive subsidies to a company that supplies the US military. Labour's choice is to describe close to 40% of the electorate as "suffering from revolting and naked middle class greed." I'm sorry, those were your words, not Labour's - but the subtext is pretty clear I think; we see those sort of sentiments again and again on these blogs and in the media.

LABOUR HAS FAILED IN HEALTH. The figures on this blog show that even with planned expenditure increases in the next few years, we will not regain the equivalence we used to have with Australia and the UK.

Your response - the critics are simply greedy and revolting. And I suppose you can't work out why Labour is being seen as increasingly divisive?

[kiwi_donkey]

"Maori Party says it was offered $250,000 to side with Labour"

http://www.radionz.co.nz/news/latest/200609281011/maori_party_says_it_was_offered_$250,000_to_side_with_labour

I guess that's the end of any health discussion.

[sagenz]

Jordan - your years are wrong but I can get to coincidental numbers.
I blogged this last year based on the PREFU but have checked and corrected your figures and am happy to use them as they still prove my point.

2005/6 Forecast Health 9563 GDP 156257 are your numbers for 2006/7. Glad you are not the Finance Minister.

So this year your numbers say that Labour has spent 0.3% less on Health as a % of GDP than National spent to 1999.

"Economic growth will not help Aletia or other cancer victims." - Well under Labour policy where you do not increase health spending at the same rate as GDP increases that would be true.

But your lies are to try to present National as being the party that would make cuts. Certainly they will cut wasteful PC bureaucracy and hundreds of millions on twilight golf, hip hop tours and tertiary institutions scamming the taxpayer.

But using your figures we have just proven that Labour have been the one to reduce health spending as a % of GDP. So Dr Brash point holds unless Labour is in power.

Next....

[sagenz]

Health 2005/6 is at http://www.treasury.govt.nz/forecasts/befu/2006/58a.asp
GDP is at http://www.treasury.govt.nz/forecasts/befu/2006/08.asp

[Jordan]

See my latest post to get the accurate figures.

[bobrien]

So are Labour going to increase GST to pay for Health and Education or will it be a vote to sock it to the rich earning over $60,000?

It will be interesting to hear Helen justifying a tax increase for core labour voters.

[phillpjohn]

Increased GDP growth may provide more money to improve health care but it isn't the be all and end all. For instance- the USA is in the top 3 countries for GDP per capita, yet its health service is ranked 39th. On average a US citizen spends four times as much on health care as the average Greek citizen, yet the Greeks live on average 3 years longer. So our health is as much about diet and lifestyle as how much money we spend on health care. Why not tax consumption of junk food higher and use the revenue generated from that to provide free/subsidised fruit to primary and secondary school students? It would be a start down the right track and it would certainly reduce cancer and obesity.

[Insolent Prick]

phillipjohn:

Yet again you haven't thought through your thesis before advancing it. You're just a low-grade reactionary. I'm very disappointed in you. In your initial statements on-line, I thought you were a respectable, highly qualified academic with stunning credentials. You've proven yourself to be a sham.

What constitutes "junk food"? McDonalds, KFC, Fish and Chips, and Coke? What about Subway? Subway is low fat. What about other high-fat products, such as butter and cheese? What about other high-sugar products, such as orange juice?

Introducing a McTax won't stop people eating shit, and won't tackle obesity.

[innocentIII]

"If you want better health care, better-resourced schools and so on, you have to provide more resources. Economic growth DOES NOT do this.

All that economic growth does is provide a bigger economy. It remains a matter of political choice as to what one of the consequences of economic growth - higher tax revenues - get spent on"

This is so so so bad - tell me you are a graduate of the economics department of Auckland University.

Logically wealth must exist prior to allocation. Logically the more wealth one has the more one can allocate. What we also know is that allocation mechanisms can waste wealth and undermine the wealth creating. We also know that private allocation in trade is most efficient mechanism. Political allocation models (like health central planning and rationing) won't work well overtime. But even then if one's nation is wealthy one can afford to do dopey socialistic things and they will work better than dopey socialistic things done in a poor country. Of course one might soon become poor.

But the notion that rising prosperity does not lead to health advances (and rising demand for access to these advances) is not born out by any examination.

If this is the basis on which Labour now makes public policy then they have to go.