Breaking bad or breaking even?

ANTHONY HUBBARD
Last updated 15:32 20/05/2012
Education Minister Hekia Parata
ROSS GIBLIN/Fairfax NZ
TROUBLESOME EVIDENCE: Education Minister Hekia Parata is deliberately buying a fight with teachers.

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Budget 2012

Change to rest home care asset tests Reformed criminal says Budget offers hope English: Drill for success Tobacco tax passes first hurdle 'Urewera four' members join Budget protests Opposition upsets power firm float Economic risks increased - Treasury A tale of two budgets IRD to target 'hardcore' tax avoiders National plays it tax safe

OPINION: It's a dirty business, making a zero budget. There's no money, so you have to pretend. Cuts are blessings, crumbs are caviar, revenge is commonsense, and everyone will come out better off in 2014.

Bill English is a rat-cunning politician and nobody believes the nice-guy act any more. He is a tough Tory cut-purse and this Budget will show it.  English and his leader have decreed that the government's books will blossom into black by election year. This is not an economic necessity, though he will say it is. In fact, it is magic-number politics.

Even the rating agencies have said there is no hard deadline. As long as the trend towards black continues, the deficit does not have to disappear at midnight. The government's cut-off date is one it imposed on itself.

Of course, no government could go on a spree. Even a Green-led administration would be doing austerity. But there are always choices to be made when you cut, and these cuts tell a story. So what's National's?

National is saying that health and education are no longer safe. The move to increase prescription charges is fascinating.

National's argument that this is the first increase in 20 years is misleading rubbish, but it's also a sign of caution. Tony Ryall and English know how much the move to users-pay in health damaged National back in the age of Ruth. They know that a small number of old people still remember it.

But a politician as cynical as Ryall also knows that the voters forget. ''Amnesia is a gift,'' as the Maori proverb has it  especially for governments. So Ryall puts a toe in the water to see what happens. It sets a precedent for much bigger moves later. But if it makes too big a splash then Ryall can race back to the beach.

The money raised by the increased charges is trifling and the Government has been careful to cap the burden it imposes on any single family. It's not the money, it's the principle, and whether the voters swallow it.

Similarly in education. The Government would like to scrap Labour's interest-free student loan scheme, but dares not. Too many of the middle class have a stake in it. But National has begun to whittle it down, and once again the precedent matters more than the dosh. Steven Joyce is National's present-day Bill Birch. He seems reasonable, affable, unflappable and calm. Inside, he's all calculation.

Hekia Parata, similarly, is the perfect education minister for a John Key Cabinet. Smiley and personable, with a bit of social dash and an unreconstructed conservative at heart. She is going to require teachers to be better qualified: all will have degrees. This is an enlightened move and should actually help the quality of the teaching workforce. It matches, as it happens, moves taken by Finland.

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But Parata sees the teacher unions and even the profession as the enemy and the obstacle to a better education system. This is classic conservativism, much like National's thinking about health in the 1990s. Then, the doctors were the problem. They had taken over the system and were somehow running it in their interests rather than the patients'.

So Parata will impose ''performance pay'' on the teachers, which will do nothing to raise education outcomes but will cause a massive upheaval. She is deliberately buying a fight with the profession, and she deserves all the woe it brings her.

Above all, Parata is keen to let class sizes grow so she can have money ''to spend on good things elsewhere''. In this she cites evidence produced by Treasury, which now fancies itself as an expert on education. Treasury says: ''Increasing class sizes doesn't have much effect on education standards. Go for it!''

This is, of course, exactly what a cash-strapped government wants to hear. Treasury is saying it can have its cake and eat it too. In this, of course, both Treasury and the Government ignore the evidence that suggests the opposite. Ivan Snook and a bunch of education professors have argued that class size does affect quality. But Snook is an old ''troublemaker'' and governments have long spurned him.

The point is: governments are not really interested in evidence. They want evidence that supports their plans. They want to do things, not gather evidence, let alone consider the evidence that raises doubts about their wisdom This goes for governments of all kinds, right, left and wishy-washy centre.

The rise of a swaggering and ideologically pure Treasury is also a reminder of the bad old days under neo-liberal Labour and National. Politicians should ask Gabriel Makhlouf: When did you become an expert outside your field?

It's not as though Treasury's competence is unquestioned, even in its own area. Last year the auditor-general issued an amazing critique of Treasury's handling of the government's retail deposit guarantee scheme. This scheme was introduced in a hurry in 2008 to prevent a run on the banks and finance companies. Everybody knew the risks of such a scheme, which was a moral hazard. If the Government guaranteed the financiers' investments, what was to stop them spraying money around like lunatics?

And this, of course, is what happened. But Treasury, according to the auditor-general, didn't do anything to stop it. Or, to quote the bureaucratese: ''It did not see itself as able to interact with a finance company to attempt to moderate that behaviour, even when it could see the Crown's potential liability increasing markedly.

''The view appeared to be that it was better to recover what funds it could after an institution failed, than try to influence events before a failure.'' This lack of action cost the Crown a fortune, although no-one knows exactly how much. Perhaps $200 million? It's not a good look for the guardian of the exchequer.

Just why Treasury failed this way is uncertain. It hadn't run such a scheme before, and maybe the officials couldn't adapt quickly enough to their sudden new task. Or maybe it was because they don't ideologically approve of meddling in the market anyway. Incompetence or ideology, it hardly matters. Treasury botched it.

But nowadays Treasury is singing a song that the Government likes. So Treasury is running education. What next? Maybe we will find out in next year's Budget.

- Sunday Star Times

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