Thinking in splendid isolation

17:00, Aug 02 2014
Oliver Hartwich
RIGHT THINKING: Oliver Hartwich says he’s unfazed by criticism his two-year-old think tank lacks profile or influence.

Are Oliver Hartwich and his New Zealand Initiative hiding in plain sight? Matt Nippert reports.

Self-described classical liberal Oliver Hartwich, German, bespectacled and dry, is sitting in an Auckland law firm's conference room describing a courtship that sounds so old-fashioned it could be, well, classical.

It started when Hartwich, aged 16 began writing letters to Julie, a girl he'd never met in Australia.

"She was born in Malaysia, and migrated with her family to Adelaide when she was nine. She wanted a penfriend, I wanted to learn English, so out of that came a penfriendship."

Eight years on, he eventually met his penfriend. Hartwich later managed to wangle a couple of years in Sydney by bolting a comparison with Australia onto his PhD thesis on German competition law. But academia recalled Hartwich to Bonn.

"After 4 years of long-distance relationship we decided it was really time to live together, so where do we do it?" he says.


The couple lived together, first in London, then Sydney, before arriving in Wellington in 2012 for Hartwich to become the executive director of the New Zealand Initiative - a think tank formed at the same time with the merger of the Business Roundtable (previously run by the late Roger Kerr) and the New Zealand Institute (originally run by David Skilling).

The Initiative, with a staff of nine and an annual budget of $1.8 million funded by members, is thought to be the country's largest private think-tank.

Despite his travels, Hartwich says arriving in New Zealand was notable, but mainly for personal reasons.

"For the first time ever we didn't rent a house, we bought one," he says of his new home in Wellington's Khandallah.

"I was two weeks into the job and my wife fell pregnant. For us it was quite a big step," he says.

Big step or no, Hartwich has struggled to make a big public splash. Despite talk on his appointment of pushing membership of the Initiative (mostly big businesses and professional advisory firms) to 75, it remains stalled at its starting count of 38.

Hartwich's work, particularly in the United Kingdom when he was chief economist for Centre-Right think tank Policy Exchange, marked him as a magnet for criticism and public debate. His website, featuring quotes by Austrian economist Friedrich Hayek, includes pages detailing both positive and negative comments.

Included in the latter is UK Prime Minister David Cameron, shortly before Hartwich departed to take up a research job with Australian Centre-Right think tank the Centre for Independent Studies, saying: "I gather he is off to Australia. The sooner he gets on the ship the better."

Tellingly, Hartwich's collection of press, both good and bad, features little from his time in New Zealand. And a search of Fairfax newspaper articles shows the New Zealand Initiative has been mentioned in print only 30 times this year, less than a quarter of the mentions generated by its smaller - but admittedly more public-facing - counterpart in the think-tank sphere, the Taxpayers' Union.

Hartwich is unfazed by criticism that his group lacks profile or access and influence on those in power. He says he's working on increasing membership, and his and the Initiative's profile. "It's something we're building up. We're not there to generate just quick headlines," he says.

"I understand other organisations that are much more campaign-focused, where there probably isn't as much research going on, than that's fine - but it's not our business model."

Hartwich points to successfully influencing government policy through a cluster of reports produced over the past two years focused on teacher quality.

"That's not too bad, actually, for an organisation that's only two years old."

Hartwich put his lack of profile here down to being "older and wiser" and a rabid UK press. "Maybe I've just behaved better," he says, laughing.

"I'm not in this job to create controversy for controversy's sake," he says.

He does, however, acknowledge that controversy can be useful in starting a debate. Challenged to do just that, Hartwich begins with the hot-button issue of local government financing.

"One of the proposals that I would like to put out is to abolish the rates system tomorrow. I would like to introduce a local income tax and give local governments more control," he says.

His focus on local government financing came out of work he did in the United Kingdom into housing affordability after his initial hypothesis that over-zealous planning regulations and imposed costs were responsible for property bubbles didn't pass the evidence test.

"Germany is very planned, probably more planned than either Britain or New Zealand. And yet the house price inflation that you guys have experienced here is completely absent in Germany: you can still buy a house for the same price in real terms that you would have paid in 1970."

Hartwich concluded that local councils who were funded by rates had perverse incentives to limit development, as new projects added to infrastructure costs without directly boosting council coffers.

By contrast, Switzerland and Germany allow local bodies to levy income taxes, promoting development. "What this country needs is more house building, but you don't get it by just instructing councils or tinkering around the Resource Management Act. What you really need is a proper incentive system for local government, which is not present at the moment," he says.

Seemingly unaware local government financing is unlikely to set talkback lines humming, Hartwich asks: "Is that controversial? I don't think it should be, really. It's just common sense to me."

He acknowledges his belief in stronger local governments runs counter to the old Roundtable line that councils should be solely occupied by rates, rubbish and roads.

"That's where I disagree.

"An aversion to local government, and a belief that central government is the way to run things for the whole country, strikes me as odd."

Lukewarming to the task of stirring up debate, Hartwich continues with his bold plans for local planning.

"If you want more controversy, while we're at it, perhaps I should abolish the Resource Management Act. I think it's a vast piece of legislation which seems practically ungovernable," he says.

Hartwich concludes with something actually likely to generate letters to the editor: a proposal to abolish the Overseas Investment Act.

"All the evidence points to foreign direct investment being extremely conducive to economic growth and creating jobs, and most countries I know are actively competing for it," Hartwich says.

This third proposal, broadly sketched out in previous Initiative publications, has already drawn the ire of Winston Peters. "He accused us of all sorts of weird things," Hartwich says of Peters.

The weirdness has subsided, he says, since Kim Dotcom took over as the most prominent German in the public sphere.

Hartwich is "irritated" by the public furore his compatriot has caused.

"He's got a very colourful history in Germany, I'm surprised he's even talking about it."

Hartwich sees comparisons between Dotcom's Internet Party and the Pirate Party that - for a while at least - seemed like a nascent political force in Europe.

"What I find interesting about this whole [Internet Party] is it doesn't seem to have a guiding philosophy at all. The Pirates kicked off in Scandinavia, and became very big in Germany - had quite a few electoral successes at state level - and then completely disappeared because they couldn't agree on what an internet party is actually about," he says.

Hartwich sees similar disintegration for the Internet Party ahead, noting that founding a movement based on a medium seems rather curious and will inevitably have a crisis of purpose.

"I mean, try to establish a fax party, or a television party," he says.

After two years in New Zealand, he's now also able to make some observations on our quirks.

"I find it really interesting, from a political mentality perspective, - Yes, it's a good quality of life, but it has bred some kind of complacency," he says.

Hartwich points to our relative youth, access to markets and low public debt as assets to be celebrated.

"We've got great opportunity here, it's a great country, but I'm not quite sure whether we're even aware of our good fortune. We sometimes withdraw into the insular mentality where we just want to enjoy this splendid isolation. And I don't quite get that."


An Auckland businessman familiar with the interface between commerce and government, and firmly in the old Business Roundtable camp, says while the late Roger Kerr was polarising – noting his effective blacklisting from the Beehive by the fifth Labour government – he at least got some runs on the board for the business think tank.

The New Zealand Initiative, by comparison, is adrift, he claims.

"Kerr came from the Treasury, knew New Zealand and those players and what was going on within the government. He could align some of the Roundtable work with the more innovative proposals and sell it to the Right Wing of the Bolger Cabinet table," the businessman says.

While Oliver Hartwich and the Initiative were not subject to the claims of political partisanship, its profile and apparent influence on government policy were lacking, the businessman says. "Hartwich is regarded very highly as an intellectual, but is clearly not performing in the media or in Wellington in terms of shifting policy," the businessman said.

A Beehive insider, who also didn't want to be named, described Hartwich in cutting terms: "Kerr had connections going back 30 years in business and politics, which his successors lack, obviously. The Initiative struggles for relevance, and Hartwich has been bone dry. I'm not aware they have any influence within government."

But company director Tony Carter, chairman of Air New Zealand and Fisher & Paykel Healthcare and co-chair of the Initiative's foundation board until he stepped down in March, says this criticism – particularly of Hartwich – is unfair.

"Roger built that reputation over 20 or 30 years. Oliver's only been here for a couple of years and clearly doesn't have the same mana that a Kerr would have. On the other hand, Roger was incredibly polarising and the Roundtable brand suffered as a consequence."

Carter says the formation of the Initiative was partly to deal with perception issues with the Roundtable that had effectively shut that lobby group out when National was not in power. "The problems with the Roundtable were probably as much perception as reality. But perception is reality," he says, laughing. "One thing the Initiative can be proud of is having shed the baggage of the Roundtable."

Carter says the Initiative was now able to talk to both sides of the House, but acknowledged dialogue with Left-leaning parties could be improved. "We'd like more with the opposition, to be honest," he says.

Sunday Star Times